September 2015 will be remembered as a success in contrast to other recent US-China interactions. President Xi’s firm grasp on domestic decision-making now clearly means the Chinese leader can enact positive change where and when doing suits his domestic agenda.

       Reading the headlines before Chinese President Xi Jinping’s visit to the United States, there would have been little reason to be optimistic about the outcome of his meeting with US President Barack Obama. And yet, September 2015 will be remembered as a success in contrast to other recent US-China interactions. President Xi’s firm grasp on domestic decision-making now clearly means the Chinese leader can enact positive change where and when doing suits his domestic agenda. Meanwhile, by adopting an exceptionally-strong stance on cyberattacks by suggesting he might impose sanctions on Chinese corporations, US President Obama showed himself capable of bringing an increasingly bold Beijing back to the negotiating table.

       Indeed the visit’s greatest accomplishment was China’s willingness to acknowledge the malevolence of economic espionage (a first) and promise never to engage in or condone such activity. The agreement, reciprocated by the US, will be difficult to enforce considering the multiplicity of actors on each side; especially China’s military, which may not consider itself committed to the deal. But the creation of a regular bilateral cyber-dialogue and the planned ministerial-level tracking of the issue both put the agreement on a solid track.

       Next, the visit served to clarify prospects for China’s continued participation in the existing global governance architecture born out of Bretton Woods. Here again, the news was quite positive, with the US administration stating publicly – and for the first time at the presidential level – that it would support the inclusion of China’s currency (the Renminbi) in the International Monetary Fund’s (IMF) Special Drawing Rights (SDR) basket if it meets the necessary criteria. In exchange, President Xi promised that China’s recently-created Asian Infrastructure Investment Bank (AIIB) would uphold existing environmental and governance standards, a win for those who feared the new institution might depart from the spirit of the existing international regime.

       Also comforting was the news that China will roll out a nationwide carbon emissions trading scheme, potentially the largest such framework in the world. Beijing will also join the United States in financially supporting developing countries in their efforts to reduce their carbon footprint – a step which puts China in the category of leaders rather than followers in the fight against climate change. The two presidents also vowed to make a success out of climate negotiations slated to take place in Paris at the end of the year.

       Finally, the US-China meeting created a much-needed opportunity to agree on improved military-to-military coordination, particularly regarding airspace. The aim here is to avoid a crisis such as the one that ensued from the collision of a Chinese fighter and US intelligence aircraft in 2001. To do so, new rules on air-to-air interactions and crisis communication have been approved.

       Now for the shortcomings -- three areas stand out. First, Beijing gave remarkably few assurances that the deterioration of its domestic operating environment for foreign businesses would be reversed or even slowed. Second, despite numerous rounds of discussion to date, prospects for a US-China Bilateral Investment Treaty (BIT) still seem strikingly far away. Finally, Beijing gave very little by way of assurances that its aggressive behavior in the South China Sea will abate any time soon.

       Looking ahead, I see one major tailwind for the US-China relationship, accompanied by an equally-significant headwind. The upside is that Presidents Xi and Obama will be meeting twice in 2016, thereby giving them ample opportunity to build on their positive momentum or to address any tensions that might arise in the meantime. On the flipside, however, I fear that the near-certain electoral victory of Taiwanese opposition candidate Tsai Ing-wen – whose views on Beijing are far more assertive than those of the island’s current leadership – could create a storm of the type that precisely requires joint attention by the US and Chinese presidents. At which stage the question would be: can Obama and Xi make the most of their coming interactions, or will they let exogenous pressures derail their promising path toward greater collaboration?

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.