Although Beijing was distracted this quarter by the SARS epidemic, there was still progress in U.S.-Chinese relations. Dealing with North Korea’s nuclear weapons programs continued to top the bilateral diplomatic agenda with China orchestrating and hosting trilateral talks in Beijing. Presidents Bush and Hu Jintao agreed to seek a peaceful solution to the nuclear weapons issue in a summit on the sidelines of the G-8 meeting in Evian and exchanged views on other international and bilateral issues. In an unprecedented joint effort between the U.S. Drug Enforcement Administration (DEA) and law enforcement authorities in China and Hong Kong, the U.S. and China succeeded in dismantling a massive heroin smuggling organization that targeted the U.S. and Canada.  On the negative side of the ledger, the U.S. expressed displeasure at Beijing’s lax enforcement of its export control laws, promulgated almost one year ago, by slapping sanctions on Norinco, one of China’s biggest and most prestigious state-owned conglomerates.

Coordinating to Cope with North Korea’s Nuclear Weapons

China earned kudos from the U.S., as well as from Japan and South Korea, for organizing and hosting trilateral talks in late April among Beijing, Washington, and Pyongyang to discuss North Korea’s nuclear weapons programs. U.S. officials credited China with working hard behind the scenes, including via a secret visit to Pyongyang by former Vice Premier Qian Qichen, to persuade the North Koreans to attend the talks.  Beijing’s three-day suspension of oil supplies to North Korea under the pretense of technical difficulties was also welcomed by the Bush administration as a signal to Kim Jong-il that he could not take Chinese aid for granted. On the eve of the trilateral talks in Beijing, President Bush publicly attached importance to China’s active involvement and its assumption of greater responsibility.  “Now that they’re engaged in the process, it makes it more likely” that their policy objective of a nuclear-free Korean Peninsula can be achieved, Bush stated.

U.S. officials spoke highly of China’s conduct at the talks, which were convened in Beijing April 23. The Chinese representative, Director-General of the MFA’s Asia Department Fu Ying, presented China’s unambiguous opposition to North Korea’s provocative actions and its nuclear weapons programs. China’s talking points included the important statement that the pursuit of nuclear weapons will only bring turmoil to North Korea.  One U.S. official who participated in the talks noted that Beijing was clearly “in our corner.” Another official characterized China’s stance as providing “tough love,” with an emphasis on “tough.” Washington was also pleased that China’s presentation included reference to the 1992 North-South nuclear agreement and did not mention the 1994 Agreed Framework.  Bush administration officials interpreted this as signaling two key shifts in Chinese policy: 1) recognition by China that a return to the Agreed Framework is not favored by the United States and is thus impracticable; and 2) endorsement of the U.S., Japanese, and South Korean position that the North Korean nuclear problem must be dealt with multilaterally rather than as a bilateral U.S.-North Korean problem.

Following the talks, President Bush expressed his appreciation for China’s positive efforts by phone to China’s President Hu. According to China’s Xinhua News Agency, the fundamental issue on which the two leaders agreed was the need to peacefully resolve the North Korean nuclear weapons problem. Bush stressed that he would continue “this process to solve the issue through diplomatic means” and Hu agreed that the talks were “a good beginning for a peaceful resolution to the issue.”  Apart from this common point, however, there were obvious differences in U.S. and Chinese assessments of the talks and their approaches on how to proceed that surfaced over the next few days.

First, Hu reminded Bush that the security concerns of the North Koreans should also be addressed.  The Bush administration insists that the U.S. won’t discuss provision of security assurances until North Korea unilaterally and unconditionally dismantles its nuclear weapons programs. Beijing contends that North Korea’s desire for security assurances is reasonable and believes that Pyongyang is unlikely to agree to verifiably dismantle its nuclear programs without a U.S. pledge to not use force against it.

Second, the U.S. views North Korea’s frank admission that it already possesses nuclear weapons and is reprocessing spent atomic fuel into weapons material as the most prominent feature of the trilateral talks and accused the North of once again resorting to blackmail.  The Chinese, in an unusual briefing for Western diplomats, revealed that North Korea had presented a proposal to the U.S. that included the dismantling of its plutonium-based nuclear program.   Privately, the Chinese urged Washington to consider and respond to the proposal, but the U.S. side judges it to be a nonstarter.

