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Marginal Utility of Summit MeetingsKuni Miyake's Tenor of Tokyo #65

November 14, 2014  Kuni Miyake

Chinese President Xi Jinping, met with U.S. President Barak Obama for a total of nine hours with a big smile on his face, but spent only 25 minutes with Japanese Prime Minister Shinzo Abe with no expression on his face on the occasion of the November 10-11 Beijing APEC meeting. The embarrassed silent majority of Japanese wondered why and how this happened.

毎朝最初に大気汚染をチェック、中国の習主席

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Most TV news viewers this week in Tokyo raised the following three questions about the APEC meeting: Why didn’t Xi smile when he met and shook hands with Abe? Why did Obama spend nine hours with Xi? And finally, have the U.S.-China relations become a “new model of major-country relations” as Xi claimed? Here is my take.

First, Xi was expressionless less because he didn’t want to smile but more because he shouldn’t and couldn’t. In 2014 in Beijing, a smile to the Japanese conservative leader could be politically fatal. Xi is still in the middle of a long nationwide anti-corruption campaign against his political enemies who could easily criticize the smiling Xi for being too weak vis-a-vis Japan.

This doesn’t mean that China didn’t want the summit meeting. China might have underestimated the ramifications of stalling economic activities with Japan, which could harm the Chinese economy in the end. They might have also realized that trying to isolate Japan has backfired and even led to closer Japan-U.S. security relations. They now know that such tactics were counterproductive.

Then, why nine hours? The correct answer is that the number of hours is not the most important point. This is a typical case of the “law of diminishing marginal utility” in economics. For those, including myself, who are not economists, the marginal utility of a good or service means “the gain from an increase, or loss from a decrease, in the consumption of that good or service”.

The law of diminishing marginal utility states that, “The first unit of consumption of a good or service yields more utility than the second and subsequent units, with a continuing reduction for greater amounts.” This could be said for the U.S.-China and Japan-China summit meetings which have taken place in recent years.

It is a well-known fact that Chinese political leaders could often become a “broken record,” which means that once you push the play button, nobody can stop the record from repeating the same old official lines for minutes on end. When they met in California in June last year, Xi reportedly acted like a “broken record” to Obama and not much candid discussion occurred.

On the contrary, although the smileless meeting was only 25 minutes long, the Abe-Xi encounter had the maximum marginal utility. The summit meeting is seemingly paving the way for a number of future contacts or meetings between Japanese and Chinese politicians and bureaucrats, as well as business leaders in various fields.

Finally, the concept of a “new model of major-country relations.” This is still a touchy subject in Tokyo because people here are concerned that Washington might give in and accept the Chinese definition of the concept. In the joint press conference in Beijing, however, Obama never used the words “new model of major-country relations” while Xi used them three times.

The White House proudly stated on November 12 that the U.S. and Chinese presidents “jointly announced crucial new actions to protect our climate. And because of American leadership, China is making critical new commitments,” and that “China is committing to peak CO2 emissions around 2030 while striving to peak early, and boost its share of non-fossil fuel energy to around 20%.”

The U.S. media echoed the U.S. government by reporting that this is a huge, historic commitment of China to reduce emission for the first time. Are you kidding? China only said it will “peak” its CO2 emissions around 2030, not reduce it by 2030. China will only strive to peak “early” and nobody knows when. This is an empty commitment which, of course, is slightly better than nothing.

By 2030, the Chinese economy will slow down and the environment will deteriorate. Emissions will peak by default, not by, but around, 2030. Without increasing the use of non-fossil energy, the Chinese economy will never transform itself into a new post-middle-income trap stage. Let’s hope that China will do all these by around 2030, at least twenty years from now.

The author spent over 25 years working in the Ministry of Foreign Affairs, including as Minister at the Embassy of Japan in China and Iraq. When he retired in 2005, he was Deputy Director-General of the Middle East Bureau. Since then, he has taken on the roles of president of the Foreign Policy Institute, Visiting Professor at Ritsumeikan University and Research Director at the Canon Institute for Global Studies.

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