Commentary | June 13, 2013

EastWest Direct: Assessing the U.S.-China Presidential Summit

EWI's Alex Schulman interviews Piin-Fen Kok, director of EWI's China program, about the U.S.-China relationship, in light of the recent Obama-Xi Presidential Summit.

Although cybersecurity has been a central issue in the U.S.-China bilateral relationship, President Xi still has not acknowledged the allegation that PLA military units have been involved in hacking American sites. What is your opinion of the Chinese response?

In general, the Chinese have not been all that transparent in terms of what the PLA does, so I am not surprised by this lack of acknowledgement in terms of PLA involvement in the hacking of U.S. sites. It’s no secret that the PLA is enhancing its cyber-warfare capabilities, but if you look at the Mandiant Report, it states that PLA involvement in hacking goes beyond the military realm and extends into hacking commercial entities and other private organizations. But if the Chinese did acknowledge that the PLA’s hacking activities are state-sponsored actions, they would be shooting themselves in the foot.

Thus far, the more fundamental problem—which is creating a great deal of frustration for the U.S. and other countries—is that China, more broadly, has been unwilling to acknowledge any involvement in any of these hacking activities and cyber intrusions beyond saying that China is a victim. But according to former National Security Advisor Tom Donilon’s press conference after the summit between Obama and Xi, he did mention that the Chinese have at least acknowledged, in private, that it is a concern. This is a good start for fostering progress in the dialogue on cyber issues between the two countries.

How does China see the U.S. effort to “rebalance” to Asia?

China has been very suspicious about the U.S. rebalancing to Asia, maintaining that it is primarily a way to contain China, particularly in the region. If you look at Defense Secretary Chuck Hagel’s speech in Singapore, you see that the U.S. is trying to allay those fears. But then you have a prominent military academic saying, “we don’t believe you,” so it is clear that suspicions run very deep.

China is currently advocating a new type of relationship between major powers, and looking at the Asia-Pacific region, this is where the U.S. and China could potentially collide. I think China is trying to avoid the kind of conflict and confrontation in line with a Cold War model akin to the American and Soviet experience. Looking at State Councilor Yang Jiechi’s press briefing that is titled “Transpacific Cooperation,” you can see how China is trying to frame this issue.

There are some positive things that we can glean from the presidential summit in terms of outcomes. One, the Chinese asked for more information on the Trans-Pacific Partnership (TPP), which is something they view as part of the overall U.S. containment strategy in the region. This is a good sign; both sides are looking at this in the spirit of being more transparent about this whole process. Another good step is that China has agreed to participate in the 2014 Rim of the Pacific (RIMPAC) exercises, which is another way for both countries and other countries in the region to reduce tensions, build military confidence, and reduce the potential for miscalculation. I think that both sides are trying to find a way to work directly with each other because at the end of the day, what happens between the U.S. and China affects not just them but also the region as a whole.

Will the slowing growth of the Chinese economy affect U.S.-China economic cooperation—and, if so, how?

It will and it has. If you look at the cyber issue, there is an argument that the key motivating factor for the Chinese allegedly hacking into U.S. systems is that their economy is slowing and that they are trying to find all sorts of ways to jumpstart it, such as trying to gain an advantage in the technological realm. This definitely impacts U.S.-China economic cooperation because it increases the cost of U.S. companies doing business in China. It also affects the level of trust between these top two economies, creating a barrier in terms of effective economic cooperation. Finally, it affects China’s credibility as a trade and investment partner.

Nonetheless, through processes like the U.S.-China Strategic and Economic Dialogue (S&ED), the two countries should find ways to promote economic cooperation that would help to meet their respective problems and challenges. This is where opportunities for economic cooperation exist. For example, both countries could try to make more headway on the Bilateral Investment Treaty.

Overall, how do you perceive the U.S.-China bilateral relationship under China’s new leadership?

I think that there is going to be continuity. China’s new leadership will be very preoccupied with domestic challenges, including slowed economic growth and struggles to reach economic targets, all of which have an impact on domestic stability. I don’t believe China is going to try to rock the boat, except in some areas where a supposed wave of nationalistic sentiment could be advantageous. This is where the leadership is going to be very careful in how it manages these situations.

In terms of the U.S.-China bilateral relationship, Xi has advocated a new type of relationship between major powers, and the Chinese are really trying to push this notion forward. I think there is a certain level of sincerity on the part of the Chinese leadership and also on the part of the Obama administration in trying and foster cooperation rather than conflict. Xi has become very comfortable in his leadership role; he projects a very statesman-like aura. China will certainly be more assertive and confident now that they know they are being viewed as a major rising power. That might translate into certain actions on issues such as maritime disputes and territorial disputes, so this is something that has to be well-managed. Furthermore, Yang Jiechi’s press briefing mentions that both sides are talking about common interests without avoiding differences. Having the courage and the ability to address those differences is also very important.

Any final thoughts on U.S.-China relations in general?

Some commentators tend to focus on the intractability of the cyber relationship and how that will continue, regardless of the number of summits between the two presidents. Nevertheless, there are a couple of positive takeaways from the recent summit. First, the primary goal was for the two presidents—at a relatively early stage in their terms—to establish face-to-face contact and develop personal chemistry and a relationship. Otherwise, Obama and Xi would have first met on the sidelines of the G-20 summit, in September, which would have been too long a wait. Spending eight hours together in a largely informal and seemingly unscripted format displays a different side of China’s leadership relative to what we have seen in the past. This bodes well. You need that sort of relationship to be able to talk about sensitive issues when the going gets tough.

Second, there has been progress on some substantive issues. For example, the two sides are in greater convergence on how to address the nuclear issue in North Korea. They came to an agreement on common objectives, focusing on what they can both do together and on their own to address the North Korea issue. On climate change, the two countries signed an agreement to curb hydrofluorocarbons (HFCs), which is a positive sign. This comes on the heels of an announcement that a working group has been set up to deal with climate change.

Even if we talk about cybersecurity—an issue that will not be resolved anytime soon—the fact of the matter is that cybersecurity is now a presidential issue. In his second State of the Union address, Obama speaks about cyber for the first time. Now he has raised it directly with Xi, advancing the issue in the bilateral agenda. As uncomfortable as the elevation of this topic may make the Chinese, their top leadership will have no choice but to address this issue more seriously going forward.