Hu's visit: Hot economics, lukewarm politics

By RALPH A. COSSA
GLOBAL BEAT SYNDICATE
WASHINGTON -- I had dinner with Chinese President Hu Jintao last Thursday night! He was hoping for George Bush. Instead he got me (and 900 others, mostly from Washington and New York think tanks and business councils), in a Washington hotel ballroom.
Hu wanted a formal state visit, complete with a White House dinner, like his predecessor Jiang Zemin received during his first visit with Bill Clinton. White House officials offered the Bush administration's "moral equivalent" of a state visit -- a trip to the Crawford, Texas, ranch -- but Hu held out for the state visit that never was.
Beijing decided to call it a state visit anyway, insisting on a 21-gun salute during White House ceremonies. There was a 22nd blast, from a "loose cannon" in the press corps: Wang Wenyi, representing The Epoch Times, a pro-Falun Gong newspaper, interrupted Hu's remarks to demand an end to China's persecution of her banned religious sect. Conspiracy theorists will have a field day speculating that the White House was using this to embarrass Hu.
From a foreign policy standpoint, Hu's visit underscored just how far apart both sides remain on major issues. Bush pointedly urged China "to use its considerable influence with North Korea." Hu's mild response was that "the Six-Party Talks have run into some difficulties" and that he hoped Washington and Pyongyang "will be able to further display flexibility" to "create necessary conditions for the early resumption of the talks."
Washington is clearly getting frustrated with Beijing's approach, which seems to blame the United States as much as North Korea for the current impasse.
On the other two hot-button issues, Hu made it clear that China is not prepared to back a hard-line U.S. position on Iran and would address revaluation of its currency on its own timetable, promising vaguely to "continue to take steps" in that direction.
Bush's mantra
President Bush was careful not to plow any new ground on Taiwan, merely repeating his mantra that "we oppose unilateral changes in the status quo."
Beijing was hoping for a specific rebuke of Taiwan's President Chen Shui-bian, given his February declaration that the National Unification Council had "ceased to function." But this was not meant to be.
In public, Bush also stuck with the "do not support independence" formulation, while Hu praised Bush for saying that he "opposes Taiwan independence" -- a formulation Bush has never used publicly (although other senior officials have).
Bush also made it clear that Beijing needs to move toward greater democracy and respect for human rights: "China can grow even more successful by allowing the Chinese people the freedom to assemble, to speak freely, and to worship." Of course, every time Bush mentions religious freedom, the first thing that comes to Chinese minds is Falun Gong, thus raising questions anew about the South Lawn incident.
On a more positive note, Bush did refer to both countries as responsible "stakeholders in the international system," reinforcing a theme that has become the buzzword for Sino-U.S. relations. This is designed to reduce Beijing's complaints about the judgmental nature of the term "responsible." But the question of who gets to define what behavior is "responsible" remains a real bone of contention.
From a business perspective, the trip was only slightly more productive. Hu's $16 billion buying spree, while a mere drop in the bucket (given our more than $200 billion annual trade deficit with China), was nonetheless appreciated, as was his expressed commitment to protect intellectual property rights and move China toward a more consumer-based economy.
Economic reform
But, while China remains an attractive place to do business, given the profit potential, Beijing's slow movement toward fundamental economic reform -- greater regulatory transparency, the removal of structural impediments and observance of the rule of law -- has caused even the most bullish on China to remain wary.
Two years ago, both sides were proclaiming that Sino-U.S. relations were "the best ever." This phrase is seldom heard today. While it is still premature to describe the relationship as "hot economics, cold politics" -- a phrase being used to describe Japan's relations with China and South Korea -- Sino-U.S. politics at present are, at best, lukewarm and the trend is heading in the wrong direction. And without serious movement on the trade imbalance, currency revaluation, and greater financial transparency and reform, "hot economics" could become "hot potato" economics as fall 2006 U.S. election campaigns heat up.
Ralph A. Cossa, president of the Pacific Forum CSIS, a non-profit foreign policy research institute that operates as the Asia Pacific arm of the Center for Strategic and International Studies. Distributed by Knight Ridder/Tribune Information Services.