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U.S. – China: Why Is There A Need For Constructive Relations..?

Barack Obama and Xi Jinping had their first official summit in a positive diplomatic atmosphere, according to diplomatic sources, and as international community needs a U.S. – China structural approach during that period of time:

Obama and Xi end ‘constructive’ summit

US President Barack Obama and Chinese leader Xi Jinping have ended a two-day summit described by a US official as “unique, positive and constructive”. US National Security Advisor Tom Donilon said Mr Obama had warned Mr Xi that cyber-crime could be an “inhibitor” in US-China relations. He also said that both countries had agreed that North Korea had to denuclearise. The talks in California also touched on economic and environmental issues. The two leaders spent nearly six hours together on Friday and another three hours on Saturday morning at the sprawling Sunnylands retreat in California.  While briefly appearing for a stroll together on Saturday, Mr Obama described their progress as “terrific”. After the talks concluded, Mr Donilon told a press conference that President Obama had described to Mr Xi the types of problems the US has faced from cyber-intrusion and theft of intellectual property. He gave no details but said Mr Obama underscored that Washington had no doubt that the intrusions were coming from inside China.

Obama - Xi 1


More importantly, cyber security is becoming a big issue for the U.S. – China relations, as Washington is seriously worried about Chinese hackers accessibility to the U.S. sensitive military information:

Obama, China’s Xi seek to ease tensions on cyber security – Firstpost

U.S. President Barack Obama and China’s President Xi Jinping agreed on Friday to work together to try to resolve disputes over cyber security, a major irritant between the world’s top two economic powers. Hosting Xi at a two-day summit in a luxurious desert estate in southern California, Obama said the United States welcomes China’s “peaceful rise” but made clear that Beijing must play by the same rules of economic world order as other major nations. The United States says Chinese hackers have accessed American military secrets, an accusation China denies, and the White House itself faces questions at home over its own surveillance of emails and phone records. Obama did not shy away from the issue of cyber spying in the first day of closed-door meetings, but he took a cautious line at a news conference, stopping short of pointing the finger directly at China or threatening any consequences. With Xi making his first U.S. visit since taking over the presidency in March, both sides appeared intent on giving the impression of a constructive tone at a summit billed as a get-to-know-you encounter at the sprawling Sunnylands compound near Palm Springs.

Overall, the bilateral official discussions covered issues directly related with China’s trade surplus, the Chinese global business practices and efforts to re-organize the global financial system:

Obama / Xi “Summit” — Big, Big Issues

Larry Summers, ( the former U.S. Treasury secretary)

One: Mind the Trade Gap

China’s trade surplus with the rest of the world, measured as a share of its economy, has come down in recent years. That’s partly because its big customers – the U.S. and Europe – haven’t been buying as much as they once did and partly because China has allowed its currency to gently climb, which makes its exports less attractive. But there’s a debate over how much of this is temporary and will evaporate as the U.S. economy improves and how much reflects a genuine shift in China’s economy away from exports to domestic consumption.

Two: Play by the Rules

There are, Mr. Summers said, “a range of Chinese business practices that are unacceptable in terms of what they mean for the competitive position of foreign firms.” These, of course, range from stealing American intellectual property to barring foreign investments from huge swatches of the big Chinese economy and are a persistent annoyance to U.S. companies in China.Asked about the standards the U.S. should use in deciding which Chinese investments the U.S. should accept, Mr. Summers said U.S. government scrutiny is warranted when the Chinese seek to invest “where the industry involved has substantial national security sensitivity in the form of possessing technological knowledge of a kind that is not otherwise available, and it could be used in ways that are adverse to our national security, or where the industry is sufficiently central to networks that a decision by those who control it could have substantial adverse impacts on the U.S. economy.”

Three: Jointly Rethink Global Financial System

The world has changed. The international financial institutions haven’t changed enough in response, Mr. Summers – once chief economist at the World Bank – suggested. Is there going to be a global system? What is the role of the International Monetary Fund? And, in particular, what is the future of the World Bank and regional development banks given that China is lending more to some developing countries than the development banks and some other countries that once relied on outside aid have built substantial reserves of foreign currencies? He didn’t offer any answer to those questions. Mr. Summers did offer one bit of advice to Americans who view the rise of China with trepidation. “No one can forecast with confidence the future of the Chinese economy,” he said. “In retrospect, U.S. alarmism about Japanese growth peaked at just about the same point that the Japanese competitive threat to the American economy peaked. And not very long after those concerns, Japanese economic weakness became more of a concern for the United States than Japanese economic strength. “I think that U.S. policy makers would do well to recognize that there’s an enormous range of uncertainty about possible Chinese outcomes and that sustained, rapid growth and greater competitive threat is one of the possibilities, but it is by no means the only possibility,” he said.

Finally, it is becoming more than clear that the international system today, really needs a constructive U.S. – China relationship with a given emphasis on global commerce, common finance practices and security. To this direction the Obama – Xi agenda of discussions was officially valid.


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