Third, the Bush administration is trying to win international support for interdicting North Korean vessels suspected of carrying illegal drugs, counterfeit money, weapons shipments, or nuclear materials to increase pressure on the North to negotiate an end to its nuclear weapons program.  Beijing remains wary of the value of sanctions in persuading Pyongyang to reverse course and is concerned about any measures that could destabilize the country and lead to a large flow of refugees across the border in northeast China.  The Chinese also believe that until the U.S. unveils its promised “grand bargain,” North Korea will not put its nuclear programs on the negotiating table.

The Chinese did not object to the proposal to expand the talks to include Japan and South Korea and agreed to convey the suggestion to Pyongyang, but they are not certain that they can convince the North Koreans to include other parties.  They hope, therefore, that the U.S. will agree to hold another round of trilateral talks if Pyongyang nixes the five-party talks proposal.  Beijing’s foremost objective is to keep the diplomatic process alive and the Chinese worry that the U.S. approach will result in the breakdown of the talks, or even worse, a new conflict on the Korean Peninsula.

Bush and Hu Confer on the Sidelines of the Evian G-8 Summit

The threat posed by North Korea’s nuclear weapons programs was at the top of the agenda when Presidents Bush and Hu met in Evian, France on the sidelines of the Group of Eight (G-8) summit on June 1.  Bush again expressed his appreciation to China’s president for hosting the April trilateral talks and underscored the importance of Beijing’s cooperation in the peaceful resolution of the North Korean nuclear weapons issue.  He also reiterated to Hu the U.S. view that China has significant influence over North Korea.  The two leaders agreed on the need to work together to achieve a diplomatic solution.  Both sides also shared the view that the Japanese and South Koreans have a role to play, but Hu emphasized the urgency to get North Korea back to the table.

Hu conveyed and asked the U.S. to consider a demand from Pyongyang for some sort of bilateral contact within a multilateral format. Bush did not rule out a bilateral exchange as long as other countries were at the table. According to the U.S. senior administration official who briefed the press following the meeting, the Chinese seemed satisfied with the assurance that the U.S. would be willing to listen to North Korea concerns while sitting at the table with other parties present.

The two leaders also discussed the war on terrorism and President Bush welcomed China’s decision to sign onto the Container Security Initiative, which has not yet been finalized, but is expected to take place in the coming weeks. The subject of Iran came up briefly, with Bush stressing his concerns about the grave threat posed by Iran’s pursuit of nuclear weapons and the need for the U.S. and China to work together to address the threat. The urgency to combat proliferation in general was also discussed. President Bush highlighted the need for Beijing and Washington to fight proliferation together.  According to the U.S. briefer, Bush acknowledged that even U.S. companies engage in some degree of proliferation around the world and both countries have to be more effective in implementing their respective controls on proliferation.  Hu insisted that China has put in place a “comprehensive system” to prevent proliferation.  The U.S. side hopes that Beijing will enforce it more effectively.

On Taiwan, Hu voiced Chinese concerns about forces on the island moving toward independence and, in the words of the U.S. briefer, Bush repeated the position that the U.S. does not support independence.  Chinese media accounts of the exchange claimed that Bush has expressed his opposition to Taiwan independence as he had during his summit meeting with Jiang Zemin in Crawford last October.  In what may have been a gesture of American support for Hu Jintao’s leadership or a warning to Taiwan President Chen Shui-bian to avoid taking any provocative steps in the runup to the Taiwan presidential elections next March – or both – Bush elevated the stance of not supporting Taiwan independence to the same level as the three communiqués and the Taiwan Relations Act, terming all three components of the U.S. “one-China” policy.  Moreover, in contrast to the tough language that President Bush employed in April 2001 when he vowed that he would do “whatever it takes” to help Taiwan defend itself, Bush was quoted by the senior U.S. official as pledging within the context of our “one-China” policy, “if necessary,” to “help Taiwan to the extent possible defend itself” through the provision of defense weapons as required in the Taiwan Relations Act.

