Sunday, Jun 25, 2017, 3:06 AM CST – China

International

China-US Dialog

PARTNERS IN POSITIVITY

The US and China avoided open confrontation over the South China Sea issue during their recent strategic and economic dialogs

In marked contrast to recent mudslinging over a variety of issues, both China and the US adopted the rhetoric of cooperation during the seventh US-China Strategic and Economic Dialog (S&ED), two days of high-level meetings which concluded in Washington on June 24.

Strategic talks brought together US Secretary of State John Kerry and China State Councilor Yang Jiechi, while US Treasury Secretary Jacob Lew and Chinese Vice Premier Wang Yang discussed economics, with the S&ED reportedly reaching a combined total of 310 outcomes.

Achievements

Sending a 400-member delegation, including 13 ministers and 40 vice-ministers, China appeared to be devoting considerable resources to this year’s dialog, an effort to avert what many have called a “downward spiral” in bilateral relations following rising tensions in the South China Sea, where the US continues to criticize China’s massive land reclamation projects.

US officials appeared to share the same desire with their Chinese counterparts, and avoided being openly confrontational in their public remarks.

In his closing address, Kerry called this year’s S&ED “one of the more constructive and productive in terms of the seriousness of the discussion that we’ve had on a very long, comprehensive agenda,” and said that he saw “not one tiny piece of an indication of a downward spiral.”

As both sides focused on the positive, most of the achievements of the latest S&ED focused on issues where the US and China share common interests. For instance, 44 of the 127 outcomes – over one-third – related to climate change and other environmental issues.

Both sides agreed on a commitment to reduce carbon emissions and boost clean energy during US President Barack Obama’s visit to Beijing last year. During the S&ED, ministers announced new cooperative projects, including a “Green Ports” project and two new carbon capture, use and storage (CCUS) pilot projects aimed at improving “clean coal” technology.

On the economic front, US and Chinese officials discussed the Bilateral Investment Treaty (BIT), which has been under negotiation for quite some time. Following the meeting, Wang Yang described the meeting as a “milestone” toward reaching a final agreement on the BIT, as both sides exchanged “negative lists” specifying which sectors will retain restrictions on foreign investment, and pledged to push forward negotiations to reach a “mutually beneficial and high standard” agreement.

In his closing statement, Lew echoed Wang’s optimism by saying that China and the US had set a goal to “exchange improved negative list offers in early September.” Analysts took this as an indication that may mean a formal result during Chinese President Xi Jinping’s planned state visit to the US in September.

The two countries also addressed the issue of international financial governance, holding a special session on US-China “cooperation in the international financial system” as part of the S&ED. Lew said that the US would “welcome China as a partner in supporting, maintaining and advancing high standards in multilateral institutions,” a tone which seemed milder than the hostile one adopted in the immediate wake of the establishment of the China-led Asian Infrastructure Investment Bank (AIIB) earlier in the year. Lew did, however, comment that China needed to further open up its financial system in order to allow the yuan to be included in the International Monetary Fund’s (IMF) Special Drawing Right (SDR), a major stated goal of China’s financial policy.

China, meanwhile, pledged that it would not intervene in the foreign exchange market, a persistent bugbear of the US Treasury, unless there are “disorderly market conditions.” Wang Yang, Lew’s counterpart, stressed that the US has promised to implement the plan to reform the IMF’s Executive Board “as soon as possible.”

Disagreements

Despite cooperation in the fields of economics and climate change, some thorny issues continued to feature prominently during the dialogs. For example, as China has been accused of being behind a major hack into the US Office of Personnel Management, despite repeated denials, cyber security issues remained a sticking point.

However, hostile remarks were generally avoided during the S&ED, with both sides seemingly at pains to present an amicable relationship. For example, even when voicing US concerns about cyber security, John Kerry stressed that the meetings were “an honest discussion... without accusations, without any finger-pointing.” Chinese officials, in Kerry’s words, refrained from “confrontational push-back.”

This is a contrast from earlier, frosty exchanges over cyber security. After the US decided to indict five People’s Liberation Army (PLA) officers on charges of cyber espionage, China suspended a bilateral dialog mechanism on cyber security.

Also absent, at least from public statements, was serious US criticism of China’s stance in the South China Sea. In the past couple of months, US officials have been highly critical of China’s land reclamation and construction projects on disputed shoals and reefs under its control, with the US even threatening to deploy naval vessels and military aircraft to the region.

