Chinese President Hu Jintao praised "fresh progress" in Sino-American relations Sept. 8 after three days of meetings between a U.S. delegation and several of China's most powerful politicians. National Economic Council Director Larry Summers and Deputy National Security Adviser Thomas Donilon met with Hu, Premier Wen Jiabao and a number of high-ranking Chinese economic and foreign affairs officials. Other recent visits included an unofficial visit to China by former U.S. President Jimmy Carter, who met with Wen, and a late-August meeting between Chinese Vice Foreign Minister Cui Tiankai and U.S. Deputy Secretary of State James Steinberg. These latest efforts by China and the United States to reduce tensions in their relationship are part of the normal up-down cycle in bilateral relations, showing that no
fundamental break in the relationship has occurred. But while the meetings have produced a few points of agreement, the fundamental problems between the two countries have yet to be resolved.
Military Ties
Among the agreements made during this flurry of diplomacy is the resumption of military-to-military ties, which China severed in protest of the most recent U.S. approval of an
arms sale to Taiwan. The absence of military communications, including the cancellation of U.S. Defense Secretary Robert Gates' planned
visit to China earlier this year, has occasioned numerous U.S. complaints about China's lack of transparency in pursuing military modernization and expansion. Washington claimed that better channels of communication could have averted tensions over the latest series of
U.S.-South Korean naval exercises, and the latest Department of Defense report on China's military development struck a note of concern about the subject. This resumption should not be seen as a watershed, however. Beijing has suspended the talks several times when the United States has approved arms sales to Taiwan, and given that the United States has no intention to stop selling arms to Taipei (with a potential sale of F-16 C/Ds to Taiwan on the horizon in 2011), China will most likely continue to register its dissatisfaction in this way in the future.
Economic Tensions
The two sides also agreed that Hu will hold a state visit to the United States in January 2011, after having
canceled planned visits throughout 2010. In addition, they prepared for meetings between Hu and U.S. President Barack Obama at the upcoming G-20 summit in South Korea and Asia-Pacific Economic Cooperation summit in Japan in November. To pave the way for these talks, Beijing reassured Washington that it would continue its economic liberalization and provide a stable regulatory and political environment for foreign companies in China, a growing worry among American, European and Japanese investors. The U.S. team raised concerns over unemployment in the United States, implying dissatisfaction with China's large trade surpluses recently and its currency policy. Yet both sides also agreed not to "politicize" economic issues, which is the Chinese way of stressing, as its Foreign Ministry reiterated simultaneously to the meetings, that its currency policy is for Beijing to determine. More concretely, on the trade front, Beijing's Commerce Ministry has called for continuing a national
"import surge" to offset large and controversial trade surpluses with partner nations, with the United States being the most obvious example. From January to July, China's trade surplus fell by 20 percent compared to the previous year, and by the end of the year Beijing claims its surplus will be considerably smaller than years past. Meanwhile in late August, the U.S. Commerce Department declared it would not investigate two cases calling for China's undervalued currency to be interpreted as a
subsidy for Chinese exports, which would have opened the floodgates for petitions by American companies against Chinese goods, potentially leading to greater trade barriers. These developments have helped both sides avoid escalating trade tensions beyond their already heightened level, but this reduction is temporary. The Chinese yuan has not risen even a full percentage point since China announced a more flexible policy in June, and U.S. Treasury Secretary Timothy Geithner emphasized Sept. 8 his expectation for it to rise faster in the coming months. Of course, the Treasury Department holds the implicit threat of citing China for currency manipulation in its foreign currency report due Oct. 15. The yuan will remain a subject of criticism for the U.S. administration and especially Congress, which is facing midterm elections in November and is under intense pressure to appear effective in dealing with foreign countries to the benefit of American workers.
The Korean Peninsula
China has also put some diplomatic effort into restarting the six-party talks on North Korean denuclearization. Beijing sent its top nuclear envoy to Pyongyang and held several meetings with the North Koreans, including an unusual visit between North Korean leader Kim Jong Il and Chinese President Hu. China has resumed "shuttle diplomacy" among the other members of the talks — South Korea, the United States, Japan and Russia — to re-energize the process. The United States has signaled willingness to find a "new way" forward with North Korea and has said it will send nuclear envoy Stephen Bosworth to South Korea, Japan and China in mid-September (not to mention Carter's recent unofficial trip to the North). These are positive developments after a summer that saw heightened rhetoric and a flurry of U.S.-South Korean and Chinese military exercises around China's periphery. But they are inchoate, and obstacles remain to a full resumption of international talks on the issue. North Korea's behavior is likely to remain somewhat unpredictable as it approaches a leadership transition, and it has not signaled any major concessions to demonstrate its seriousness on a new round of talks or shown any token of remorse for the
sinking of the South Korean naval corvette ChonAn, which the United States and allies have insisted is necessary before relations can improve.
Cyclical Diplomacy
Relations between the United States and China frequently experience this cycle of rising and falling tensions. Beijing, in particular, has reason to seek to act conciliatory both in the short term to counteract building U.S. congressional pressure and more generally to prevent tensions from reaching the point that Washington is forced to take a more aggressive approach. Beijing has not substantially supported the United States on Iran sanctions, North Korean provocations or the currency matter, so it may see a benefit in striking a more accommodative posture. Such a move would reflect the ongoing differences in China over how best to manage foreign policy with regard to the United States, with one side calling for Beijing to outright oppose the United States where interests conflict (as has been on display in recent months) and another side calling for Beijing to emphasize areas where cooperation is possible. The Obama administration also has shown itself reluctant to push China too far on trade disputes amid economic uncertainty and difficulties managing more pressing foreign policy problems elsewhere. But on a deeper level, without more concrete developments, the two sides do not appear to have struck a grand deal to resolve their disagreements, and the domestic political atmosphere in both countries is conducive to rocky relations.
