China and the World, Talking Point

Enter the dragon

What to expect from Obama’s first presidential visit to China

Enter the dragon

Stamp of approval: "Obamao" t-shirt sell in advance of his visit

Barack Obama becomes the third of three iconic American figures to appear on Chinese soil this month, as part of his nine day Asian tour.

Of course, the American president may not see the likes of Michael Jackson and Mickey Mouse as his most natural peer group.

But for a man used to wowing the crowds, the excitement surrounding his American compatriots must bolster a little of the presidential confidence.

The sweeping success of Jackson’s posthumous This Is It (see WiC 37), as well as the news that Disney has finally won approval to build its first mainland park in China (in Shanghai, after more than 10 years of talks) both point to an enthusiasm for at least some things American.

But will the same be said of Obama’s own trip to China?

He has a China plan?

For a man feted for breaking the political mould, Obama’s China strategy has been pretty much to follow in the footsteps of his Republican predecessor at the White House

Perhaps that is a wise choice. “Little Bush,” as the Chinese call the 43rd US president, is widely liked, and China relations top a very short list of foreign policy success.

Sino-US ties were helped by the setting up of the Strategic Economic Dialogue (SED), as a twice-yearly meeting of senior leaders to discuss economic relations.

Obama has since widened the SED’s scope beyond economics to strategic issues in general.

But the straitened global financial circumstances have brought economic issues back to the fore. That means that it is topics like protectionism, exchange rates, trade surpluses and Beijing’s $2.3 trillion of forex reserves that continue to capture much of the attention. Obama has said he will discuss many of these issues – in private – in Beijing.

But less sense of the Obama ‘magic’ in the air?

In speeches in Europe (as a presidential candidate) and then in Cairo (as the real thing) Obama was greeted with rock-star adulation by much of his audience.

Similar fervour looks unlikely next week.

“Obama is finally coming” – a headline in China Business News (CBN) – reflects a sense less of anticipation at the presidential visit, and more of impatience that he should take so long to be making the trip.

The implication is that he should have been paying his respects a lot earlier in his presidential term (to keep the bank manager happy, and all that).

Hillary Clinton earned similar flak for making Beijing the last stop in a four-nation tour in February, even though some in the press came round to it as a case of “grand finale” thinking.

At least this time around there is some pleasure that the American delegation will be spending more time in China than in “ally” countries Japan and South Korea.

But don’t forget – complains CBN – that Obama was quick to slam us on arriving at the White House. Tim Geithner, his treasury secretary-elect, was talking about China as a currency manipulator within three days of the president taking office.

So expect a public less impressed by the Obama story than other audiences (“lukewarm”, says Caijing magazine).

Many will also remember his talk of taking a tougher line with the Chinese during campaigning for the White House.

Perhaps that’s why the Obama team has been pushing for a “town hall” style address during the Shanghai leg of his visit. Clearly he hopes to work some of his oratorical magic on the local audience.

But the thought of the American president taking spontaneous questions from the floor is causing jitters among the mainland authorities. Even as Obama left Washington for Asia, negotiations were continuing on whether unscripted questions will be allowed, and whether the event is to be televised live.

But there’s been an American charm offensive too?

Forget climate change, nuclear confrontation and economic meltdown.

When Hillary Clinton was in Beijing in February, the issue that the Chinese side most wanted to discuss was a missing tent.

Their annoyance was that the Americans had not committed to funding a national pavilion at the 2010 World Expo in Shanghai.

In a revealing insight, the organisers feared that the American absence would seriously undermine the status of the event.

So since February, Clinton has been trying to raise $61 million in private donations to fund pavilion expenses, reports the Financial Times. Many expect an announcement next week that the Expo will get its American rep after all.

What’s on the negotiating wish list?

Neither side seems to be expecting any major breakthroughs, although there is plenty to talk about.

Three issues top the US agenda: a rebalancing of the global economy (greater Chinese consumption, fewer exports), more resolute measures on climate change (emission reductions and clean tech progress), and tougher action against nuclear proliferation (Chinese pressure on North Korea and Iran).

The Chinese approach will be different, says Kenneth Lierberthal, former director on the White House National Security Council, and now a Brookings Institution expert.

Whereas the US administration will be flagging the areas in which it would most like to see progress, Beijing’s tactic is to allow its visitors to define much of the agenda, and then respond as issues are raised

But keep an eye out for references to Chinese “core interests” in the final communiqué, especially respect for its territorial integrity, as well as its right to make a wider commercial push globally.

What’s more, as creditors-in-chief, they’ll be listening closely to what Obama says about getting the US fiscal situation into better order.

No doubt the two teams will denounce protectionism too, even as both prepare for the latest round of trade restrictions.

Disagreements are likely to continue?

Plenty, although both sides will be hoping that this will not derail relations in general.

Trade frictions are one of the potential brush fires. In September the Obama administration imposed safeguard duties of up to 35% on Chinese-made tyres, after a complaint by unions that low-priced imports were forcing factories to close. The case is currently working its way towards WTO resolution procedures.

China has launched investigations into imports of US chicken parts and automotive components in response.

Another spat may soon follow, with the US announcement last week of 99% duties on the $2.6 billion of annual Chinese steel pipe imports.

Another potential row is an imminent arms sale to Taiwan. Last month Taiwan President Ma Ying-jeou told local media that the US government was stalling on the deal (F16 jets) because of the risk of provoking Chinese displeasure.

But the bigger picture suggests a G2 glue?

Disagreements will continue but relationship meltdown looks unlikely. That’s because Sino-American agreement is now so key to solving most global challenges. Many of the issues facing the two sides are either shared ones (like climate change) or interlocking (like the “rebalancing” of economic relations).

“On critical issues, whether climate change, economic recovery or nuclear non-proliferation, it is hard to see how we succeed or China succeeds in our respective goals without working together,” the US president told Reuters this week.

China will also want this first Obama visit to appear momentous. The Financial Times says Beijing might throw him a PR bone – the Chinese central bank has just hinted that a “stronger renminbi” might be on the cards.

Over to you Barack, and that Expo tent..

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