As presidents Barack Obama and Xi Jinping meet this weekend, China's aggressive actions and halting cooperation on a growing list of issues undermine the U.S. economy and national security.
Diplomacy has not yielded satisfactory results.
Beijing has not stopped manipulating its currency, pirating intellectual property or handicapping U.S. private investment in China. As a consequence, the United States has a whopping $320 billion trade deficit with China, which costs American workers about 5 million jobs and slows U.S. growth by about 50 percent.
China's actions violate its international obligations. However, American advocates of finger-pointing—such as formally calling China a currency manipulator—and of more diplomacy—such as establishing yet another framework for bi-lateral talks—fail to recognize that China won't change behavior that advantages its economy but entails few risks of retaliation.
When confronted, Beijing alibis, as an emerging economy,that it should not be required to offer U.S. exports and investment reciprocity in China. For example, to obtain U.S. food processing know-how, Shuanghui International Holdings is purchasing 100 percent of Smithfield Foods; whereas Ford Motor and General Motors are permitted only limited stakes in their Chinese joint ventures.
Yet, on major geo-political issues and even regional conflicts, such as North Korea's nuclear program and China's territorial aspirations in the East and South China Sea, Beijing expects the United States to treat it as a co-equal superpower. American recognition of such status is what President Xi is most seeking from President Obama.
To respond to Chinese challenges to the interests of Asia allies, such as Japan and the Philippines, President Obama is shifting U.S. naval resources to the Pacific. However, American influence in the region and money are necessary to implement this policy.
Asian states see the success of Chinese state-directed capitalism, relative to the floundering American performance, and that will make them increasingly reluctant to afford the U.S. Navy the bases and cooperation ultimately needed to succeed. And with the U.S. economy growing so slowly, the United States will not be able to afford the naval resources needed to counter Chinese challenges stretching from the Eastern Pacific to the Indian Ocean.