Preparation for the U.S.-China October summit between Presidents George W. Bush and Jiang Zemin in Crawford, Texas proceeded smoothly this quarter.  During Deputy Secretary of State Richard Armitage’s August visit to Beijing, the United States and China exchanged positive gestures. Washington endorsed China’s claim that at least one separatist group in Xinjiang has links to the al-Qaeda terrorist network and announced that its assets in the United States would be frozen.  The Chinese in turn released new rules on the export of missile technology and a missile technology control list.  Both countries signaled their growing satisfaction with bilateral cooperation in the counterterrorism arena.  A crisis was averted over Taiwan President Chen Shui-bian’s Aug. 3 statement that there is “one country on each side” of the Taiwan Strait.

The mid-July release of two reports on China, one by the Department of Defense and the other by a bipartisan congressional commission, stirred concern in China. Overall, relations improved as both Beijing and Washington advanced their respective interests by emphasizing the positive elements of their relationship.

Armitage Visits Beijing for Summit Preparation

In late August, Deputy Secretary of State Armitage visited Beijing as part of a five-nation tour that included Sri Lanka, India, Pakistan, and Japan.  He spent one day that was crammed with meetings with Vice President Hu Jintao, Vice Premier Qian Qichen, Foreign Minister Tang Jiaxuan, his host Vice Foreign Minister Li Zhaoxing, and Deputy Chief of the General Staff Gen. Xiong Guangkai. The primary objective of Armitage’s Beijing stopover was to make preparations for the planned October summit meeting between Presidents Bush and Jiang. According to the deputy secretary, he discussed a wide range of bilateral and regional issues with Chinese officials, including counterterrorism cooperation, South Asia, human rights, missile proliferation, Iraq, and Taiwan.

In a press briefing following his discussions, Armitage delivered upbeat comments on virtually every topic in what seemed to be a deliberate effort to highlight the cooperative side of the bilateral relationship and the shared interests between the two countries.  “I think the senior leadership of the United States is quite intent on developing a good, solid relationship with the People’s Republic of China,” Armitage told reporters, dismissing the hawkish, skeptical stance of some in Congress and inside the administration. “There’s enough mutual trust and confidence that we can disagree without being disagreeable.”  He also praised Beijing for its “strong commitment to standing with us in the international fight against terrorism.” Issues on which the two sides took divergent positions were addressed in a “constructive as well as candid” manner.

In discussions on South Asia, Armitage thanked the Chinese side for its intensive efforts to ease tensions between India and Pakistan.  He declared U.S. intention to continue to “consult closely” with the Chinese in managing the volatile situation in South Asia.  On the issue of how to handle Iraq, Armitage also promised to confer with Beijing and emphasized that President Bush had made no final decisions about whether and when to use military force.  In response to almost certain Chinese urging that the U.S. resolve the problem of Iraq and its weapons of mass destruction (WMD) programs through negotiations and dialogue within the framework of the United Nations, Armitage raised the negative consequences for the credibility of the United Nations as a body of permitting a nation to continuously defy United Nations Security Council resolutions.

In an effort to strengthen the bilateral relationship on the eve of the Bush-Jiang summit, both Beijing and Washington seized the opportunity presented by Armitage’s visit to exchange positive gestures.  The U.S. endorsed China’s claim that at least one separatist group in Xinjiang has connections to the al-Qaeda terrorist network and announced that its assets in the United States would be frozen.  Beijing in turn released new rules on the export of missile technology and a missile technology control list.

East Turkestan Islamic Movement Assets are Frozen

In a small, but significant, concession to Beijing, Deputy Secretary of State Armitage relayed to Chinese officials that the Bush administration had decided to freeze any U.S.-based assets of a group seeking independence for China’s Muslim Xinjiang region.  The group, called the East Turkestan Islamic Movement (ETIM), was placed under an executive order signed by President Bush after the Sept. 11 attacks that singles out groups deemed to pose a terrorist threat to Americans or U.S. interests.  The ETIM was subsequently officially accorded the designation of a foreign terrorist organization.  This constituted an important gesture to Beijing because the Bush administration had long resisted any linkage between the war on terrorism with China’s efforts to crush separatist movements in its northwest region.

