Bloomberg News

Obama-Xi Meeting in California to Take Personal Approach (2)

June 07, 2013

President Barack Obama & Chinese President Xi Jinping

U.S. President Barack Obama listens to Chinese President Xi Jinping, then vice president, speak during meetings in the White House in Washington, D.C. during February 2012. Photographer: Saul Loeb/AFP via Getty Images

U.S. President Barack Obama welcomes newly minted Chinese President Xi Jinping today to the secluded gardens of a 200-acre California estate for what could be considered the world’s most important weekend get-away.

Breaking a tradition of choreographed talks between leaders of the two biggest global economies, the presidents have scheduled six hours of unscripted meetings, a leisurely dinner, and, if things go well, perhaps a sunset stroll in the shadow of the San Jacinto mountains.

The informal, “shirt-sleeve” event is part of Obama’s effort to redefine a critical international relationship. No policy breakthroughs are expected from the meetings in Rancho Mirage today and tomorrow, according to White House aides who briefed reporters on condition of anonymity.

“I’m used to meetings with the Chinese where you have 20 or 22 people and you have bleachers in the back,” said Jeffrey Bader, who directed East Asian Affairs at the National Security Council during Obama’s first term. “You have a much more candid, different kind of discussion in this kind of setting.”

Instead, the White House aides said the gathering will give Obama and Xi a chance to build personal diplomacy to help reset relations that have become strained as China’s economy expands and as the U.S. confronts the Chinese government over matters including human rights and computer hacking.

Rather than focus on the thorny international issues that have long defined the U.S.-China ties, Obama and Xi plan to exchange ideas on how to jointly manage the countries’ long-term economic and security issues.

‘Our Challenges’

“I know everybody worries about China,” Obama told donors gathered last night at the hillside estate of Sun Microsystems Inc. co-founder Vinod Khosla in Portola Valley, California, for a Democratic fundraising dinner. “And yet when you look at the challenges they face and the challenges we face I’d take our challenges any day of the week.”

Hours before the meeting began, China issued passports to the family of blind legal activist Chen Guangcheng after previous requests had failed, his brother Chen Guangfu said in a telephone interview. The family will talk to Chen Guangcheng about visiting the U.S., he said.

Chen Guangcheng was the focus of a diplomatic episode between the U.S. and China last year when then-Secretary of State Hillary Clinton visited Beijing. After four years under house arrest, he fled to the U.S. embassy days before Clinton’s visit. Following talks between the two sides, he was issued a passport and took a fellowship in the U.S., where he now lives.

Domestic Concerns

Before the meeting, Obama will turn his attention to domestic concerns, using the visit to California to tout the benefits of his health-care law and encourage Americans to sign up for insurance. Last night, he wooed Democratic party donors at fundraisers in Palo Alto and Portola Valley, two towns in the heart of Silicon Valley.

The events came as the Washington Post and Guardian newspapers reported that some of the technology companies headquartered in the area, including Google Inc. (GOOG:US), Facebook Inc., and Apple Inc. (AAPL:US), provided the National Security Agency and the Federal Bureau of Investigation with access to their servers. Yesterday, the companies denied the reports.

Obama addressed the controversy in remarks this morning, saying that Congress has repeatedly approved his surveillance policies and that his administration has put in safeguards to ensure that the programs aren’t abused.

“In the abstract, you can complain about Big Brother, and how this is a potential program run amok, but when you actually look at the details, I think we’ve struck the right balance,” he told reporters in San Jose.

Asia Pivot

Since taking office, Obama has sought to redirect U.S. attention toward Asia after a lull in interest in the region during the Bush administration. Now, with the wars in Iraq and Afghanistan winding down, U.S. military and economic resources are being shifted to Asia.

As part of that pivot, the administration has spent years cultivating Xi, who previously served as his country’s vice president. During the past two years, U.S. Vice President Joe Biden has spent 20 hours visiting with his counterpart. And when Xi visited the U.S. last year, he met with Obama for 90 minutes, an unusually long time for a sitting vice president.

The two leaders have no formal events scheduled until the G-20 in September, so aides decided to find a way for them to meet sooner. Xi was wrapping up a multicountry tour of Latin America and Obama was scheduled to be in California for fundraisers, so they settled on meeting at the Sunnylands estate, 120 miles (193 kilometers) southeast of Los Angeles.

Less Formal

The property has a long history of political activity, with Republican Presidents Ronald Reagan and Richard Nixon using the grounds as a place to relax and entertain high-profile guests.

The Chinese president is seen as less formal than his predecessors, who typically expected the protocol of an official visit, including a state dinner. At recent meetings with U.S. Treasury Secretary Jacob J. Lew and national security adviser Tom Donilon, Xi set aside his notes and encouraged his counterparts to take the conversation beyond talking points, White House aides said.

During his meeting last week with Donilon in Beijing, Xi said that China wants a “new type of great power relationship” with the U.S. Other Chinese officials including General Fan Changlong, vice chairman of the party’s Central Military Commission, repeated the phrase.

“He’s a different kind of Chinese leader than we’ve seen in the past,” Bader said. “He’s not someone who needs to be scripted or likes to be scripted as much as past Chinese leaders.”

Challenges Remain

Still, even with the change in tone, the issues between the two nations remain challenging. Economic competition, the growing threat of Chinese hackers to U.S. companies, the cost of intellectual property theft, and North Korea’s renewed nuclear ambitions have long been major sources of tension for the U.S.

For its part, China is suspicious about the U.S. pivot toward Asia, which includes stationing more Marines in Darwin, Australia, for what will eventually be a 2,500-member force. On June 2, U.S. Defense Secretary Chuck Hagel went aboard the USS Freedom, a combat ship that docked in Singapore as part of its maiden deployment to Southeast Asia.

The combination of a rising yuan and a recovering U.S. economy means that disputes over the currency and the trade deficit don’t dominate the conversation with China as they did after the 2008 financial crisis. China is the largest holder of U.S. Treasuries, and it’s also a manufacturing hub for goods sold by American companies including Apple.

Export Growth

China’s gross domestic product expanded at the slowest rate in 13 years in 2012. Chinese export growth -- once the driver of the economy -- is slowing as the yuan continues to gain in value, with the U.S. in March posting the lowest trade deficit with the Asian nation in three years.

Last week, Chinese pork producer Shuanghui International Holdings Ltd. offered to buy Smithfield Foods Inc. (SFD:US) The deal is valued at $7.1 billion including debt, and, if approved, will be the biggest Chinese acquisition of a U.S. company.

“The traditional flashpoints between the two countries, the currency issue and trade have diminished as flashpoints,” said Eswar Prasad, the New Century Chair in International Trade and Economics at the Brookings Institution, a Washington policy group. “The real opportunity here lies in the fact that China and the U.S. now have a commonality of interests.”

To contact the reporter on this story: Lisa Lerer in Washington at llerer@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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