On Friday, China's new "president" will arrive in California for a retreat with President Obama. Unlike many formal visits, this one is supposed to be unscripted. Just the world's two most powerful men hanging out in Cali, maybe a few beers, probably a few wisecracks, hell maybe they'll make a few fun wagers. I don't know what important people do when they hang out. I actually didn't even know important people were capable of hanging out, I thought they were too busy being important.
But despite not having a script, there is a whole lot for these two men to talk about. Despite Mitt Romney's attempt to convince us that it is still the 1970s and that Russia is our number one geopolitical foe, President Obama's more deft "pivot towards Asia," highlights the reality that China is the nation with which the US should be most concerned.
I use the word concerned somewhat ambiguously. Certainly there are things about China that are concerning: their blatant disregard for human rights; their refusal to respect intellectual property rights or play by other established economic rules; the ongoing hacking attacks emanating from the PLA; etc. But concerned is meant more to imply that it is important for the world's two largest economies, and soon the world's two most powerful militaries, to get along. Despite all the frustrating things China does, they don't need to be our frenemy - which right now they are. In fact, our relationship with China can and should be symbiotic and to achieve this end, we need dialogue.
Let's rule out the worst case scenario: some kind of war or open conflict. I was recently fortunate enough to speak with someone who works at Mandiant, a private company that does internet security work. This person told me in no uncertain terms that we have been at cyberwar with China for the last decade. We play defense, they play offense. Most of this is based around China stealing patent information, although more recent probings into our electrical grid and Pentagon databases are more sinister. Nevertheless, an open conflict with China is out of the question. We are too dependent on each other. Despite the fact that people fret about how much of our debt China has bought, remember who owes whom money. Guess who is our biggest trading partner? Perhaps most importantly, guess who is the world's biggest polluter and its biggest producer of solar panels? China needs the American market, and American know how. America needs the Chinese market and access to labor.
Both countries are set to benefit from a proactive investment in bilateral relations, but that means playing softball and hardball with China at the same time. Let's start with softball. We need trade with China and they need trade with us. I don't know if a free trade agreement with China is feasible, but an end to protectionist tariffs certainly is. Allow China access to our market and encourage them to do the same. This of course comes with the caveat that they must adhere to the "rules." No dumping solar panels in the American market for 30 cents. More unfettered access to our markets will spur further growth in China. Furthermore, America cannot be uniformly opposed to Chinese takeover of American companies. While there are legitimate concerns about the Chinese buying Smithfield Pork, and question about Huawei's hardware, we cannot assume the worst every time a Chinese company tries to invest in an American one.
Now for hardball, which is trickier. China does not perceive itself as a little kid anymore, and rightfully so. Unfortunately, China still plays like a kid. They're bullies who do not know how to use their new found power. America must continue to push China on it's human rights agenda, economic practices, and bellicose posturing.
On human rights, it is simply unacceptable for the Chinese government to suppress dissent the way it does. Imagine if President Obama had the power to throw in jail everyone who believed he was born in Kenya. That kind of thing happens in China. As I blogged recently, the scariest of the political scandals currently facing the President is the one dealing with the confiscation of information of AP journalists. In China, there is no such thing as a free press which is why government corruption is among the country's foremost problems. I understand China won't become a blossoming democracy overnight, but the country needs to begin opening up to alternative points of view and letting people express themselves, not employing even more internet censors.
Additionally, if China wants to be a recognized and responsible member of the global community, it must adhere to the rules the global community has adopted for trade and military relations. Right now, China can sponsor hacking attacks on America with impunity because this field is so new. But this needs to be resolved immediately, and is perhaps the most pressing item on the agenda that does not exist. These attacks cost America billions of dollars each year, and are increasingly targeted and disrupting our infrastructure. I don't believe America and China will become truly involved in a real cyberwar, but the probing needs to stop before a real Pandora's box is opened.
On a similar note, China cannot continue to play by a different set of economic rules than competitors. China's currency needs to fluctuate based not on the dollar, but on normal exchange rates; Chinese companies cannot continue to dump products in foreign markets to put the competition out of business because they are propped up by the government and not driven by profit; and China must stop its cyber attacks on American businesses which cost us an estimated $50 billion in revenue each year.
I'm optimistic that this personal meeting between President Obama and President Xi Jinping will be productive. A personal approach, unscripted and off the record is more likely to yield results than a stiffer and more formal official visit, and the willingness of both sides to participate suggests how seriously both take such a visit. If President Obama brings his A-game and can build a positive relationship with President Xi perhaps we can reset a tenuous relationship and look forward to a positive future with another giant.
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