It is a given that when the leaders of great powers convene - especially powers that are at best wary rivals like China and the United States - they already know the things they will agree on and the things they will sweep under the rug. When Presidents Obama and Xi get together next week, they will try to convey an impression of cordial relations.
Behind the scenes, there are serious issues on the table. After more than two decades of robust expansion, in which China evolved from an economic backwater into the second largest economy in the world, China has finally hit the wall. To make further progress, China must make some difficult decisions that will challenge its basic power structure - and Xi's leadership.
China built its astounding expansion on low wage basic manufacturing, but that has run its course. President Xi's government understands that and is striving to shift emphasis from manufacturing to services. But to boost its services sector like it did manufacturing, China must set it free and let market forces work their magic - as it did with manufacturing.
This will be a tougher sell. Much of China's services sector - such as financial, health care, education, and logistics - is controlled by state-owned enterprises that are stubbornly defending their turf. "Stability is still the overriding consideration, and the huge state-owned enterprises are seen as an anchor of the economy," said Willy Wo-lap Lam, an expert on Chinese politics at Hong Kong University. "State-owned enterprises are a manifestation of political control of the economy."
The biggest hurdle by far is the security and development of digital technologies. Perhaps even more important than the Obama-Xi summit is the forum in Seattle that will precede it. Xi needs U.S. tech companies to invest in China in a big way, and they would dearly love to, but China will have to curtail its digital raids on U.S. trade secrets and, even more importantly, back off its efforts to impose police state controls on the Internet. If China is to assume its rightful place as a world leader, and empower its people to achieve their potential, it must reject the repressive ideology of the old communist regime and become more open.
President Xi is seeking to establish himself as a visionary leader in the mold of Mao Tse-tung, but he needs a more lofty vision than Mao had. Xi's campaign against corruption is widely seen as a partisan witch hunt. Honest government depends on a free press, independent judiciary and basic human rights. Xi wants to be seen as successful and wise, but the weakening economy, the collapse of China's housing and stock markets, and the massive Port of Tianjin disaster have undermined that image. The recent military parade in Beijing was no doubt intended to bolster his image as a strong leader, but such saber rattling served mainly to frighten China's neighbors and make Xi look like a third world potentate.
It is vitally important that the world's two greatest powers get along amicably. If Xi and Obama can make a breakthrough on developing a more open and secure set of technology rules it just may help put China on the road to more progressive government, and more sustainable economic prosperity.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. September 2015