Tim Summers
Senior Consulting Fellow, Asia Programme (based in Hong Kong)

The meeting on 7-8 June in California between Chinese and US Presidents Xi Jinping and Barack Obama is a welcome one. It will be the first chance for direct discussion since Obama's re-election and Xi took over his new positions at the apex of China's political structures. The novel informal format should allow in-depth discussions without the trappings of a state visit. This increases the chances that the two leaders might form a close working relationship. 

However, the last few years have been difficult for the US-China relationship, during a period of flux in the international order. The potential agenda is therefore long and difficult.

It can be helpful to think about the challenges and opportunities for the relationship in terms of two dynamics: issues which are primarily bilateral in nature, and those where the focus is US-China interplay on issues of global or regional governance. This distinction is not an absolute one, and given the size and consequent global impact of both countries, there are few bilateral issues which do not have some sort of wider spillover effect. 

The key issues

Top of the bilateral agenda will likely be alleged hacking into US commercial and government systems, attributed to China. The US response has been highly critical, though Chinese media has pointed out that the US too has engaged in global cyber intrusions. Given that this is a relatively new agenda item, calmer rhetoric and an agreement to engage in working-level discussions is probably the best we can hope for at the moment. 

Also topical is the proposed takeover of US pork producer Smithfield by China’s Shuanghui. At US$4.7bn, this would be the largest Chinese acquisition of a US company. On paper this should be less sensitive than previous major bids, in the energy sector for example, though given political sensitivities in the US about China’s growing economic clout, we should not discount arguments about national security coming from some quarters. A positive mood could be on display on energy cooperation, where both countries are over-dependent on imported oil, and would benefit from sharing experience in the development of shale gas or other non-conventional resources.

This would have a clear spillover into global energy markets, as would closer cooperation on climate change, which is a distinct possibility after the positive readout in this area from US Secretary of State John Kerry’s visit to Beijing in April. Such non-traditional security issues should rise up the agenda, while the extent of their global impact means that they are ultimately more about global governance than the bilateral relationship. 

Another global issue which might - unusually - feature on the agenda is the Israeli-Palestinian relationship. Beijing's hosting of the two leaders in the same week in May has given China a greater profile in this issue, at a time when the US has also talked about renewing its efforts.

Of more importance to both sides will be regional dynamics in East Asia. Tensions over North Korea have subsided, but North Korean determination to follow its own path looks unlikely to weaken, even if the US is prepared to talk directly to Pyongyang or China threatens breaking ties with its northern neighbour.

However, wider regional issues are ultimately the most challenging part of the relationship. Beijing sees the US 'rebalancing' to Asia and strengthening of its alliances in the region as an effort to contain China as the country becomes stronger, while the dominant perception in the US is of China engaging in irresponsible aggression by asserting its maritime sovereignty in disputes with Japan, the Philippines and other neighbours. The strategic uncertainty about both sides' intentions has been accompanied by experts talking increasingly about a lack of trust in the relationship. At least at the moment these are fundamental differences, though the California meeting provides an opportunity for both to listen to the other’s approach. Greater understanding and ongoing communication are necessary – though not sufficient – in building greater trust.

European perspectives

Most of the commentary around the Xi-Obama meeting has, understandably, emanated from either China or the US. How, though, might European actors react to these talks and to the ongoing issues between Beijing and Washington?

Firstly, it makes sense to focus on the issues of global governance. While it is important that the US and China work together, their discussions need to be integrated with those in other fora, such as the G8, BRICS summits, and the UN, so that the interests and voices of all relevant actors are taken into account. Europeans should intensify their dialogue with the US and China, as well as other countries, taking positions on the merits of individual issues, whilst exploring the potential for commonalities on economic and security issues. 

Secondly, when it comes to regional rebalancing in East Asia, Europeans should actively be encouraging coexistence, and if necessary exploring new structures to deal with change. For example, there might be ways in which the international community can secure freedom of navigation in the waters of the Asia-Pacific which could reduce the risks of maritime military tensions. Again, Europe should engage in greater dialogue with all sides.

The key question Presidents Xi and Obama need to address is whether they can accommodate each other's interests and ambitions. Whatever emerges in California, if mutual understanding can be developed then the prospects of better bilateral relations and smoother global interactions will be improved.

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