The Obama-Xi Summit
A New Era in Bilateral Relations?

By Oriana Skylar Mastro
June 12, 2013

President Barack Obama and China’s president Xi Jinping met informally last weekend at the Sunnylands estate, a desert retreat in California, with the publicly stated hopes of launching a new phase in U.S.-China relations. In February 2012, then vice president Xi visited the White House at the invitation of Vice President Joe Biden where he also met President Obama. However, this summit is the first meeting between the two men since Obama’s inauguration into his second term in January and Xi’s ascendance to China’s presidency last March.

The two leaders were not originally scheduled to meet until September, on the sidelines of an international economic summit in Moscow. The Chinese side proposed the summit, in large part to solidify Xi’s position domestically, by promoting the image of the Chinese leader as a master of foreign policy. The Obama administration was originally hesitant, but agreed once China agreed to jettison the heavy protocols to allow for a more open discussion between the two leaders. U.S.-China relations have deteriorated over the past few years to the point where tension and distrust broadly characterize the bilateral relationship. The Obama administration hopes this summit will help the two sides change course and launch a more constructive working relationship moving forward. The summit placed some tough issues on the agenda; while some of those issues can be managed, and the summit provides an opportunity to create positive momentum, some other issues remain rooted in fundamentally divergent interests, and as long as these are not tackled directly, tension will continue to characterize the bilateral relationship.

Tough Issues to Tackle

While the summit’s general goal was to establish personal ties between Obama and Xi and not generate specific deliverables, both sides had agenda items they hoped to work into the conversation. Before the meeting, many U.S. commentators hoped that Obama would largely focus on the thorniest issues in the relationship, such as cybersecurity and North Korea. The official White House background briefing also noted that Obama would bring up human rights concerns and discuss global economic issues such as climate and energy security. [1] President Xi was expected to emphasize China’s discomfort with the U.S. rebalancing efforts in Asia, which many in Beijing see as an effort to thwart China’s rise. China is also concerned about perceived obstacles to Chinese direct investment in the United States; some Chinese commentators were concerned that the recent purchase of a large U.S. pork producer by a Chinese company will be subject to the U.S. review process generally applied in more sensitive sectors. Lastly, and perhaps most importantly, Xi was determined to push for equality between leaders to reinforce his concept of a “new type of great power relationship.”

Before the summit, Obama’s greatest domestic political pressure focused on pressing China on its cyber activities. The United States is concerned about both commercial espionage against U.S. companies as well as the national security threat of cyber intrusions against government and military-industrial networks. An American Chamber of Commerce study revealed a widespread concern among the one thousand U.S. companies surveyed, with 26% reporting theft of business data from their computers and 46% arguing that the problem is getting worse. [2] In February, the private information-security company Mandiant publicly provided convincing evidence that one of the most persistent cyber threat actors, AP1, is government-sponsored—specifically that it is a Chinese military unit. [3] The Washington Post reported last week that China had used cyber attacks to access data from nearly 40 Pentagon weapons programs, including the F-35 Joint Strike Fighter. [4] China refuses to acknowledge any state-sponsored cyber activities, instead arguing that it too is a victim of such attacks and does not need outside help for its military development.

Managing, Not Resolving, Issues

The two sides made their most measurable progress on one of the lower-profile issues, climate change. The short summit concluded on Saturday on a positive note, with the announcement that the two countries will work together “to phase down the consumption and production of hydrofluorocarbons,” which are used in refrigerants and isolating foams. This agreement is a major step in combating climate change. [5] From a strategic perspective, the Obama administration most likely pursued cooperation on a less contentious issue like climate change in the hope that it would create momentum and goodwill that could be leveraged later—such as in the strategic and economic dialogues due to take place next month.

Regardless of whether the two leaders were able to establish a deeper personal relationship of trust and understanding in the eight hours they had together, the Obama administration is unlikely to make any significant progress on cybersecurity in the foreseeable future. This is true for at least two reasons. First, President Obama only raised the issue of cyber-enabled economic theft—theft of intellectual property and other kinds of property in the public and private realm in the United States by entities based in China—not the trickier issue of cyber activities directed by the Chinese government that impinge on U.S. national security. [6] Secondly, even on this less sensitive issue, the Chinese refused to admit to any culpability for Chinese military-linked entities pilfering secrets in cyberspace, diverting the issue by only acknowledging that the United States was concerned. [7]

The fact that the two sides seemed to be talking past each other on cybersecurity also makes any future progress doubtful. China’s state councilor, Yang Jiechi, said China strongly opposed hacking and cyberespionage and echoed the defense that it was also a victim. [8] President Obama’s public remarks on the cyber issue virtually laid out the Chinese talking points for them, arguing that cybersecurity problems “are not issues that are unique to the U.S.-China relationship” and that “oftentimes it’s non-state actors who are engaging in these issues as well.” [9]

