Foreign Correspondence

[Amaunet]

China and the US: Moving beyond talking
By Zhiqun Zhu

Apr 18, 2006



Though one should not expect major substantive results from the summit between President George W Bush and Chinese President Hu Jintao on Thursday, such meetings between the leaders of two powers are necessary and helpful.

Outstanding issues such as trade will certainly be on the agenda, while other less prominent but not less important issues will also be covered in the talks.

Most likely to appear on Hu's list are the following major issues.

The US and China: Friends or foes?
The Chinese prefer to discuss specific issues under some general principles or guidelines. Paramount to the Beijing leadership is to determine the nature of US-China relations in the future.

The Pentagon issued its quadrennial defense review in early February, officially and explicitly identifying China as a military rival for the first time. According to the review, China is the power most likely to "field disruptive military technologies that could ... offset traditional US military advantages". China has "the greatest potential to compete militarily" with the United States and Beijing's military buildup "already puts regional military balances at risk".

Though the defense report also states that "US policy seeks to encourage China to choose a path of peaceful economic growth and political liberalization rather than military threat and intimidation", it underscores America's genuine concern about the rise of China and the potential threat from that country.

Since the Pentagon report serves as a guideline for military planning for the next few years, it remains to be seen how the US military will readjust its resources and overseas deployment to deal with the perceived Chinese rivalry in the near future.

It is an open secret that the US and Chinese militaries consider each other the greatest potential threat and have developed contingency plans for actual conflict between the two, but it is diplomatically unwise and politically damaging for Washington to reveal the secret in an official report. (The Pentagon admits to preparing for war with China. #msg-10051566)


Hu is likely to seek Bush's clarification of the intentions of this report and his view of bilateral relations in general. To soothe America's concerns, Hu will explain to his host his vision of China's peaceful development and the harmonious society it will create.

On a related issue, Hu is likely to question the purpose of the strengthened US-Japan alliance. He is also likely to seek Bush's help to persuade Japan to take a less confrontational policy toward China and to address China's concerns seriously, given that Bush and Japanese Prime Minister Junichiro Koizumi enjoy a cordial relationship.

An independent Taiwan: To be or not to be?
In the much improved US-China relationship, the contentious Taiwan issue should no longer dominate the summit agenda. Yet since New Year's Day, President Chen Shui-bian of Taiwan has thrown several political bombs into the otherwise calm Taiwan Strait, pushing the Taiwan issue back to the US-China summit table.

Despite his denial, Chen continues to tighten cross-strait trade and other exchanges, ignoring the popular wishes of the majority of the people on both sides of the strait. At the end of February, Chen declared that the National Unification Council would "cease to function" and the Guidelines for National Unification would "cease to apply". He has also suggested that Taiwan should apply for UN membership under the name "Taiwan".

In addition, he has proposed to revise Taiwan's constitution and hold a referendum on the new version next year. These policy initiatives smack of unilaterally changing the status quo across the Taiwan Strait and clearly run counter to his previous pledges.

Though the unpredictable Chen has lost much of his political credibility and his inflammatory remarks should not always be taken seriously, his radical policy declarations are still very disturbing to Beijing, Washington and many others both inside and outside Taiwan and are potentially disruptive to the political economy of East Asia.

What will the US do, since Taipei has repeatedly attempted to alter the status quo and ignored warnings from Beijing and Washington? Beijing leaders realize that the shortest cut to Taipei is via Washington. Though lower-level US officials and many American scholars have expressed displeasure with Chen, it is unclear where Bush stands on the recent developments.

Since Taipei has not done enough to alleviate Beijing's or Washington's concerns so far, Hu will most likely press Bush to rein in Chen and publicly utter his opposition to Taipei's unilateral challenge to the status quo, much like what Bush did during his summit with Chinese Premier Wen Jiabao in December 2003.

China hopes that the US will take concrete measures and work together with China to prevent Taiwan from continuing to be a destabilizing factor in US-China relations. To a large extent, the success of Hu's visit hangs on whether he can win a public statement or at least private reassurances from Bush regarding Taiwan.

Trade: Free or fair?
Tensions over trade have become a regular irritant in US-China relations and risk overshadowing the Bush-Hu meeting. The US Congress has proposed different versions of punitive bills against what it perceives as "unfair" Chinese trade practices. But the Chinese government has suggested that the two countries need to ease trade frictions through consultations and negotiations as equal partners.

Hu is likely to reiterate China's decision to revalue the yuan gradually and reasonably. In fact, most countries, including European Union members and China's major trading partners in Asia, support a gradual approach to the yuan's revaluation. Hu will also promise to continue the crackdown on piracy to protect America's intellectual-property rights.

On the other hand, Hu will also ask the US to conduct fair trade with China, not just so-called free trade. One major cause of the huge trade imbalance between the two sides is that the US still maintains its Tiananmen-era economic sanctions against China, prohibiting US companies from selling high-tech and military/civilian dual-use equipment and know-how to China.

