Their meeting will certainly define two of the really big questions that lie ahead. China has just become the world leader in carbon emissions. The United States is close behind. With each country accounting for roughly 20 percent of the carbon pumped into the groaning atmosphere, any chance of controlling climate change will lie principally with whatever understanding is reached between these two men.

Despite the recovery, the global economy remains at best fragile, and any hope of maintaining the recovery will be destroyed if important countries turn their backs on the open trading system and launch a new round of tariffs and protection. One of the big issues for the Hu-Obama summit will therefore be the controversial tariffs the United States announced last week on Chinese tire exports, which could be the thin end of a very long and dangerous wedge. We shall see.

In carbon emissions and in its importance to world trade and industry, China's 30 years of growth have propelled it quickly into the top ranks of global influence. The country is now the world's top exporter, ahead of Germany and the United States. Its vast appetite for oil, iron ore and other raw materials has almost singlehandedly raised world commodity prices this year, despite the recession.

But in dollar terms, China remains dwarfed by the American economy, whose gross domestic product at $14.5 trillion is roughly three times larger than China's GDP, and its people are incomparably richer. Americans have an average income per head of $45,000 a year, compared with the average Chinese income of $3,400. If one measures GDP by purchasing power parity, allowing for different price structures, then China's GDP is not much more than half that of the U.S. GDP, and its average income is around $5,000 -- still just over a tenth of the American level.

So talk of an economy duopoly is wildly premature. China's hopes of clambering up to U.S. levels of wealth will depend heavily on its ability to maintain the headlong growth rates of recent years. But that growth seems to be continuing, with the country on track to record 8 percent GDP growth this year, despite the 20 percent fall in China's exports over the last year.

How was this achieved? By the most dramatic burst of stimulus sending in history. Bear in mind Beijing's $586 billion stimulus package of last November. This year the stimulus has come from bank lending. The Beijing government told the banks to relax credit and they did. So far this year, bank lending is running at $1.2 trillion, and despite government requests to slow down, it was still $70 billion in August.

So by the end of the year, China's banks as this rate will have lent a third of GDP, around $1.5 trillion. China's $2 trillion reserves of foreign currencies and securities will not last long at this rate. But it still means that China is growing while the United States remains flat or sinking and credit is scarce. Total U.S. loans and leases insured by the Federal Deposit Insurance Corporation actually fell $249 billion, or 3.2 percent, in the first half of this year.

China's credit explosion is unprecedented. And from the evidence of climbing real estate prices and the stock market, a lot of that money -- perhaps a third -- has gone into speculation. Most of the rest has gone, at low interest rates, to the State-Owned Enterprises and their investment projects. Fixed-asset investment in China increased 33.5 percent in the first half of the year, which accounts for much of the new growth.

In effect, the investments have been a big gamble that the world will soon get back to normal and that American, European and Japanese consumers will quickly start consuming again. But since their levels of unemployment are still rising and consumer credit is declining, it is far from clear that they will return to their former consumption levels any time soon.

So the Beijing government is getting worried about overcapacity. China's State Council last month called on authorities to "resolutely" curb overcapacity as the economy is still in a "critical period." The restraints on steel and cement output, as well as parts of the coal, glass and power industries, were matched by further curbs on alternative energy output. Steel output reached a record in July, which led to a 12 percent drop in China's benchmark steel prices in August.

That helps explain why Chinese Premier Wen Jiabao told a conference in Dalian this month that stimulus measures would be continued as the rebound "is unstable, unbalanced and not yet solid. ... We cannot and will not change the direction of our policies when the conditions aren't appropriate."

And while there has been some healthy growth in private consumption, with car sales booming like never before, much of the retail sector shows little sign of the big shift from exports to personal consumption that most economists say China needs. Sales at Suning Appliance, the biggest electronics retailer, grew by just 5 percent in the first two quarters of this year, about a third of the official growth rate in overall retail sales. Its closest competitor, Gome Electrical Appliances Holdings, saw revenues fall 18 percent (its chairman's arrest was a factor).

The giant Chinese Resources Ltd. said its first-half net profit fell 22 percent from a year earlier as weaker retail and food-processing operations more than offset strength in the company's beverage business. Operating hypermarkets, superstores, supermarkets and convenience stores in China, the company is usually a reliable bellwether of Chinese private consumption. The 28 percent fall in profit from its retail operations sends a sobering signal.

China is still doing well, just not as well as it did. U.S. imports from China fell only 14 percent this year, while imports from the rest of the world fell 32 percent. But with the bad debt and inflation consequences of the great surge in bank lending yet to come, China's leaders know that it will be a long time before they really can speak to the United States as an economic equal.

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