China-US summit: Will Beijing follow through on economic pledges?
US exports worth $45 billion sounds small relative to the gaping US trade deficit with China, which could be more than five times that amount when final 2010 figures are tallied. But for President Obama and Chinese President Hu Jintao, who announced new bilateral business deals, it's the symbol as much as the substance that counts.
Despite all their differences, the two leaders emphasized partnership rather than conflict at their summit Wednesday.
This suggests that both sides recognize the benefits of economic engagement, as well as risks to their economies if relations sour.
The summit comes after a year in which signs of tension emerged between the world's two leading economic powers, including US frustrations that China is not doing more to correct an allegedly misaligned currency value.
No grand bargain on the yuan's value emerged from the bilateral meeting Wednesday. But Mr. Obama said that $45 billion in new US exports, approved by China amid preparations for the Wednesday meeting, would support an estimated 235,000 US jobs.
The newly inked business deals include Chinese purchases worth $19 billion in aircraft from Boeing, plus some $25 billion from 70 other contracts that range from auto parts to chemicals. The ventures include partnerships on renewable energy and transportation, involving General Electric (on high-speed rail, clean coal, and avionics), Cummins Engine (on hybrid buses), and UPC Management (on wind power).
In addition, the White House touted new pledges by China to ensure that US companies will not be discriminated against when bidding for contracts in China. Beijing also promised to strengthen enforcement against violators of intellectual property rights.
Copyright violations have been a major source of tension between the nations in recent years. The disputes aren't likely to disappear overnight, but China agreed this week to address the problem by setting aside government funds for the purchase of legal software, publishing the results of legal-software audits, and clarifying the liabilities of third parties who sell counterfeit products.
It remains to be seen whether these moves carry much weight with members of the US Congress, many of whom view current policies in China as a threat to America's economic health.
Among China-related bills that Congress could consider this year is one that would penalize China for its alleged currency manipulation. Proponents say a show of American force could nudge China toward changes that would boost US exports and jobs.
Obama and his economic team agree that the currency issue is important, but they're sticking with the less confrontational approach honed by previous presidents. Whereas President Reagan was known for his "Trust, but verify" attitude on US-Soviet arms treaties, Obama's approach to China might be characterized as "Cooperate, but don't capitulate."
Echoing the view of many economists, the president said the growing commercial ties between the two nations have been "good for the United States," and he spoke of "friendly competition" with China in global markets.
By allowing the yuan to appreciate in value, Obama said, China could give a needed push to the purchasing power of its own consumer base. That, in turn, could help China's economy become more balanced, with a greater reliance on domestic consumers for its growth and less reliance on exports to the US.
The US also needs to have a more balanced economy, he added, with less reliance on foreign borrowing from nations including China. (When America's imports exceed its exports in a given year, the difference is made up by borrowing from abroad.)
The American public displays a nuanced view on US-China ties, according to a new poll by the Pew Research Center. Some 53 percent of Americans called it "very important" to get tougher with China on trade and economic issues, but 58 percent also say it's very important for the US to build a stronger relationship with China.
