The attention of the world is focused on U.S. President Obama's upcoming visit to China. The international community has high expectations for the meeting between Obama and Chinese President Hu Jintao. Any agreements reached will have important consequences for global governance.

With the gradual change in the balance of power between China and U.S., their bilateral relationship is shifting from a narrow focus on economic cooperation to broader issues of global cooperation and governance. The improvement in relations between the Chinese mainland and Taiwan and the deepening of financial and fiscal interdependence between China and the U.S. have both enhanced the stability of the Sino-U.S. relationship. Closer partnership between the two nations will have a huge global impact, even if the concept of a G2 is not accepted by the leaders of the other great powers, or even by the U.S. and China.

Currently topping the agenda for both nations is how to deal with pressure for restrictions on emissions at the Copenhagen Climate Conference. China and the United States between them account for nearly 40 percent of global emissions. China argues that since its China's per capita emissions are still low and its history of large-scale emissions much shorter than that of the United States, it cannot make a concrete commitment to reduce emission in the coming ten years. But it may commit to increasing the proportion of renewables in its energy mix to 15 percent by 2020, and stepping up construction of wind and solar power projects. The two nations are likely to initiate technical cooperation on emissions cuts and President Hu Jintao and President Obama are likely to sign a deal on cooperation in clean energy.

The next issue on the agenda will be friction over trade and the yuan exchange rate. Obama wants to promote "a framework for sustainable and balanced growth", to correct the profound imbalances that have developed between the two nations in recent decades. China has a huge and growing trade surplus with the United States and is the world's largest holder of U.S. treasury bonds. Obama wants to move the U.S. away from consuming, importing and borrowing, achieve a certain level of manufacturing capacity, and reduce the trade deficit. To achieve these goals, he needs China to adjust its income distribution, expand domestic demand, reduce exports, and accelerate the appreciation of RMB. In line with Obama's strategy, the United States recently launched a number of anti-dumping suits against China. Although when Obama met President Hu Jintao in New York, he said measures taken against Chinese tires were exceptional and this has not been borne out by events.

President Obama will recognize China's market economy status if China gives up its export stimulus policy and prices its export products in line with the international market. President Obama will also ask China to open up its financial markets and entertainment industry to the United States. China fully understands that the United States is attempting to re-adjust its economy and life style to reduce its huge deficits but insists that adjustments should be made in accordance with the rules of the WTO and should not damage the interests of other countries. The Chinese leader will ask Obama to control the spread of trade protectionism. China will also take measures to modify its economic growth model and boost imports, as well as allowing the RMB to rise gradually in a controlled manner. But industrial restructuring will be tough and slow, because in the past China has mainly depended on cheap labor rather than technology. The best way to reduce the United States trade deficit would be to boost high-tech exports to China and allow more Chinese enterprises to invest in the United States. In this way the United States could create tens of thousands of jobs as well as reducing imports from China.

The third main agenda item will be strategic trust. James B Steinberg., the US Deputy Secretary of State, has raised the concept of "strategic reassurance" in relations between China and U.S. It seems that the Obama administration is looking to replace President Bush's policy of encouraging China to be a "responsible stakeholder". But the concept of "strategic reassurance" is no better than that of "responsible stakeholder". Its intent is to push China to pledge to the US that its military development is in accordance with its goal for a peaceful development. But the real challenge is that the two sides have to understand each others' security concerns and find proper ways to deal with bilateral problems.

China cannot offer the US unilateral reassurance. The US must make similar commitments on issues like weapons sales to Taiwan, missile defense and military cooperation with its East Asian allies. We can safely predict that Obama will bring no meaningful new strategic policies to the table at this summit. What Obama might stress is improved military ties and transparency between the two countries. China will agree to cooperate in this way, but at the same time, it will warn America that major obstacles to military cooperation will remain as long as America continues selling weapons to Taiwan. US doubts on the strategic intention and the rationale of China's military development and its frequent patrolling of Chinese waters are also factors obstructing military cooperation between the two countries.

Judging from his public remarks, President Obama does not have a Cold War mentality. So he may be willing to listen to and acknowledge issues raised by President Hu Jintao. But he is also heavily influenced by the National Security Agency and the armed forces. The US is currently enhancing its relations with Myanmar and proclaiming its intention to become a member of the East Asian Community. This demonstrates that Obama's basic approach is to enhance the dominant influence of America in Southeast Asia in order to balance China's increasing role in the region. With such an approach, Obama will have little success in boosting strategic trust between the two countries during his visit.

(Translated by Gong Jie, Wu Jin)