Armitage explained that the decision had been made after an independent U.S. investigation into Chinese claims that several Uighur groups were involved in terrorist activities.  “After careful study we judged that it was a terrorist group, that it committed acts of violence against unarmed civilians without any regard for who was hurt,” Armitage said in the press conference held in Beijing.  He also indicated that pressing China to respect minority rights, particularly the Uighurs, remained a priority of Bush administration policy.

The announcement of Washington’s decision was greeted with skepticism in many Western European capitals, however. Some Western diplomats and scholars alleged that the determination to freeze ETIM assets in the U.S. was a political favor to Beijing to win support for tougher action against Iraq and continued cooperation in the war on terror.  Many voiced concern that the designation would be used by China to legitimize its crackdowns in Xinjiang.  U.S. government officials adamantly denied these charges, insisting that ample evidence had been independently gathered that proved the involvement of the ETIM in international terrorism.

In September, the UN added the ETIM to its list of terrorists and terrorist supporters associated with Usama bin Laden and his al-Qaeda network in response to a request by the U.S., China, Afghanistan, and Kyrgyzstan.  The U.S. Department of the Treasury welcomed the designation, which requires UN member states to freeze the group’s assets and deny entry to its members, as “an important step toward greater cooperation in Central Asia against common terrorist threats and the instability and horror that they sow.”  In an effort to mollify its critics, the Treasury Department statement provided additional background information on the ETIM, including its close relationship with al-Qaeda and the Taliban as well as ETIM schemes to attack U.S. interests and nationals abroad.

New Export Control Regulations Advance Nonproliferation Cooperation

Just before Armitage’s plane touched down in Beijing, China announced the signing into law of new regulations controlling the export of missile technology.  The new rules do not explicitly ban any items from export, but they require companies that transfer technologies specified on a “control list” to acquire licenses and seek approval from government regulatory bodies for each transaction.  They also require the companies to obtain guarantees from their foreign customers that the technology will not be misused or resold.  The long-awaited issuance of export controls on missile technology – which had been promised by the Chinese government in November 2000 – aimed to address U.S. concerns about the transfer of sensitive equipment and technology to Middle Eastern nations, especially Iran.

Chinese diplomats had previously maintained that they would not publish the export regulations until the United States lifted restrictions barring U.S. companies from launching satellites on Chinese rockets. The Chinese government had also objected to sanctions imposed in Sept. 2001 on specific companies accused of exporting missile components to Pakistan. Beijing’s decision to proceed with promulgation of the new regulations despite the U.S. refusal to concomitantly respond to Chinese demands was designed to bolster China-U.S. relations on the eve of President Jiang’s visit to President Bush’s Texas ranch in October.

The Chinese Missile and Missile Technology Control List is reasonably comprehensive, and generally follows the Missile Technology Control Regime (MTCR) Annex text.  There are a few potentially significant omissions and differences with the MTCR Annex text, however, which may portend problems in the future.  The Bush administration welcomed the new regulations, but cautioned that enforcement and “actual reduction” in missile exports was needed.  State Department spokesman Richard Boucher noted that continuing activities by Chinese entities in violation of international standards remained a problem and called on the Chinese government to “stop and curb those activities.”

After the release of the new regulations, China urged the United States to end the satellite ban and lift sanctions on Chinese companies accused of missile technology proliferation.  Referring to U.S. sanctions, Director General of the Department of Arms Control and Disarmament in the Chinese Ministry of Foreign Affairs Liu Jieyi maintained, “first we believe they are not warranted and secondly we don’t believe that sanctions are appropriate for proliferation issues where cooperation is better.”

The issuance of the export control regulations paves the way for resumption of the bilateral nonproliferation dialogue. During the press conference in Beijing, Secretary Armitage said he hoped those talks would be convened in the “very near future” and would result in the granting of licenses for U.S. satellites to be launched in China.  Bilateral discussions will also address other outstanding issues in the nonproliferation realm. The dispute over whether missile contracts signed by China prior to November 2000 are covered under the U.S.-China accord remains unresolved.  The U.S. has also insisted that China reaffirm its agreement last November to refrain from assisting other countries to develop missiles capable of delivering nuclear weapons.

The sale of chemicals and related technology by China is another U.S. concern that produced new sanctions on Beijing in this quarter. Nine Chinese companies and an Indian businessman were sanctioned in July for selling goods or technology to Iran, where they were allegedly put to use by that country’s chemical and conventional weapons programs. The sanctions bar firms from doing business with the United States government, forbid them to export goods into the United States, and prevent U.S. companies from exporting certain items to them. Most of the sanctions will last two years, U.S. officials said. The sanctions were imposed under the Iran-Iraq Arms Non-Proliferation Act of 1992, which addresses transfers to Iran, and the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991. This is the fourth time the Bush administration has sanctioned Chinese companies for export-control violations.

