With critical issues pending between the United States and China over mounting debt, trade imbalance and foreign policy, President Barack Obama tried to stress commonality over conflict.
“Our countries have now shared relations for longer than we were estranged,” Obama told the U.S.-China Strategic and Economic Dialogue. “I believe that we are poised to make steady progress.”
Chinese officials are in Washington for two days of meetings with U.S. counterparts. China, the top foreign holder of treasury debt with more than $800 billion in U.S. notes and bonds, wants to see U.S. currency value improved and the federal deficit reduced.
Treasury Secretary Tim Geithner moved to assure the Chinese delegation that the United States would reduce the deficit, which is expected to reach $1.8 trillion this year.
“Private savings are up and our external deficit has fallen,” Geithner said. “We are committed to taking the necessary measures to bring our fiscal deficits down to a more sustainable level, once recovery is firmly established.”
Pressure from China puts Obama in a tight spot. While the president insists the United States is following sound fiscal discipline, he is also pressing U.S. banks to loosen credit and get lending again.
The United States, meanwhile, wants China to address the trade imbalance by relying less on exports and to embrace an authentic exchange rate.
Obama, who made frequent mention during his campaign of China’s currency manipulation, only alluded to the issue at a speech at the Ronald Reagan Building and International Trade Center.
“The current crisis has made it clear that the choices made, within our borders, reverberate across the global economy,” he said.
The president stressed that China must be a partner in neutralizing nuclear threats from North Korea and Iran.
China, an ally of North Korea, could play a crucial role in the six-party talks with Pyongyang — including restarting the stalled negotiations. U.S. officials have said China’s dim view of North Korea’s recent missile launches were a hopeful sign that China could take a more helpful role in the talks.
Derek Scissors, an expert on Asian economic policy at the Heritage Foundation, called the summit a missed opportunity by Obama to focus the two countries on a more limited agenda with better prospects for action.
Highlighting shared interests and mingling strategic concerns with economic issues reduces the likelihood of getting anything substantive done, he said.
“Pick anything, have a priority,” Scissors said. “It’s a lot of lip service, but nobody is really doing anything.”
Charles Freeman, an expert on China at the Center for Strategic and International Studies, said the two-day summit was geared more toward building mutual trust than delivering ironclad agreements.
“The United States and China have developed an increasingly close relationship over the years,” Freeman said, but “there still remains a fundamental sense of mutual strategic mistrust.”
