If Obama presses Hu to revalue the Chinese currency as the best way to achieve recalibration, however, Hu is likely to push back, asking Obama what he intends to do to stem the massive US deficits that will cause inflation and reduce the value of investments by Chinese and others in US securities.
Neither side will volunteer to bear the costs of recalibrating the relationship. As a result, the summit will most likely produce promises to work together to stimulate the global recovery and adjust the economic imbalances — but not much more.
As for North Korea, Obama and Hu will agree on the importance of bringing the regime back to the six-party talks and affirming its commitments to denuclearize, and the summit communique will emphasize this common stance. Beneath the surface, however, clear differences in strategy will emerge. Hu will urge Obama to resume bilateral talks with North Korea under the six-party umbrella and he may press China’s position that, in the long term, economic engagement is more effective than sanctions in changing North Korea’s behavior.
Indeed, Chinese trade and investment are spurring market activity in North Korea’s northern region. Based on their own experience over the past 30 years, the Chinese know how economic reform and liberalization can change a country’s perception of its self-interests and stance toward the world. Why not reach out to North Korea the way you are toward Iran and Myanmar, Hu may ask Obama?
The US and China could work together to organize managerial and development training for North Koreans and encourage the World Bank and the IMF to start providing technical advice. A report by the University of California Institute on Global Conflict and Cooperation and the Asia Society makes the case for economic engagement with North Korea as a long-term strategy that would complement the sanctions now in place, but the US Congress might well cry “appeasement” if Obama dared to propose engaging — and changing — North Korea in this way.
Hu and Obama will work hard to present an image of unity during the summit. Both sides want to prevent any serious rupture, but substantive agreements on climate change, the financial crisis or North Korea would require both countries to take actions that could be domestically costly. The era when China made all the compromises in the relationship has passed.
Susan Shirk, a former US deputy assistant secretary of state under former president Bill Clinton, is director of the University of California Institute on Global Conflict and Cooperation.
COPYRIGHT: PROJECT SYNDICATE
RSS