What an astonishing event.
I honestly don't know what to make of that.
In one way, it's a stunning acknowledgement of just how useless and pointless and downright wrong-headed the Peace Prize is, when it's awarded to worthless clots like Carter and "thank you for showing up and not being George W. Bush" Obama. There is apparently no sense of brotherhood and solidarity among the winners.
In another way, it's a demonstration of realpolitik and dealing with the world the way it is. As vile and contemptible as China is, we need to maintain a cordial relationship with them -- and vice versa. Picking a fight with Hu over this, at an event like this, would not do any good. In fact, it might actually do some harm -- Liu could develop a terrible medical condition while in jail.
In yet another, it shows that just when you think you can utterly write off the Nobel Peace Prize, they go and do something worthwhile and honor a genuinely good person or group. They did that in 2006, 2003. and 1999, just to name a few recent ones.
Should Obama have honored Hu with a state dinner? That was pretty much a given. Should he have brought up his fellow award winner? That's debatable. Should he have excluded Carter? Absolutely, just on general principles. "Ignore Jimmy Carter" is almost always the right answer. Hell, I once put it on an algebra test, and got partial credit.
China doesn't like to have its human rights record questioned. In fact, it gets downright touchy when it does, insisting that it is purely an internal matter (something common of most Communist regimes and other dictatorships -- they see their citizens as property). And when China gets testy, it tends to react in unpleasant ways -- diplomatically, economically, and even militarily.
This is not to say we should walk on eggshells around China, but to choose our fights carefully -- in topic, manner, timing, and location. A state dinner would probably not be the best venue to remind the rest of the world that the average Chinese citizen is little more than a slave of the state, and those who try to improve that from within tend to get stomped down hard.
Finally, Obama must remember at all times that he is the President of the United States. He is OUR president, answerable first to us. He should not let his natural deference for thuggish foreign heads of state overshadow his duty to us (even those who, to put it mildly, don't always agree with him) and our national principles. High up on that list is a respect for certain fundamental human rights, such as "don't lock up people who peacefully call for governmental reform."
Plus, he blew a perfectly good opportunity to ignore Jimmy Carter. And that is darned near unforgivable.