On eve of Xi’s US visit, China loses some luster

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WASHINGTON, DC: When US policymakers began planning Xi Jinping’s state visit to Washington next month, they must have imagined that the Chinese president would be arriving, figuratively, in a gleaming aircraft carrier with his trademark “Chinese Dream” banners flying. The challenge then was how to deal with a strong and supremely confident Beijing.

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Now, the summit planners face a different test: After this month’s economic typhoon, Xi is piloting a shakier vessel — still sleek on the outside, but with some leaks and battered compartments. The question is how the US can cooperate with this weaker and newly vulnerable China to restore economic growth and stability, without reinforcing Xi’s authoritarian political style.

The paradox is that a wounded China may be trickier to handle than a healthy one. “China is heading into a period of domestic uncertainty and anxiety, but this does not translate necessarily into more moderation internationally,” cautions Kurt Campbell, who helped steer Asia policy during the Obama administration’s first term. “Xi will likely strike a tougher stance to avoid any appearance of weakness or vulnerability.”

China-watchers had warned that an economic “correction” was ahead after so many years of rapid growth and unchecked lending. Henry Paulson, a former treasury secretary, wrote in his book “Dealing with China,” published earlier this year: “Slowing economic growth and rapidly rising debt levels are rarely a happy combination, and China’s borrowing spree seems certain to lead to trouble.”

“Frankly, it’s not a question of if, but when, China’s financial system … will face a reckoning,” Paulson predicted. That “when” has turned out to be now.

Xi had set himself the twin goals of free-market reform and a crackdown on internal corruption. Both were attempts to bolster China’s stability and protect the Communist Party’s rule. But Xi hasn’t yet achieved the promised reforms, and the anti-corruption drive has made him new enemies within the party. Xi had hoped to trim the power of a faction mentored by his predecessor, Jiang Zemin; instead, this group is now said to be bolder in second-guessing Xi.

Xi will come to Washington with a newly fragile political base, as well as economic turmoil. He’ll want the symbols of power that a Washington summit can bring. And he will resist public concessions that would mean a loss of “face” back home. “It’s all about the outward, visible display of American respect,” explains Campbell.

Hawks might argue that this moment of weakness is a time to squeeze Beijing. Some senior Pentagon officials have suggested recently, for example, that the US should be tougher in asserting the right to navigation in the South China Sea, by sending planes and ships to challenge Chinese claims of sovereignty in disputed waters.

A quiet policy debate about the South China Sea issue has been underway in Washington. Pentagon officials worry that China is building what amount to naval installations in disputed areas, unchallenged by the United States. Advocates of a tougher stance include US allies in the region, such as the Philippines and Vietnam, which want the US to renew its historical commitment to defend freedom of navigation at sea.

The Obama administration has resisted calls for such maritime challenges, arguing that they might set off an unpredictable chain of reaction and counter-reaction. On the eve of Xi’s visit, the White House is almost certain to reject any such provocative moves. “Tell me what comes next” is likely to be Obama’s wary response to proposed muscle-flexing in the South China Sea, as in Syria and Ukraine.

With the world economy so shaky, Obama will probably pursue a limited agenda in his summit with Xi. The broad theme may be that the US and China, as the world’s two biggest economies, are working together for global stability and growth. Specific “deliverables” might include a Chinese reaffirmation of the Iran nuclear deal; a joint study group to explore links between China’s new Asian lending bank and existing institutions like the IMF and World Bank; a working group on cyber issues; a joint statement of concern about North Korea; and renewed pledges to limit carbon emissions ahead of December’s climate-change conference in Paris.

This week’s financial roller coaster, with markets seesawing from Shanghai to Manhattan, is a reminder of the interdependence of the world economy. That’s a reality that’s uncomfortable for both the US and China. Each wants to be master of its destiny — and able to shape the 21st century in its own image. Next month’s summit will probably illustrate the limits of power even for the two global giants.

(c) 2015, WASHINGTON POST WRITERS GROUP

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