Strengthening Counterterrorism Cooperation

In this quarter, China and the U.S. made progress in jointly fighting terrorism and both signaled their growing satisfaction with bilateral cooperation in the counterterrorism arena.  In mid July, Beijing agreed to consider a request from Washington to place U.S. customs inspectors at Chinese ports to help inspect U.S.-bound sea cargo.  The U.S. is eager to persuade China to join its Container Security Initiative (CSI), which so far includes the Netherlands, Belgium, France, Germany, Singapore, Japan, and Hong Kong.  A decision to join the CSI pact would allow the exchange of information and collaboration between the U.S. and China to enable the identification, screening, and sealing of containers deemed high risk.  If discussions proceed smoothly, Beijing may sign up in time for an announcement of the agreement at the Crawford summit.

At the invitation of U.S. Treasury Secretary Paul  O’Neill, Chinese Finance Minister Xiang Huaicheng led an official delegation to the United States to co-chair the 15th session of the China-U.S. Joint Economic Committee (JEC) in early September.  Among the items discussed was cooperation on terrorist financing and anti-money laundering. Both sides pledged to reinvigorate efforts to combat the financing of terrorism and money laundering, including improving international cooperation and placing greater focus on financing mechanisms outside the mainstream financial system. China clarified the role of its existing mechanism for fighting the financing of terrorism and its recently established inter-ministerial coordinating mechanisms for anti-money laundering.

In his press briefing in Beijing, Deputy Secretary Armitage summed up counterterrorism cooperation as a “pretty good picture for the U.S. and China.”  Chinese Foreign Minister Tang expressed similar gratification for the antiterrorism collaboration between the two countries. In an interview with the New York-based Chinese newspaper Qiao Bao in mid-September, Tang noted that the U.S. and China had established “a medium- and long-term antiterror exchange and cooperation mechanism” and “carried out fruitful consultation and cooperation on the basis of two-way cooperation, equality, and mutual benefit.” Privately U.S. officials said that information sharing had increased and was being conducted reciprocally.  There were reports that the U.S. had perhaps half a dozen Uighur suspects in custody at its naval base in Guantanamo Bay, Cuba and had shared the results of the prisoners’ interrogation with Beijing.

Managing Differences over Taiwan

Taiwan President Chen Shui-bian’s Aug. 3 statement that there is “one country on each side” of the Taiwan Strait aroused concern in Beijing, but the Chinese reacted mildly because they estimated that a forceful response could strengthen Chen’s domestic position, harm China’s international image, and trigger Sino-U.S. friction on the eve of the Bush-Jiang summit. Instead, Beijing looked to Washington to reproach President Chen.  Initially, Beijing feared that Taiwan’s president had consulted with the Bush administration in advance of delivering his remarks and were greatly relieved to be convinced that there was no such conspiracy. The U.S. National Security Council spokesman reaffirmed Washington’s “one China” policy and reiterated that the U.S. does not support Taiwan independence. In a carefully worded, even-handed statement, the spokesman called on all parties to avoid steps that might threaten cross-Strait peace and stability, and urged the resumption of dialogue between Beijing and Taipei. Chinese officials welcomed the timely reaffirmation of U.S. policy, but were disappointed that U.S. officials refrained from directly criticizing President Chen and failed to point out the contradiction between Chen’s remark and the U.S. “one China” policy. Many Chinese had hoped that Chen would be labeled a “troublemaker” as President Lee Teng-hui had been branded in 1999 following his claim that relations between Beijing and Taiwan were “special state-to-state relations.”