The US side cannot expect its trade deficit with China to be reduced by only selling apples and oranges to China. Hu is likely to appeal to Bush and US businesses that America's discriminatory policy is harmful to trade and bilateral relations in general. Punitive measures or trade wars do not help to resolve trade disputes.

Meanwhile, the following issues are most likely to top Bush's list.

Trade: Ready to be tough
The 2006 Economic Report of the president released in Washington in mid-February claimed that China's "tightly managed pegged exchange rate" and "foreign-exchange-market intervention to limit currency appreciation" were partly to blame for America's record trade deficit. The report, while acknowledging that US exports to China had grown dramatically faster than overall US exports since 1990, warned that there were "areas that require further progress" on China's part to address the trade issue between the two countries.

Tensions between the two countries in recent years have grown over US accusations that China is undervaluing its currency to boost its exports, hurting US manufacturers' competitiveness. Though China increased the yuan's value by 2.1% last summer, many in the United States believe China has not done enough.

The Bush administration has so far consistently resisted calls from Congress and some business leaders to name China a currency manipulator and impose on it related sanctions. Several bills currently moving through Congress would impose additional tariffs on Chinese imports unless Beijing relaxes its currency-exchange regime.

To address his domestic audience, Bush is likely to press the Chinese president to revalue the yuan further to help reduce America's trade deficit and job losses. If China does not move swiftly in the next few months, it is likely that the Bush administration will be compelled to get tough with China over trade disputes, including naming China as a currency manipulator.

Bush may also raise the issue of political freedom in an increasingly capitalistic China, echoing congressional concerns about US companies' alleged bending to Chinese laws and helping China block Internet information and oppress political dissents. Several US technology companies, including Yahoo and Google, have been accused of complying with China's censorship rules to enter the Chinese market. Bush is likely to reiterate his claims that political and religious freedom goes hand-in-hand with economic freedom and is beneficial to China in the long term.

North Korea and Iran: No nukes allowed
Curbing North Korea's nuclear ambition and pressuring Iran to give up its plans for uranium enrichment remain the dual challenge for Washington's non-proliferation efforts.

North Korean leader Kim Jong-il's January tour of China highlighted the solid bond between his country and China. Apparently only Beijing has the persuasive power to ask Pyongyang to return to the negotiation table and to behave reasonably. Bush will take the opportunity to prod China to restart the six-party talks as soon as possible. Washington's patience may be running out, but its options are also limited. China's leadership role is vital to the resolution of North Korea's nuclear issue.

Washington's accusation of North Korea's counterfeiting of US dollars and Pyongyang's strong denial have complicated the six-party talks. Hu is likely to respond by persuading Bush to drop America's accusations of North Korea's illegal financial activities and remove it as an obstacle to the six-party talks.

On Iran, China, along with Russia, has unexpectedly backed the proposal by the United States and the European Union to refer Iran to the United Nations Security Council if it fails to account for its alleged nuclear activities to the International Atomic Energy Agency, much to the delight of the US. Bush is likely to thank China for its decision and will also ask it to use its diplomatic and economic clout to push Iran further to abandon its nuclear ambition. Hu is likely to affirm China's opposition to nuclear proliferation, but he will also reiterate his country's long-standing position to resolve the nuclear issue peacefully.

Global energy security: From competitors to cooperators
Bush in his 2006 State of the Union address proposed that the US should cut its dependence on Middle East oil by 75% by 2025. Regardless of whether this is feasible, China's deep reach into the Middle East and other oil markets has already caused great concern in the United States. China's energy foray into different parts of the world and especially its deals with some of America's "nightmare countries" - such as Sudan, Iran, Venezuela and Nigeria - are deeply unsettling to Washington.

Bush wants to wean the United States off imported oil, and China has an insatiable appetite for energy to sustain its growth. The country's economic growth in the first three months of this year is estimated to be 10.2% higher than in the same period of 2005. Obviously, the two countries can cooperate to develop alternative energy sources. Bush may well take the opportunity to propose ways the two countries can work together to ensure global energy security. The two nations can also cooperate in areas of energy conservation, efficient consumption of natural resources, and environmental protection. These issues on their respective lists are obviously important. But the two leaders must have the vision and the political will to raise relations to a new level. Since US Deputy State Secretary Robert Zoellick first put forward the idea last September that China was a "stakeholder" of the current international system, and should take its responsibilities in international affairs, both countries seem to be embracing the concept and are establishing a new framework for international cooperation.

Bush and Hu should strike while the iron is hot and turn this summit into a momentous meeting about the future of the two great powers. Relations between China and the US will largely determine the trajectory of the 21st century. The two leaders must be conscious of their historic responsibilities and map out a future in which their countries can work together to promote peace and prosperity around the world.

Zhiqun Zhu ([e-mail]), PhD, is assistant professor of international political economy and diplomacy at the University of Bridgeport in Connecticut. He is the author of US-China Relations in the 21st Century: Power Transition and Peace (London and New York: Routledge, 2006).

(Copyright 2006 Zhiqun Zhu.)

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