President Bush restated his vision of a candid, constructive, and cooperative relationship between the two countries.  He also issued an invitation to President Hu to visit Washington at his convenience, perhaps later this year or in early 2004.  Hu accepted the invitation and both leaders committed themselves to continuing and accelerating high-level visits between the U.S. and China.

The atmospherics of the Bush-Hu summit were “pretty good,” from the perspective of the senior briefer, who noted that there was a bit more give-and-take than usually occurs in such meetings.  The Chinese were undoubtedly pleased with President Bush’s constant refrain that the two countries need to work together more closely to achieve common objectives.  This meeting was especially important for Beijing because it was the first summit with the U.S. since Hu assumed the presidency.  In addition, it was the only high-level bilateral meeting in the first half of this year since Vice President Dick Cheney’s planned trip to Asia in April was postponed due to the Iraq War.

U.S. Slaps Sanctions on Norinco for Proliferating Missile Technology

In a sign of growing U.S. impatience with the gap between Chinese rhetoric and action in its nonproliferation policy, the Bush administration imposed tough sanctions on one of China’s biggest and most prestigious state-owned conglomerates in May.  The U.S. alleged that the North China Industries Corporation (Norinco) supplied missile technology to Iran in violation of a 1998 Executive Order and China’s own export controls issued last August.  The sanctions barred for two years all exports by Norinco and its subsidiaries to the United States, which were estimated at over $100 million last year, and prohibit any contracts between U.S. government agencies and the Chinese company during that period.

U.S. officials claimed that Washington had evidence that Norinco sold missile technology to the Shahid Hemmat Industrial Group, the Iranian government agency in charge of developing and manufacturing ballistic missiles. A State Department spokeswoman said that the penalties were imposed because of U.S. government determination that the Chinese transfer had made a material contribution to Iran’s efforts to use, acquire, design, develop, produce, or stockpile missiles capable of delivering weapons of mass destruction (WMD). The sanctions took effect on May 9 and were disclosed in documents filed with the Federal Register. They are thought to be the severest yet imposed against a Chinese company.

Although the Bush administration lauded China’s promulgation of new export control laws last summer aimed at stemming the flow of technology used to manufacture WMD and missiles, U.S. officials say that Beijing continues to lack a rigorous enforcement mechanism. The sanctions were a wakeup call to the Chinese leadership that despite expanding U.S.-Chinese cooperation on important issues like the war on terrorism and resolving the North Korean nuclear threat, the U.S. remains committed to combating proliferation and will not overlook ongoing and egregious violations.

The Chinese government denied the U.S. charges, insisting that Beijing opposes the spread of WMD and their carrier rockets. A Foreign Ministry statement faxed to reporters contained ambiguous language, however, noting that Norinco had not provided assistance to the “relevant projects of Iran,” thus leaving open the possibility that the Chinese corporation had offered aid to other illicit Iranian ventures.  Norinco subsequently issued an unequivocal statement that termed the sanctions “utterly groundless” and insisted that the company had “never assisted any country in developing such missiles” and does “not have technological capabilities in this area.” “The economic and trade cooperation between our corporation and Iran is entirely carried out within the permissible limits under the above policy and related export control laws and regulations,” the statement read.  Citing economic losses as well as damage to the corporation’s international image, Norinco reserved the right to take legal action against the U.S. government.

U.S. Opts not to Censure China on Human Rights

In a departure from past practice, the United States decided not to sponsor a resolution on China’s human rights practices at the United Nations Commission on Human Rights in Geneva in April.  The move came just two weeks after the State Department’s annual human rights report condemned China, saying that its human rights record throughout 2002 “remained poor, and the government continued to commit numerous and serious abuses.”  The report cited continuing human rights violations, including the arrests of democracy activists, trials of labor leaders, and the imposition of death sentences against two Tibetan dissidents.