Beijing voiced its objections to numerous developments in U.S.-Taiwan relations this quarter, but most of its protests were relatively mild. Beijing made “solemn representations” to Washington about the presence in the United States of Taiwan’s Premier Yu Shyi-kun, who transited the U.S. en route to Latin America, and Tsai Ing-wen, chairwoman of Taipei’s Mainland Affairs Council, whose visit to Washington was hastily arranged to discuss President Chen’s Aug. 3 statement.  Chinese officials also protested the visit to the United States by Taiwan’s Vice Defense Minister Kang Ning-hsiang. Yet another protest was precipitated by reports that the U.S. was considering delivering 120 AIM-120 Advanced Medium-Range Air-to-Air Missiles (AMRAAM) to Taiwan, which had been approved by the Bush administration last year under the condition that the missiles be stored in the U.S. and transferred to Taiwan only if there is evidence that China has similar missiles as part of its operational inventory.  China reportedly test-fired AA-12 air-to-air missiles from its Su-30 fighter jets acquired from Moscow, but Beijing insisted that it had the right to develop new weapons.

Legislation signed by President Bush in early August also prompted a Chinese demarche.  He Yafei, director general of the Department of North American and Oceanian Affairs under the Chinese Foreign Ministry, summoned Minister Marine of the U.S. Embassy to protest the signing of the “U.S. 2002 Supplemental Appropriations Act.” The legislation treats Taiwan as equivalent to NATO allies and major non-NATO allies in some respects, exempting Taiwan from the provision denying military support for countries that participate in the International Criminal Court (ICC) and treating Taiwan military officers and elected officials as “covered allied persons” when it comes to preventing the ICC from acting against the U.S. or its allies.

When Chinese Foreign Minister Tang met with U.S. Secretary of State Colin Powell on the sidelines of the ASEAN Regional Forum meeting in Brunei at the end of July, he communicated Beijing’s concerns about closer U.S.-Taiwan relations and called on Washington to halt military contacts and arms sales to the island. “We have been seriously concerned about the upgrading of the U.S.-Taiwan relationship and strengthening of the military links between the United States and Taiwan,” Tang was quoted as saying by the Chinese press.  Powell told the Far Eastern Economic Review that the Chinese government is constantly seeking reassurance from the U.S. about its policy toward Taiwan. “Arms sales to Taiwan are for the purpose of making sure that the Taiwanese are able to defend themselves and are in no way an attempt to move away from our ‘one China’ policy,” he asserted.

U.S. Reports on China Rattle Beijing

The mid-July release of two reports on China, one by the Department of Defense and the other by a bipartisan congressional commission, briefly rattled Beijing’s growing confidence that China-U.S. relations can be stabilized for a relatively prolonged period.  An assessment of China’s military power was issued by the Pentagon, fulfilling a requirement legislated in the National Defense Authorization Act of 2000. The 2002 Annual Report on the Military Power of the People’s Republic of China questioned China’s commitment to a peaceful settlement of its differences with Taiwan and detailed Chinese defense modernization efforts with an emphasis on developing capabilities to coerce Taiwan. The report estimated China’s military budget to be $65 billion – more than triple the official military budget of $20 billion – and forecast a possible increase in real terms over three- to four-fold by 2020. China views the United States as posing “a significant long-term challenge,” according to the report, and is seeking “opportunities to diminish U.S. regional influence.”

Asked about the Pentagon report, Secretary of State Powell stressed that China’s defense modernization “is not in and of itself frightening” as long as Beijing is not pursuing a “new strategic purpose” or posing a threat to the region. In remarks made after his meeting with Australian Minister of Foreign Affairs Alexander Downer at the State Department, Powell told reporters that the United States believed it was important that China use the wealth that it is acquiring from greater participation in the international economic community to benefit its own people. The secretary of state noted that the U.S. would continue to closely monitor China’s military efforts and added that the Bush administration is anxious to have more military-to-military exchanges with the Chinese.

Only a few days following the release of the Pentagon’s evaluation of the Chinese military, the U.S.-China Security Review Commission issued its first annual report, which portrayed China as making economic and strategic advances against the United States and urged tougher policies to defend American interests. Among the report’s recommendations was the provision of authorization to the president to invoke economic sanctions against China if it is found to be proliferating weapons of mass destruction or related technologies.  The report also proposed tightening access of Chinese firms to U.S. capital markets.  Voting 11-1, the commission concluded that Chinese leaders view the U.S. as a declining power with critical military vulnerabilities that can be exploited.  The report also maintained that the U.S. has contributed significantly, through trade and investment, to China’s rise as an economic power, and said this raises serious national security concerns. The lone dissenter, William A. Reinsch, a Clinton administration undersecretary of commerce, criticized the report for implying that China is a threat and advocating a more suspicious policy in place of engagement.  “I think that’s the wrong way to go,” he observed.