In private, however, the U.S. line was reportedly tougher, with Mr. Obama telling Mr. Xi that failure to tackle the issue would be “an inhibitor to the relationship really reaching its full potential.” [10] And National Security Advisor Tom Donilon warned that Chinese cyber activities threatened to constrain the spirit of partnership the two countries publicly declared they were seeking. [11] This will likely be echoed in the position the United States takes in future cybersecurity talks scheduled to begin next month. China’s agreement to attend is likely a tactic designed to defuse tension and avoid U.S. pressure without ceasing its threatening cyber activities. [12] Over time, the U.S. will try to convince China that stealing proprietary information is damaging to China’s own interests and to bilateral ties. [13]

Other recent examples show that U.S. patience can pay off. China’s position on U.S. surveillance and reconnaissance activities in China’s exclusive economic zone (EEZ) has changed as China has become richer, more powerful, and more capable. The Military Maritime Consultative Agreement (MMCA) talks were launched in 1998 to promote maritime safety, with the goal of socializing China to the rules of the road at sea. In early June 2013, Chinese officials privately informed U.S. interlocutors that, though their view on legality has not changed, “from now on” the famous “three obstacles” to greater U.S.-China cooperation (U.S. arms sales to Taiwan, no arms sales to China, and U.S. surveillance offshore) were reduced to two. [14] Fifteen years after the launch of the MMCA talks, China changed its position, probably because it now has the ability—and exercises it, according to the most recent Department of Defense report on China’s military developments—to conduct surveillance within the U.S. EEZ. [15] In a similar vein, the upcoming cyber talks will not resolve the issue, but may help manage the situation until China’s preferences change and the country’s own interests prompt it to agree to and adhere to the cyber rules of the road.

A Clash of Interests

On some issues, the United States and China have fundamentally divergent interests. High-level summits may help improve the tone and optics of the relationship but will not help the United States advance its policy objectives. One example from the recent summit is the issue of North Korea. Both presidents “agreed that North Korea has to denuclearize, that neither country will accept North Korea as a nuclear-armed state.” [16] China has preferred a non-nuclear North Korea for almost a decade, participating in the 2003–9 six-party talks, a forum designed to achieve the denuclearization of North Korea. But the alignment of U.S. and Chinese priorities and preferred tactics is as important as the alignment of goals, and has yet to be achieved. Observers are hopeful that China is moving towards greater alignment; the largest Chinese state-owned bank suspended all transactions with North Korea’s main foreign-exchange bank, which was facilitating Pyongyang’s nuclear activities. [17] China’s new assertiveness has also been credited with muting belligerent North Korean statements after its nuclear and missiles tests earlier this year. But unless China puts denuclearization above its other goals—including maintaining the existence of the regime in Pyongyang—and is willing to use all available levers to pressure North Korea, including more extensive and crippling economic sanctions, U.S. entreaties for Chinese cooperation will yield limited results.

Another topic that was relatively absent from the official statements about the summit was what the United States views as unconstructive Chinese behavior in its maritime territorial disputes. China aims to control its surrounding waters and has been conducting a coordinated and deliberate campaign of coercive diplomacy in the South and East China Seas. [18] In spite of intense concern and criticism from the United States and China’s neighbors, the increasing frequency of demonstrations of force and resolve—from arresting other countries’ fishermen, to the near collisions of ships, to aircraft interactions and standoffs—suggests that China is doubling down on its strategy. [19]

For example, in the case of China’s dispute with Japan over the resource-rich Senkaku/Diaoyu Islands in the East China Sea, before 2009 China almost never sent ships near the islets; in comparison, Chinese vessels entered these waters 25 times last September. [20] A long-term study from the Carnegie Endowment for International Peace argues that “the most likely potential challenge to the U.S.-Japan alliance over the next fifteen to twenty years does not involve full-scale military conflict between China and Japan or the United States” but instead “stems from Beijing’s growing coercive power—increasing Chinese military capabilities could enable Beijing to influence or attempt to resolve disputes with Tokyo in its favor short of military attack.” [21] Mr. Donilon did mention that the topic was discussed over dinner, and according to him, both sides agreed that the issue should be managed through diplomatic channels instead of through actions in the East China Sea. But China’s destabilizing behavior should have been a central part of the agenda, given the summit’s broader goal of dispelling distrust and progressing beyond a relationship defined by confrontation and conflict, as well as the fact that the United States is treaty-bound to come to Japan’s aid in defense of these islands.

It is too early to tell whether China and the United States have turned a corner and begun to prioritize cooperation while honestly acknowledging and peacefully managing the competitive aspects of their relationship. [22] This informal meeting of the presidents early in Xi’s tenure and Obama’s second term is a step in the right direction. But as long as no concrete progress is made in areas critical to U.S. national security—such as cybersecurity, Chinese behavior in maritime territorial disputes, and North Korea—tension is likely to continue to define bilateral ties.

Endnotes

[1] “Background Conference Call by Senior Administration Officials on the President’s Meetings with President Xi Jinping of China,” Office of the Press Secretary, White House, Press Release, June 4, 2013, http://www.whitehouse.gov/the-press-office/2013/06/04/background-conference-call-senior-administration-officials-presidents-me.