The decision was undoubtedly made to avoid irritating Beijing at a time when Washington is seeking Chinese cooperation to resolve the nuclear weapons crisis in North Korea and combat terrorism.  In addition, the U.S. may have wanted to reward Beijing for not vigorously opposing the war in Iraq.  If the Bush administration had submitted a censure resolution, it would have had symbolic meaning, but would not have been supported by more than a few of the 53 nations on the UN Human Rights Commission, which is currently chaired by Libya.  Last year, the U.S. was denied a seat on the commission and was unable to table a resolution.

A State Department spokesman explained the decision as based on what the administration believes will best advance the cause of human rights in China.  He maintained that the Bush administration’s approach to promoting the human rights of Chinese citizens had achieved “limited but significant progress,” highlighting Beijing’s commitment to unconditionally cooperate with UN mechanisms, including the Special Rapporteur on Torture and the Working Group on Arbitrary Detention; China’s decision to invite the U.S. Commission on International Religious Freedom; China’s welcoming of the Dalai Lama’s special representatives to visit Lhasa; and the release of a significant number of political prisoners. The spokesman acknowledged that there had been some recent backsliding in China’s human rights record, but emphasized that the U.S. sees an opportunity to make progress with the new Chinese government. Advancing human rights in China remains “a key element of our overall China policy,” he asserted, pledging that the Bush administration would continue to press Beijing to improve its human rights practices.

Cooperation to Break International Drug Syndicate Yields Results

In an unprecedented joint effort between the U.S. Drug Enforcement Administration (DEA) and law enforcement authorities in China and Hong Kong, the U.S. and China succeeded in dismantling a massive heroin smuggling organization that targeted the U.S. and Canada. The collaborative endeavor, Operation City Lights, led to the arrest of dozens of criminals on the mainland, in the U.S., India, and Hong Kong. They were associated with a Fujian-based organization that was responsible for smuggling more than $100 million worth of Southeast Asian heroin into the U.S. over a three-year period.

Law enforcement officials from China and the U.S. jointly headed a command office that was set up in the Fujian Public Security Bureau.  In the past, the two sides had engaged in discussions before or after arrests, but this marked the first time that they conducted a joint operation.  DEA Acting Administrator William B. Simpkins applauded China’s cooperative efforts.  In a DEA news release, Simpkins said that the success of the joint investigation was made possible by real-time sharing of information by the U.S., China, and Hong Kong. “We have begun an excellent working relationship which we are confident will continue to grow,” he concluded.

SARS Causes Crisis of Confidence at Home and Abroad

The epidemic of severe acute respiratory syndrome (SARS) and its mishandling by the Chinese leadership sullied China’s international reputation and created a crisis of confidence at home this quarter.  On April 20, just 10 days after China’s Health Minister Zhang Wenkang had described SARS as “under effective control” and claimed that Beijing had only 22 cases, the government admitted that the epidemic was far more serious and declared the existence of hundreds more confirmed and suspected cases.  The health minister was sacked, along with Beijing’s mayor, who had declared the city safe.  Chinese officials attributed the fiasco to incompetence, claiming that accurate figures had not been reported to higher authorities in a timely manner, but it was apparent that a coverup had taken place.  The leadership’s perennial obsession with the preservation of social stability had taken precedence over the protection of the social welfare of its citizens.

Anger overseas mounted about the months of Chinese prevarication about the extent of SARS and the reluctance of the government to cooperate with the international community. Only after a two-week wait were inspectors from the World Health Organization (WHO) permitted to travel to the SARS outbreak’s epicenter in Guangdong.  Even after the epidemic was declared under control, international health experts warned that China’s failure to closely track the spread of the virus raised questions about the reliability of Chinese statistics. Doubts were especially voiced about the advisability of traveling to interior cities and provinces, where medical monitoring and public health care are sorely inadequate.

The SARS epidemic forced the postponement of prestigious conferences in the capital and elsewhere in China, including the Boao Forum for Asia, slated for mid-May in Boao, on the southern island province of Hainan.  Tourism, airline travel, trade, and investment slowed as foreigners shunned Beijing and Guangdong province.  The economic impact of the epidemic remains uncertain, but rough estimates made by international economists suggest that China’s GDP growth for 2003 could be reduced by between 0.5 to 2 percent.  More enduring, however, is the blow to the confidence of foreign investors and the global community who have been reminded of the uncertainties in dealing with China.  Beijing was the last city in the world to remain under a WHO advisory urging travelers to avoid nonessential travel.  The travel warning was lifted June 24, after no confirmed new cases had appeared for 20 days.  On that date, a cumulative total of 5,327 SARS cases had been confirmed on the Chinese mainland during the epidemic, with 4,934 fully recovered and 348 deaths.

