Xi Jinping in US, China on the Defensive

President Xi Jinping made his first state visit to US on 22 September at the West Coast starting off with Seattle. He condemned piracy in which the Chinese are said to be adept. He also defended China’s intervention to prop up the crashing stock market. China’s economy, by one measure, is now the world’s largest, and its military is a growing force in Asia. When Obama and Xi last met, in Beijing in November, they agreed to reduce carbon emissions and to improve military communication. In Washington, they are likely to expand on those agreements, and to send reassuring signals to investors, after a summer of stock-market turmoil. Still, tensions in the world’s most important diplomatic relationship are unmistakably climbing.

The United States has given the nation the full splendor of a state visit – including a twenty-one-gun salute and a black-tie dinner – on just three occasions, each at a different political moment. For instance, when President Jiang Zemin visited, in 1997, he was a reluctant supplicant. China was saddled with sanctions brought on by the crackdown in Tiananmen Square, and it craved investment – its economy then was smaller than Italy’s.

Trump Demands

Xi arrives just as both countries are experiencing a wave of nationalism. Last month, after a drop in China’s stock markets and a devaluation of its currency triggered a plunge on Wall Street, Donald Trump, the Republican Presidential front-runner, called on President Obama to cancel Xi’s gala and “get him a McDonald’s hamburger.” Trump also demanded “a big uncoupling” of the two economies, and tariffs on Chinese imports of up to twelve per cent. “They want our people to starve,” he told Fox News. “They’re taking our business away.”

Recently, China has sent its own wary, often conflicting messages to the United States. As the economic boom has slowed, the Party has promoted an alternative source of legitimacy, emphasizing the Communists’ triumph in ending a “century of humiliation,” suffered at the hands of Japan and Western imperial powers. People’s Daily, the Party’s official mouthpiece, maintains an online page entitled “America’s Strategy to Contain China Will Never Change.”

Meet the Leaders

Xi is due to make a policy speech at a banquet at the hotel in the evening in the company of Microsoft Corp co-founder Bill Gates, the chief executives of Boeing Co and Starbucks Corp and other local luminaries.

For the Chinese side, Xi’s meetings with Obama and U.S. business leaders offer the chance to bolster the president’s stature at home, building on a high-profile military parade earlier this month to mark the end of World War Two, while deflecting attention from the country’s recent stock market rout, slowing economy and a chemical explosion at a Tianjin warehouse that killed over 160 people.

Among the few concrete agreements expected to result from the Obama-Xi summit has been a military-to-military confidence building step aimed at reducing the risk of aerial collisions between warplanes in areas such as the South China Sea through adoption of common rules of behavior.

Boeing Tour

The Chinese president is due to tour Boeing’s widebody plant and the nearby Microsoft campus on Wednesday, and will later meet Warren Buffett, Apple Inc Chief Executive Tim Cook and Amazon.com head Jeff Bezos, among 30 U.S. and Chinese business leaders at a roundtable discussion.

U.S. tech companies are seeking to expand access to the Chinese consumer market. Even if no formal agreements are reached, the presidential blessing “sends an important message to Chinese leadership” to help them, said Ed Lazowska, Bill and Melinda Gates chair of computer science at the University of Washington.

China Challenges Boeing and Airbus

For Boeing, the visit could bring a formal announcement of plans for an aircraft finishing plant in China. The plant would help Boeing’s Chinese sales, analysts say, and help counter a threat from Commercial Aircraft Corp of China Ltd, which is developing a single-aisle aircraft to challenge the top-selling Boeing 737 and Airbus A320 planes.

US Accused of Market Manipulation

Foreign companies describe the atmosphere as less welcoming. When the stock market slid, Financial News, another official paper, accused Goldman Sachs, Morgan Stanley, and other investment banks of provoking a market “stampede,” and theorized that foreigners were trying to stop China from becoming a financial rival. (The actual role of foreign investors in Chinese stock markets is minimal; UBS estimates that foreigners hold about one per cent of China’s $6.4-trillion domestic market value.)

At a grand military parade in Beijing this month, marking the seventieth anniversary of the end of the Second World War, President Xi announced a cut of three hundred thousand members of the armed forces – more than a tenth of the personnel – in an effort to consolidate and modernize the military. “War is the sword of Damocles that still hangs over mankind,” Xi said, before ushering a flotilla of tanks, drones, and other weapons down the Avenue of Eternal Peace. For the first time, China paraded its DF-21D anti-ship ballistic missiles, which American military analysts call “carrier killers,” because they could deny U.S. aircraft carriers access to the East China Sea and the South China Sea.

Hacking

Among the preparations leading up to Xi’s visit, the thorniest subject has proved to be hacking – not cyber espionage, which many countries, including the United States, use to gather intelligence about other governments, but hacking of corporate secrets and intellectual property. For years, the Obama Administration and American businesses declined to discuss the breadth of attacks traced to China, in the hope of quietly solving the problem and preserving relations. The business community has lost patience. In the past year, the F.B.I. has reported a 53% rise in the number of Chinese cyber attacks aimed at commercial espionage. Earlier this month, the White House threatened to put sanctions on Chinese companies and individuals. Obama said that cyber theft is an “act of aggression” that will be met with “countervailing actions” unless both sides can rapidly agree to rules of conduct.

$600bn Trade

Amid the anxieties, it is easy to overlook a powerful fact: trade between China and the U.S. has grown from $2 billion in 1979 to $592 billion last year, making the two nations more interdependent than ever before. When Henry Kissinger made his secret trip to Beijing, in 1971, with the aim of opening relations, the two countries were united, above all, by a common adversary. For the moment, it may be enough for them to accept that neither is powerful enough to survive alone.

Xi and his wife touched down in an Air China 747 at Paine Field, adjacent to the massive plant where Boeing Co makes its largest jets, some 25 miles (40 km) north of Seattle. They were welcomed by Washington state Governor Jay Inslee.

Yuan Pressure

China’s economy faces downward pressure but is still operating within a proper range, China says exchange rate reform will continue and there was no basis for sustained depreciation in the yuan.

China also feels that moves to make Yuan an international currency sparked off the Goldman Sachs attacks which forced the series of devaluation.

The United States will urge Xi to avoid “quick fixes” for its economy, such as devaluing its currency to boost exports, White House chief economist Jason Furman said.