This afternoon, Presidents Hu Jintao of China and Barack Obama of the United States, two upon whom there is a lot of weight these days to maybe save the world, will meet for the first time. The meeting will take place in the US embassy in London.
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This will be Hu’s third bi-lateral meeting during his visit to the UK, and the most important one among all the seven meetings planned.
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Hu, leading a delegation of over 100 members, including Vice-Premier Wang Qishan in charge of China’s financial affairs, flew into London this noon. China’s new prominence at these talks, sparked no little by a white paper issued last week by the head of China’s central bank calling for the establishment of a new international reserve currency, has all parties eager to learn what intentions the Chinese leader will bring and what kind of speech he will make. Leaders of many countries are hoping to get the chance to meet with him during the summit, according to a Chinese Embassy official, but time constraints mean he will mostly be limited to sit-downs with the leaders of the UK, Russia, and the US before the meeting, and Brazil, Japan, Australia, and South Korea afterwards.
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The meeting between the leader of the country with the world’s largest forex reserve and the country with the largest economy has the world’s economics and political wonks abuzz. Though there has been some earlier telephone communication between the two, Hu and Obama have never met face to face.
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Fred Bergsten, director of the Peterson Institute for International Economics, said in an article published in Diplomacy issued last July that the keys to future global economic problems are owned by China and the US. World Bank President Robert Zoellick and Chief Economist Lin Yifu have added that without a powerful G2, the G20 will be disappointed.
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Before the G20 London meeting, China’s strong statements on reform of the current international reserve system surprised other countries. Although the Obama Administration has dismissed talk of USD losing its reserve currency dominance, it has said it is interested in reforming and strengthening the IMF.
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The meeting between the two leaders is unlikely to yield any actual outcome, just as a 3.5 hours�G20 summit meeting is equally unlikely to settle the financial crisis troubling the globe.
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Chinese London Embassy officials say they would not be surprised if Hu Jintao asked Obama about the security of the US national debt, as China, the biggest creditor of the US, is continuing for now to buy US Treasury bonds and is most concerned over possible monetary problems led by USD depreciation and future inflation.
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Another item on the agenda will likely be the status, nuclear and otherwise, of North Korea, a situation they might find more to agree about at this, their first meeting.
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A problem for China is that it is not in a place where it can realistically challenge the status of the US, in terms of either economic power or international influence. And, with all that USD tucked away in its forex reserves, it would be very reluctant to do anything to bring about dollar fluctuation.
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So the major hope for this meeting is that the two enormously powerful leaders sit down and just have a nice chat. No great solutions, maybe, but not great new problems, either.
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