Two distinguished politicians, one with a constituency of over one billion souls, the other a constituency of over one billion subjects, visited us this week. The pope’s souls, of course, are voluntary adherents to his cause, with the price of disobedience deferred until the disobedient enter another world; the subjects of the president of China find deviation punished more immediately.
* One leader loathes the American system of market capitalism, the other wants to adopt some of its features to reform the sinking Chinese economy.
* One would like to raise the poor from poverty because it is the Godly thing to do, the other because otherwise his restive poor might depose him and perhaps the totalitarian system he has imposed on them.
* One leader endorses President Obama’s plan to reduce carbon emissions by imposing draconian, bureaucratic regulations on the production and use of fossil fuels; the Communist leader announced yesterday that he will rely on the more efficient price system to accomplish that goal.
* The pope’s visit had as its goals winning over Hispanics, those Catholics who find his softer line on abortion, gay marriage and divorce attractive, and climate-change doubters. Xi’s visit had as one its goals winning over the heads of America’s companies and persuading them to lobby the Obama administration not to retaliate against China for its of hacking and theft of intellectual property, and to turn over their intellectual property and data as part of the cost of doing business there. The Wall Street Journal puts the annual value of China’s heist of US intellectual property at $300 billion.
Xi had his Boeing 747 touch down in the State of Washington for a round of meetings with business leaders. China is a huge Boeing customer and it is no coincidence that the official Chinese news agency announced the placing of an order for 300 Boeing aircraft just before Xi visited a Boeing plant in Everett, Washington, which provides 30,000 jobs for workers toiling three shifts. China’s order compares with 447 orders Boeing has received so far this year and does highlight the importance to the U.S. economy of keeping relations with the People’s Republic merely fraught rather than broken. There is, as usual in dealing with China, a sting in the tail. Boeing agreed to build its first overseas manufacturing facility in China to handle the final assembly of some Boeing aircraft. Something about a thin edge of the wedge leaps to mind: Other American companies have found that it is not long before duplicate Chinese owned facility appears on the scene, complete with the trade secrets and intellectual capital of the US company.
From Xi’s point of view it’s “Mission accomplished” in Seattle. The large order placed with Boeing showed that America should think twice before antagonizing China. The willingness of the cream of America’s business establishment to meet with Xi showed the beleaguered masses at home – unemployment is rising, wages are falling, factories are closing, share prices are plunging, the banks are effectively bust – that these companies are eager to do business with China because their leaders believe the nation’s current economic difficulties are transient. And then there is that new Boeing plant -- a boost to China’s ambitions to become a manufacturer of commercial aircraft.
Xi also used the occasion of a banquet speech in Seattle before an audience of business leaders to reassure investors that despite recent “abnormal ups and downs in China’s stock market”, China will “experience fairly rapid growth”, especially in the services sector, that it has no interest in currency wars, and that “The Chinese government will not, in whatever form, engage in commercial theft nor encourage or support such efforts by anyone.” Members of the audience, their eyes firmly set on China’s mass market and their desire to persuade Xi to end rules that favor Chinese companies, are not reported to have guffawed or even tittered.
Even more reassurance of a bright economic future for China was provided by Bill Gates, who announced that Terra Power, of which he is chairman, and China National Nuclear Power, formally agreed to pursue next-generation nuclear power. This writer, a veteran of decades of failed efforts to make nuclear power affordable, wishes all parties the best of luck.
His job done in the state of Washington, Xi turned to the more difficult chore awaiting him in Washington, D.C., a town still glowing in the aftermath of the Pope’s visit, which attracted far more media attention than did Xi’s. He was afforded a state dinner – red carpet, 21-gun salute on the White House lawn, and a dinner more lavish than the Big Mac and fries that Donald Trump says he would have laid on. This was no walk-in-the-park, tieless meeting of the sort Xi and Obama shared on his 2013 visit to California. Obama is under pressure to do something about China’s theft of intellectual property and hacking of American companies and personal data in government files. “This is not just a matter of us being mildly upset … we are prepared to take some countervailing actions,” Obama announced in advance of his guest’s arrival. Before leaving Seattle, Xi offered to set up “a high-level joint dialogue mechanism with the United States on fighting cybercrime.” A “dialogue mechanism”, the preferred technique of avoiding effective action, won’t do. The Obama administration is shooting for a joint no-first-use agreement not to attack each other’s infrastructure – power, banking, communications, and may well persuade Xi to agree to one.
But such an agreement does not cover most of the hacking of personnel records or theft of intellectual profit and other Chinese cyberaggression that has already occurred. Obama is threatening to impose sanctions on the perpetrators but not on the Chinese government, Xi contending that the hacking and IP theft are the acts of individuals and companies acting without the blessing of China’s government. Xi pretends he has no control over these hackers and Obama pretends to believe him.
Worse still, Harvard’s Joe Nye, an advocate of soft rather than hard power, points out that any agreement reached with China is not verifiable, and asks “what is its value if it can’t be verified”, while director of National Intelligence James Clapper says our cyberpolicy lacks “both the substance and psychology of deterrence”.
Xi knows three things. One is that American business executives are not prepared to challenge him directly on his IP theft and hacking, a fact bemoaned by Obama. The second is that Obama needs a healthy, reforming China to support the American recovery, and one opening its markets to U.S. companies, a vision he presumably shared in a private dinner with Xi on Thursday. It is not known whether President Obama persuaded his Chinese counterpart of his country’s need to accept more responsibility for maintaining world order. Third, verification is impossible, leaving only a credible threat of retaliation to persuade Xi to end his hacking and theft. And Xi knows that he has little to fear from the latest Obama red line – stop these actions or face “countervailing actions”. Ask Assad. And ask Defense Secretary Ash Carter, who promised to fly aircraft and sail naval vessels anywhere despite China’s declaration of a 12-mile no-intrusion zone around the military bases it is locating on the islands it is constructing in the South China Sea. Obama and Secretary of State Kerry taught Carter to check with the diplomacy-only doves before making hawkish statements: they vetoed any such testing of China’s determination to enforce its edict.
And while in Washington Xi learned that President Obama would be meeting with Vladimir Putin when both are in New York for the annual meeting of the United Nations General Assembly. Initial reports had it that Obama had requested the meeting; the administration says the supplicant was Putin, who the White House says was “desperate” for a get-together, and ridiculed Putin’s glowering, slouching demeanor during photo ops. No matter the initiating party: Obama, in a bid for the Neville-Chamberlain-man-of-the-year award, has retreated from his position that Putin and Russia are to be isolated until he ends his military action in Ukraine (the annexation of Crimea is no longer mentioned).
All this adds to what Xi already knew -- a credible threat of retaliation to China’s hacking and cyberattacks would be a worry, but Obama has run out of credibility.