President Obama's talks in China offer a precious opportunity to strengthen and recalibrate the world's most important bilateral relationship. Few dramatic public breakthroughs are likely as a result of his visit; his public urgings at his town hall-style meeting with students in Shanghai on human rights are unlikely to be any more successful than similar appeals by his predecessors in improving Beijing's dismal record in this field. But in his private session with President Hu Jintao, the stakes could hardly be higher.
In Shanghai, Mr Obama assured his audience that the US had no interest in obstructing China's rise towards being a truly global power. The truth, of course, is that the US can do nothing to prevent that ascent. America remains by far the world's greatest military power, but Washington needs Chinese co-operation to tackle a host of vital problems, from climate change to the nuclear programmes of North Korea and Iran. Historically, China also has considerable influence in Pakistan, perhaps the greatest US foreign policy challenge of all. Washington and Beijing are not really adversaries, but nor are they partners. What is self-evident is that if, if they are at odds, the prospects for resolving such issues are small. In one important area however, the future of the fragile global economy, the pair are already inseparably linked.
The lesson of the great recession of 2008/2009 was that the recent recipe for growth – of vast Chinese trade surpluses and huge American deficits – was unsustainable. But without serious moves to tackle that imbalance, a repeat of the crisis is sooner or later certain. When the TV cameras are out of the room, Presidents Obama and Hu can make a start on the moves required.
An indebted and slow growing America can no longer act as global consumer of last resort, nor can China forever operate a mercantilist policy, using an undervalued currency to export its problems to other countries. Anxious about the value of its vast holdings of US securities, Beijing is now complaining about the weak dollar. The real problem however is the artificial weakness of China's own currency, the renminbi. Failure to allow the latter to rise only increases the chances of a trade war, from which China, the US and the rest of us would only be the losers.