During the S&ED, however, the US noticeably toned down its criticism. Calling for “countries with competing claims” to “exercise restraint” and “refrain from preventative unilateral actions,” Kerry refrained from singling out China in his remarks. Chinese officials were also careful not to repeat earlier, repetitive accusations that the US was “flaring up” tensions in the region.

Form and Substance

Following the conclusion of the S&ED, the Chinese media hailed the dialogs as a “success.” People’s Daily, the official paper of the Communist Party of China, commented that the biggest achievement was that the two sides “reset a positive keynote” for US-China relations. The official Xinhua News Agency, meanwhile, declared that “the achievements show that US-China relations are heading in a direction that promotes understanding, expands consensus, manages difference and increases cooperation.”

The apparent enthusiasm shown by Chinese media not only reveals China’s desire to avoid direct confrontation with the US, but also reflects a more “holistic” approach toward the bilateral relationship, focusing on the general situation rather than becoming tied down on specific issues.

However, it appears that such a perspective is not shared by the American media and various US experts. With its less confrontational style, and lacking major breakthroughs on various high-profile issues, the S&ED received little attention in the US media, with the tone of most commentary tending towards the critical and pessimistic.

“The reality is that China and the US have not made concrete progress regarding some major disputes, such as the South China Sea issue, cyber security, and access to China’s market, although both sides have pledged that they would,” Avery Goldstein, a political scientist at the University of Pennsylvania, told NewsChina. Goldstein added that he expects that some of these problems can be resolved by Obama and Xi during the latter’s visit to the US in September.

However, as China, which has emerged to become the world’s second-largest economy, has a very different vision from that of the US in terms of its position in the Asia-Pacific region as well as in the world financial and political order. Some disagreements, analysts have stressed, are so fundamental that they simply cannot be solved in the foreseeable future. US observers and politicians generally call for unilateral change in Chinese policy, and push back against suggestions that the US give ground in many key issues raised by Beijing.

For example, while the US has lashed out at Chinese “saber-rattling” in the East and South China seas, China has labeled the US’s strengthening of its alliances and military ties with Japan and the Philippines, China’s principal regional opponents, as an effort to “contain” China. Similarly, as Washington expresses discontent with alleged currency manipulation by Beijing, the Chinese leadership has expressed its own concerns over the US policy of winding down quantitative easing. The US criticizes China for restricting market access, while China has repeatedly asked the US to lift its ban on high-tech exports to China, as well as what it calls “excessive” use of anti-dumping and countervailing duties against Chinese companies.

In response to criticism of China’s alleged cyber attacks on the US, China’s Ministry of Foreign Affairs has demanded the US to first provide an explanation regarding the allegations leaked by Edward Snowden that the US has launched its own cyber attacks against China.

For the proponents of the S&ED, conversation itself may be more important than outcomes. According to Zhou Wenzhong, China’s former ambassador to the US, by providing a chance for interaction between American and Chinese government ministries, the goal of the S&ED, is to “control the disagreement” between the two countries, and “prevent it from getting out of control,” rather than to resolve particular issues.

“Both sides have already known what our common interests, and our disagreements are,” Zhou told NewsChina. “The dialog simply provides a high-level mechanism to address these issues. Without such a dialog mechanism, there will be a serious communication problems between the two countries.”

According to Zhou, in 2005 the dialog successfully prevented a trade war between the two countries over China’s currency policy. “The development of the China-US relationship has been a process of maximizing common interest and minimizing disagreements,” said Zhou, adding that in recent years, the Chinese yuan has appreciated 35 percent against the US dollar, while China’s trade surplus was reduced from 10 percent to 2 percent of the national GDP, which he emphasized had benefited both sides.

William Burns, former US deputy secretary of state, who participated in several rounds of the S&ED dialog in the past, shares Zhou’s optimism, at least in part. “Through the mechanism, the two sides can engage in dialog, preventing disagreements from escalating to crises,” Burns told NewsChina. “The mechanism is not a perfect one, but it is very important for the bilateral relationship.”

As the China-US relationship is increasingly defined by its tensions, rather than by its cooperation, the S&ED, which many criticize as more about formality than substance, and more about pronouncement than dialog, is perhaps more important than it appears. If such dialogs can regulate and contain disagreements between the world’s dominant power and its largest emerging one, and prevent them from evolving into disastrous crisis situations, then the S&ED is serving a crucial purpose in global geopolitics.

“The development of the China-US relationship has been a process of maximizing common interest and minimizing disagreements” 

 

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