The 260-page U.S.-China Security Review Commission report sparked concern not only in China, but also among business executives who worried that it could encourage congressional moves to limit business investment and trade with China. Sources on Capitol Hill, however, predicted that the report would have little impact on U.S. lawmakers focused on the war on terror, the possibility of a U.S. military action against Iraq, and corporate crime. Moreover, the hawkish tone of the report was unappealing to the moderates in Congress. Barring a new crisis in the China-U.S. relationship, most observers expected the report to be largely ignored.

Bush’s National Security Strategy Evokes Ambivalence

On Sept. 20, the White House released The National Security Strategy of the United States of America.  For several days following the publication, mainland China and Hong Kong newspapers notably refrained from issuing commentary on the document, confining their reports to summaries of the new strategy and U.S. domestic as well as foreign reaction.  Initial reports by China’s Xinhua News Agency and on the People’s Daily web page, both in English, highlighted the substitution of the U.S. strategy of deterrence with a strategy of preemptive action. The Xinhua article maintained that the U.S. could now launch preemptive strikes against hostile states or terrorist groups when it sees fit. “The consequence of such a strategy has yet to unfold,” the Xinhua reporter observed cautiously.

It is likely that Beijing views the “National Security Strategy” with ambivalence.  On the one hand, Chinese leaders are probably relieved that President Bush’s long-awaited strategy document does not present China’s rising power as posing an inevitable challenge to U.S. preeminence, and instead explicitly states that the United States “seeks a constructive relationship with a changing China” and welcomes the emergence of a “strong, peaceful, and prosperous China.” The stated U.S. objective of forging a global consensus among major powers and developing “active agendas of cooperation” will also meet with Chinese approval. On the other hand, Beijing is likely troubled by the administration’s preemptive strike doctrine and worried about the possible abuse of U.S. military power. The Chinese leadership may also bristle at the sharp criticism of one-party communist rule and the contention that only “by allowing the Chinese people to think, assemble, and worship freely can China reach its full potential.” The Chinese also likely find objectionable the mention of the U.S. “commitment to the self-defense of Taiwan under the Taiwan Relations Act” without a concomitant reference to the three China-U.S. joint communiqués and the U.S. “one China” policy.

Overall, the China policy section of the “National Security Strategy” is largely consistent with previous policy statements by the administration. It notably revives some of the themes that were raised by Secretary of State Powell in his speech to the Asia Society last June. Those themes include: 1) criticism of China’s pursuit of military capabilities that can threaten its neighbors; 2) the existence of shared U.S. and Chinese interests (the Korean Peninsula, the future of Afghanistan, counterterrorism, HIV/AIDS, and environmental threats) concomitant with persisting differences (Taiwan, proliferation, and human rights); 3) the mutual benefit of free trade; and 4) a call for greater democracy in China.  Indeed, on the latter point, the “National Security Strategy” quotes Powell’s speech verbatim:  “In time, China will find that social and political freedom is the only source of national greatness.”

China-U.S. Relations and the Realities of Power

On the eve of China’s 16^th Party Congress, which will mark the beginning of the transition from the third- to the fourth-generation leadership, Chinese leaders are fixated on domestic concerns.  Beijing’s top priority in its relationship with the United States in this period and for the foreseeable future is the preservation of normalcy and stability.  China’s muted reaction to the “National Security Strategy” report reflects Chinese recognition of unprecedented U.S. supremacy in East Asia and the realities of the prevailing power gap between the U.S. and China.  There is a consensus in Beijing that a confrontational policy toward the U.S. while it occupies a position of unparalleled strength would be counterproductive and should be avoided if possible.

The United States is in turn using the opportunity presented by its unmatched strength and influence in the world and China’s domestic distraction to its advantage.  The Bush administration is adroitly employing U.S. leverage over China to secure increased Chinese compliance with international norms and Beijing’s acquiescence to Washington’s global agenda. In addition, U.S. officials have effectively shifted the burden of creating a constructive and cooperative bilateral relationship to Beijing’s shoulders, compelling the Chinese to undertake initiatives to improve ties.  On the eve of the Crawford summit, Chinese institute analysts are debating not what concessions Beijing can extract from President Bush in late October, but rather what initiatives China can propose to sustain forward momentum in China-U.S. ties. Barring unforeseen developments, this pattern in China-U.S. relations may well persist for several years.