Although the meeting this week between President Obama and Chinese President Hu Jintao has been dominated mostly by national security concerns, the deal on energy cooperation could be the most important in terms of improving relations between the US and China. Ongoing disputes over Beijing's currency policy and trade practices are expected to increase tensions between the two countries, making the deal struck at the summit a rare opportunity to move beyond rhetoric and toward tangible gains in clean energy development. In this Garten Rothkopf Energy and Climate Brief, the significance of the summit will be considered in the light of ongoing disputes between China and the US over clean energy, as well as what the summit will mean for US-China relations going forward.

The overriding question about this week’s summit between President Obama and Chinese President Hu Jintao is whether it will actually have any lasting impact beyond the politically hot button issues of the moment, like currency, trade and exports. Despite the announced cooperation agreements, much doubt remains on this score, given the realities of domestic politics in both countries.  Conventional wisdom among security and China experts that Garten Rothkopf has spoken to has been that security issues have dominated most of the discussion, with loose agreements based on North Korea and Iran still possible, but with more questions and uncertainty raised about China’s growing military (as well as human rights) overshadowing the meeting’s other agenda items.  Nonetheless, senior officials in the Department of Energy and in the White House have held out energy as an area where there could be some cooperation between the various parties, demonstrated by announcements on public cooperation, including leading corporations like GE, Duke Energy, and AEP.  However, the events of the last year – which have at times deepened the US-China divide – have made the path to cooperation much more difficult.  Today’s GR Energy and Climate Brief assesses the run-up to the summit, the results, and previews the impacts for US-China energy cooperation going forward.

Setting the Stage for the Summit

The list of US complaints about Chinese economic practices is long: the value of the country's currency; state financial support of major industries; and intellectual-property flaps affecting a range of products, with a number of events in the last 12 months have increased tension in the US-China relationship leading up to this visit, which was Chinese President Hu Jintao’s first since 2006.  Roughly a year ago, the Chinese government announced a program of “indigenous innovation” that would require foreign companies that want to do business with the government to produce their products in China. With government procurement accounting for the bulk of sales by foreign companies in China, and a lack of clarity in the rules leaving significant room for interpretation, US companies complained that Beijing was effectively controlling markets and forcing tech transfer from the developed world to China.

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