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Wednesday, December 7, 2016

By Michael Martina and Jeff Mason

WASHINGTON (Reuters) — Chinese President Xi Jinping arrived in Washington on Thursday for a state visit and talks with President Barack Obama that are expected to be clouded by differences over alleged Chinese cyber spying, Beijing’s economic policies and territorial disputes in the South China Sea.

Vice President Joe Biden greeted Xi and his wife as they landed at Andrews Air Force Base on the second leg of a weeklong trip that begin in Seattle. While there, the Chinese leader sought to reassure U.S. companies that he is working to create a more favorable Chinese investment climate.

The two presidents will make a joint announcement on climate change on Friday in a effort to build momentum toward a global climate change pact in Paris later this year.

The statement will build on the breakthrough announcement they made last year where the two countries set targets to either halt or reduce their emissions.

Friday’s planned announcement puts the spotlight on new measures the countries will use to meet those targets, including a national carbon cap-and-trade system that China will launch in 2017.

Xi arrived soon after Pope Francis flew out of the U.S. capital following a visit that drew adoring crowds wherever he went.

The White House quickly switched Chinese flags for the Vatican banners flying in front of the presidential mansion and prepared to roll out the red carpet for Xi, but the leader of the world’s second-biggest economy can expect only a fraction of the wall-to-wall U.S. news coverage for the popular pontiff.

U.S. cable-television networks were busy showing the pope’s arrival live in New York instead of broadcasting Xi’s welcoming ceremony, where he stood shoulder to shoulder with Biden as a band played the two countries’ national anthems.

Obama planned to host Xi later on Thursday for a private working dinner, where White House aides said they would begin grappling with the main issues that divide their countries.

Xi will be treated to full honors on Friday, including a 21-gun salute, a formal summit, a joint news conference and a black-tie state dinner.

No policy breakthroughs are likely during Xi’s U.S. trip, but the two sides are expected to announce several more modest achievements. Those could include building on the countries’ climate change commitments, progress toward a bilateral investment treatment and new rules to lower the risk of aerial confrontations in the Asia-Pacific region.

CYBER SECURITY CAUSING MAJOR FRICTION

High on the agenda is cyber security. Washington is considering sanctions against Chinese companies and individuals it accuses of stealing U.S. trade secrets.

Responding to U.S. allegations that China has been behind cyber attacks affecting American business and government databases, Xi insisted during his visit to Seattle that the Communist government in Beijing did not support such activities and pledged to work with the United States to fight cyber crime.

“We put more stock in their actions than their words,” White House spokesman Josh Earnest told reporters on Thursday.

While Obama’s aides say no formal cyber security agreement is likely, China’s top Internet regulator suggested in a closed-door session with U.S. executives in Seattle this week that a basic deal against cyber warfare was possible, according to one person present.

Chinese delegation spokesman Lu Kang did not make clear whether any deal on a “high-level” cyber dialogue was dependent on the United States dropping indictments against five Chinese military officials on hacking charges that led to the suspension of a joint working group on cyber issues last year.

However, he said any deal would depend on three principles of “mutual respect, mutual benefit and equality.

“Without that, I don’t think there will be any cooperation.”

Obama is also expected to press Xi to follow through on economic reforms and refrain from discrimination against U.S. companies operating in China. Some analysts believe Obama has more leverage due to China’s slowing economic growth, which has destabilized global markets and raised doubts about Xi’s economic stewardship.

At the same time, the Obama administration is still at a loss about how to curb China’s assertiveness in the South China Sea, where Beijing has continued to reclaim land for potential military use despite conflicting sovereignty claims by China and its neighbors.

Calls for Obama to take a harder line with China have echoed from Congress to the 2016 Republican presidential campaign. But his approach will be tempered because the world’s two biggest economies are inextricably bound together.

For his part, Xi, with nationalistic sentiment rising at home, can ill afford the appearance of making concessions.

Xi’s meetings with Obama could also bolster the Chinese leader’s stature at home, building on a high-profile military parade earlier this month to mark the 70th anniversary of the end of World War Two, while deflecting attention from China’s economic problems.

As for whether the pope’s visit had overshadowed Xi’s, Earnest said: “I have not heard anybody raise that concern.”

Xi’s visit will draw protests outside the White House gates from human rights groups, Falun Gong supporters and “Free Tibet” demonstrators.

U.S. first lady Michelle Obama will take Xi’s wife Peng Liyuan to the National Zoo on Friday for a look at the giant pandas, possibly including a cub born last month.

(Additional reporting by Roberta Rampton, David Brunnstrom, Valerie Volcovici, Julia Edwards and Idrees Ali in Washington and Michael Martina in Seattle; Writing by Matt Spetalnick; Editing by Frances Kerry and Ken Wills)

Photo: U.S. President Barack Obama (L) chats with Chinese President Xi Jinping as they walk from the West Wing of the White House to a private dinner across the street at Blair House, in Washington, September 24, 2015. REUTERS/Mike Theiler