The great powers’ relationship hinges on the Pacific

The upcoming Annenberg summit between Presidents Barack Obama of the US and Xi Jinping of China could define the strategic relationship between the two most powerful countries in the world for years to come. Mr Xi has called for a “new type of great power relationship”. Tom Donilon, the US national security adviser, has suggested a “new model of relations between an existing power and an emerging one”.

The situation is historically unusual. Although the US is the established power, its policies do not maintain the status quo but instead promote change that advances American ideals and interests. Although China is the rising power, its policies are guided by traditional views of order and non-intervention.

The two presidents need to recognise that the new type of relationship they want cannot just rely on economic interdependence to overcome 21st-century problems and threats. They need to consider how economics and security interconnect in today’s foreign policy.

To start, they could discuss their plans for economic reforms and identify mutual interests. For example, Beijing needs to open its service sector to more competition, and US companies could assist. China’s innovation agenda could be supported through international education, technologies, venture capital and intellectual property rights enforcement.

Mr Obama might outline plans for tax, spending, energy and immigration reforms. There are mutual interests in areas such as food supply and safety, water conservation, energy and the environment, and deeper and more liquid financial markets enabling Chinese savers to invest in private development and cross-investment.

China and the US have domestic reasons to pursue structural reforms. Yet co-operation can boost mutual prospects and encourage growth in other countries, too. A combined push for competition in service and information technology businesses could advance World Trade Organisation negotiations. As China moves its currency toward open trading, the international monetary system will need to prepare to operate with multiple reserve currencies. There are opportunities in development and environmental co-operation as well.

The security agenda for this new type of great power relationship will be more difficult, but is equally necessary. The two countries share global security interests that are the foundation for economic opportunity: freedom of the seas and maritime security, open skies and access to outer space, access to diverse energy and other resources, non-proliferation of weapons of mass destruction and countering violent Islamic radical movements. Yet China and the US differ about assessments of threats and how to address them.

Differences over security in Asia-Pacific could overwhelm common global interests. China wants to protect its coasts and assert influence in the western Pacific. The US has a regional network of partners that has provided stability and economic security for more than half a century. If China’s actions are interpreted as a threat – or if its allies, such as North Korea, act aggressively – there will be an inevitable counter reaction. Beijing’s Asian allies are few, unreliable and often isolated; US allies are prosperous and expanding. China should want to build ties with US partners, not heighten their fears. Together, the US and China should foster regional integration and security for all peaceful states. This summit should launch political-military talks on security strategies.

Yet ideas for a new type of great power relationship will be stillborn unless China and the US address cybersecurity dangers: espionage, commercial espionage, sabotage and even cyber warfare. The leaders will need to point to a path to stop economic losses and minimise security risks.

The summit offers the leaders time for long discussions about their outlooks and plans. To succeed, Mr Obama and Mr Xi need to stretch beyond standard exchanges to explore whether their strategies can be reconciled. That will be the true test of their rhetoric.

The writer is a former World Bank president, US trade representative and deputy secretary of state