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Will Obama, Xi see eye to eye? (Anthony Jenkins/The Globe and Mail)

Will Obama, Xi see eye to eye?

(Anthony Jenkins/The Globe and Mail)

KONRAD YAKABUSKI

Will Obama and Xi see eye to eye? Add to ...

It may be the most critical power lunch since Ronald Reagan and Mikhail Gorbachev sized each other up for the first time during their inaugural 1985 summit – with one important difference. When U.S. President Barack Obama and his Chinese counterpart Xi Jinping hold their first formal talks beginning Friday, they likely won’t say much about mutually assured nuclear destruction.

Instead, as former U.S. ambassador to China Jon Huntsman and political scientist Ian Bremmer have noted, China and the United States are now “bound together in a form of mutually assured economic destruction.” How Mr. Obama and Mr. Xi bond (or fail to) in California this weekend could set the tone of Sino-American relations for years. Much will ride on whether each leader “gets” the other.

As it stands, the U.S.-China relationship under Mr. Obama has been characterized by increasing drift and distrust. The U.S. President’s so-called pivot to Asia is widely seen as an attempt to “contain” China’s rise by strengthening American trade and military alliances in the region. The Chinese see this, at best, as an insult. At worst, they view it as a direct threat.

That’s why the proposed Trans-Pacific Partnership, the sweeping trade deal Mr. Obama is seeking to conclude with 11 countries, including Canada, Japan, Singapore and Vietnam, is such a touchy subject. If it’s meant as an everybody-but-China alliance, it can only inflame tensions.

If it’s meant as a head fake aimed at getting China to behave, it can only fail.

The worst thing Mr. Obama could do is let the suspicion toward China that permeates American media and political discourse dictate his policies. The prevailing view conveyed by the U.S. administration is that China is getting rich by flouting all the rules – hacking into U.S. computers, stealing intellectual property, manipulating its currency and sheltering its domestic market.

While there is truth to those charges, an America worried about its own decline has created fertile terrain for exaggeration. On the eve of the Obama-Xi summit, a New York Times op-ed warned that China “is pursuing a soft but unstoppable form of economic domination.” Governments including Canada’s, which approved Calgary-based Nexen’s record-setting $15-billion (U.S.) takeover by state-owned CNOOC, are apparently falling over themselves to accommodate Chinese investment. If that requires Stephen Harper to put a sock in it, so be it.

“The Harper administration now seems much more cautious in criticizing China’s human-rights record,” Spanish journalists Heriberto Araujo and Juan Pablo Cardenal wrote in the Times. “This is not only a remarkable 180-degree turn, but also a clear indication of how China’s economic influence can push the political agenda to the sidelines, even in the West.”

On Monday, a front-page Times headline cast China as the biggest winner from the war in Iraq (which cost the U.S. an estimated $1.7-trillion and counting) as it secures access to half of Iraq’s booming oil production – all under the protection of the U.S. Navy’s Fifth Fleet, which guards the Persian Gulf.

The proposed $4.7-billion purchase of U.S.-based pork producer Smithfield Foods by a private Chinese company raises no safety or national security concerns. Yet, its approval is far from certain. Members of Congress are fretting about “unsafe tactics used by some Chinese food companies,” even though meat-starved China needs to import U.S. pork, not the other way around.

All this China-bashing fails to recognize a simple reality: The world’s second-largest economy has much bigger problems to worry about than global domination. Domestic growth has slowed to 7.5 per cent, a comparative crawl. Its asset bubbles are threatening to burst. Its pollution is sparking civil unrest. It is becoming a more expensive place to make things. Its state-owned sector is overrun with uncompetitive companies. Its demographic time bomb is set to explode. Yet, its vested interests resist all change.

“With worsening social and economic inequality, abysmal food safety, corruption and rising middle-class expectations, Chinese governance is being tested in unprecedented ways,” the Paulson Institute’s Evan Feigenbaum and Damien Ma noted recently in Foreign Affairs. “… China’s new leaders have risen to the top only to inherit a growth model that is running out of steam.”

In the run-up to the California summit, Mr. Xi has said China is seeking “a new type of great-power relationship.” What he likely means is that China, as America’s biggest creditor, wants respect and a bigger say in international institutions. But as a developing country, with domestic problems that make America’s woes look manageable, it also wants to be cut plenty of slack.

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