[2] “AmCham China 2013 China Business Climate Survey Report,” American Chamber of Commerce in the People’s Republic of China, March 2013, http://media.npr.org/documents/2013/may/AmChamSurvey.pdf.

[3] “APT1: Exposing One of China’s Cyber Espionage Units,” Mandiant, http://intelreport.mandiant.com/Mandiant_APT1_Report.pdf. See also “Smoking Gun,” Economist, February 23, 2013, http://www.economist.com/news/china/21572228-evidence-mounting-chinas-government-sponsoring-cybertheft-western-corporate.

[4] “Pentagon Aircraft, Missile Defense Programs Said Target of China Cyber Threat,” Washington Post, May 29, 2013, http://www.washingtonpost.com/business/technology/pentagon-aircraft-missile-defense-programs-said-target-of-china-cyber-threat/2013/05/29/d1471b0a-c82e-11e2-9cd9-3b9a22a4000a_story.html.

[5] “United States and China Agree to Work Together on Phase Down of HFCs,” Office of the Press Secretary, White House, Press Release, June 8, 2013, http://www.whitehouse.gov/the-press-office/2013/06/08/united-states-and-china-agree-work-together-phase-down-hfcs.

[6] “Press Briefing by National Security Advisor Tom Donilon,” Office of the Press Secretary, White House, Press Release, June 8, 2013, http://www.whitehouse.gov/the-press-office/2013/06/09/press-briefing-national-security-advisor-tom-donilon.

[7] “Press Briefing by National Security Advisor Tom Donilon,” Office of the Press Secretary, the White House; and Jackie Calmes and Steven Lee Myers, “U.S. and China Move Closer on North Korea, but not on Cyberespionage,” New York Times, June 8, 2013, http://www.nytimes.com/2013/06/09/world/asia/obama-and-xi-try-building-a-new-model-for-china-us-ties.html.

[8] Calmes and Myers, “U.S. and China Move Closer.”

[9] “Remarks by President Obama and President Xi Jinping of the People’s Republic of China after Bilateral Meeting,” Office of the Press Secretary, White House, Press Release, June 8, 2013, http://www.whitehouse.gov/the-press-office/2013/06/08/remarks-president-obama-and-president-xi-jinping-peoples-republic-china-.

[10] “Cybersecurity Deemed Central to U.S.-China Relations,” National Public Radio, June 8, 2013, http://www.npr.org/2013/06/08/189928150/cybersecurity-deemed-central-to-u-s-china-relations.

[11] Calmes and Myers, “U.S. and China Move Closer.”

[12] For more on these talks, which are scheduled to begin in July, see David E. Sanger and Mark Landler, “U.S. and China Agree to Hold Regular Talks on Hacking,” New York Times, June 1, 2013, http://www.nytimes.com/2013/06/02/world/asia/us-and-china-to-hold-talks-on-hacking.html.

[13] Jeremy Page and Colleen McCain Nelson, “U.S.-China Summit Reveals Beijing’s Drive,” Wall Street Journal, June 2, 2013, http://online.wsj.com/article/SB10001424127887324423904578521161140840702.html?cb=logged0.29616110644130516.

[14] Chris Nelson, Nelson Report, newsletter, June 2, 2013.

[15] “Annual Report to Congress,” U.S. Department of Defense, May 2013, http://www.defense.gov/pubs/2013_China_Report_FINAL.pdf.

[16] Calmes and Myers, “U.S. and China Move Closer.”

[17] Don Lee, “China Tightening Trade with North Korea,” Los Angeles Times, June 7, 2013, http://articles.latimes.com/2013/jun/07/world/la-fg-adv-china-workforce-20130608.

[18] See Oriana Skylar Mastro, “The Sansha Garrison: China’s Deliberate Escalation in the South China Sea,” Center for a New America Security (CNAS), September 5, 2012, http://www.cnas.org/files/documents/publications/CNAS_ESCA_bulletin5.pdf.

[19] Chico Harlan, “In Asia’s Waters, an Assertive China means Long-lasting Disputes,” Washington Post, June 7, 2013, http://www.washingtonpost.com/world/in-asias-waters-an-assertive-china-means-long-lasting-disputes/2013/06/06/846f735e-90c5-11e2-bdea-e32ad90da239_story.html.

[20] Harlan, “In Asia’s Waters.”

[21]Michael D. Swaine et al., “China’s Military & the U.S.-Japan Alliance in 2030: A Strategic Net Assessment,” Carnegie Endowment for International Peace, May 3, 2013, http://carnegieendowment.org/2013/05/03/china-s-military-and-u.s.-japan-alliance-in-2030-strategic-net-assessment/g1wh.

[22] See Christopher K. Johnson, “Obama-Xi Summit in California: ‘Getting to Know You,'” June 4, 2013, http://csis.org/publication/obama-xi-summit-california-getting-know-you.