From a business perspective, the trip was only slightly more productive. Hu's US$16 billion buying spree, while a mere drop in the bucket (given the over US$200 billion annual trade deficit), was nonetheless appreciated and his expressed commitment on protecting intellectual property rights (IPR) and moving toward a more consumer-based economy were welcomed, albeit skeptically. There even appeared to be a "wink and a nod" regarding revaluation in the not-too-distant future.
But, while China remains an attractive place to do business, given the profit potential, Beijing's slow movement toward fundamental economic reform -- greater regulatory transparency, the removal of structural impediments, and observance of the rule of law -- has caused even the most bullish on China to remain wary.
Two years ago, both sides were proclaiming that Sino-US relations were "the best ever." This phrase is seldom if ever heard today. While it is still premature to describe the relationship as "hot economics, cold politics" -- a catch phrase now being used to describe Japan's relations with China and South Korea -- politics at present are, at best, lukewarm and the trend is heading in the wrong direction. And, without serious movement on the trade imbalance, IPR, revaluation and greater financial transparency and reform, "hot economics" could become "hot potato" economics as the US' fall election campaigns begin to heat up.
Ralph Cossa is president of the Pacific Forum CSIS, a Honolulu-based non-profit research institute affiliated with the Center for Strategic and International Studies in Washington, and senior editor of Comparative Connections, a quarterly electronic journal.
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