President Xi Jinping will attend the 4th Nuclear Security Summit in Washington from Thursday to Friday. According to Chinese Vice Foreign Minister Li Baodong, Xi will meet his US counterpart Barack Obama on the sidelines of the summit in Washington to exchange views on bilateral ties as well as a number of other issues of common concern.
Accelerating negotiations on the Bilateral Investment Treaty (BIT) between China and the US may be among the issues of common interest to be discussed by the leaders of the two largest economies in the world. President Xi's visit to the US will in my opinion play two major roles in the evolution of the economic relationship between the US and China: It will help establish a new economic order in the Eastern Pacific and Western Pacific; and it will help cope with the "business-investment" dilemma between the US and China.
The relationship, especially the economic relationship, between the US and China has evolved a lot in recent decades. The reform and opening-up policy initiated by late Chinese leader Deng Xiaoping changed the US-China comparison pattern by reducing the gap between China and the US. At the same time, Russia has experienced decline since the fall of the Berlin Wall last century, which has been exacerbated by poor economic performance, financial crisis and geopolitical conflict.
Therefore, since the second half of the 1990s, and particularly since the start of the new millennium, the US has not merely been focusing on countering the Russian "threat."
The Americans' interest is in China as a new rival, and the US has shifted its strategic emphasis from Europe to the Asia-Pacific region. Correspondingly, the Asia-Pacific region is substituting the Atlantic region dominated by Europe and the US, the two most dynamic economies of the past two centuries.
Meetings of the "G2," which refers to the US and China, are now the most influential meetings in the world.
President Xi's visit to the US this time will form only one of the G2 meetings, but it will be important because it is the appropriate time for the two countries to establish a new economic order in the Asia-Pacific region - or in other words, between the Western Pacific and the Eastern Pacific. Also, stability in this region will be a crucial "stabilizer" for the rest of the world.
With regard to commercial relations between the US and China, President Xi's visit will also help. The BIT negotiations reflect the dilemma in the field of business and investment between the US and China: The Americans need Chinese capital following the global financial crisis; however, the fact that competitive Chinese products have increasingly been accepted by global consumers given their low prices and reasonable quality makes the US nervous.
Hence, it is understandable that this "business-investment" dilemma haunts US policymakers. I suppose that it also haunts the participants in the ongoing US-China BIT negotiations.
It could be one of the major reasons for the Americans to "scrape together" their so-called Asian "little brothers" and a couple of Latin American countries into a new trade alliance. But no trade agreement could work well in the Asia-Pacific region without the participation of China, as the latter is today not only one of the players but also a heavyweight decider in the world's trade, especially in this region.
How can we cope with this dilemma? The Americans should have more confidence in China and both should open their economic borders, because only with a higher degree of openness can the US and China enjoy more mutual benefits from their bilateral business and investment.
Free trade has long been studied by economists and has proved efficient for economic growth in various regions. Why not borrow this model in order to develop one day a Free Trade Agreement (FTA) between the US and China? I am convinced that President Xi's visit will help with this.
The author is Zhao Yongsheng, a Paris-based economist and professor, and vice-president of the Paris-based China-France Association of Lawyers and Economists. Contact: jacques.zhao@163.com
ZHAO Yongsheng: Xi, Obama meeting can help fix business dilemma