Even before Beijing divulged the extent of the spread of SARS in China, Washington took steps to encourage Chinese transparency and collaborative efforts with American and international health organizations. In early April, two weeks prior to the firing of China’s Health Minister Zhang Wenkang, Health and Human Services Secretary (HHS) Tommy Thompson phoned Zhang to discuss the SARS epidemic and the two officials agreed to work together with public health experts to resolve the global outbreak. Thompson told Zhang that the U.S. and HHS are “truly committed to this being a collaborative effort with China.” In a statement that later proved false and contributed to his demise, China’s health minister told Thompson that the epidemic had peaked in China in late February.

Thompson again exchanged views by phone a month later with Chinese Vice Premier and Zhang’s successor as health minister, Wu Yi. Thompson praised the Chinese government’s measures to contain the disease and offered to provide support and assistance to China to fight the disease. The two health officials agreed to strengthen their nations’ cooperation in the prevention and treatment of SARS. Thompson specifically proposed a multiyear, multimillion dollar effort to expand collaborative work in epidemiological training and the development of greater laboratory capacity in China.  These efforts will increase the number of HHS personnel working in China beyond the two Center for Disease Control employees currently stationed in Beijing.  In addition, the United States Agency for International Development provided $500,000 in emergency funds to help China bolster its strained public health system.  The money was earmarked for the Red Cross Society of China to purchase protective gear and other medical consumables including thermometers, protective goggle, gowns, and masks to protect against SARS.

Finally, President Bush supplied much needed political support to President Hu in a phone call in late April in which he lauded the Chinese government’s extraordinary work in fighting SARS.  Hu, in turn, told Bush that SARS is the common enemy of all human beings, and assured the U.S. president that he and his country stand ready to enhance cooperation with the international community to vanquish the disease.  When the two leaders met in Evian, Bush praised Hu’s willingness to be transparent on the SARS issue and spoke highly of Hu’s leadership in combating the epidemic.

Summing Up and Looking Ahead

The relatively quick and decisive victory by the U.S. and allied forces over Iraq has further convinced China of the potency of U.S. power and the resolve of the Bush administration to eradicate threats to American interests around the globe.  Beijing is relieved that it is not a prime target of U.S. concern and has attached priority to preserving an amicable and cooperative relationship with the United States. The Bush administration continues to emphasize the positive contribution that China is making both in the war against terrorism and in seeking a peaceful solution to the brewing crisis on the Korean Peninsula. On nettlesome issues such as Taiwan and human rights, Washington has toned down its rhetoric and adopted a less confrontational approach to managing these problems. China’s proliferation infractions continue to be dealt with harshly, however, due to the perceived dangerous nexus between terrorism and weapons of mass destruction.

The U.S. and China continue to have critical differences in their approaches to resolving the North Korean nuclear issue, but their cooperation has nevertheless deepened.  This has been made possible by the Bush administration’s adherence to a peaceful solution through dialogue as well as by China’s growing appreciation of the dangers of nuclear weapons on the Korean Peninsula and its recognition that a multilateral effort is essential to secure an enduring peace. As Washington moves to complement dialogue with increased pressure on North Korea in the coming months, U.S.-Chinese cooperation will be tested.

Both countries continue to attach great importance to high-level exchanges and dialogue as a means to advance their respective and shared interests. Look for Vice President Cheney’s visit to be rescheduled in the latter half of the year and a possible visit by Premier Wen Jiabao to the United States.  Another meeting between the two presidents will unquestionably take place at the APEC Senior Leaders Meeting in October in Thailand and perhaps another summit will be held in the United States late this year or in early 2004.  China’s new Defense Minister Cao Gangchuan will also likely be hosted by Secretary of Defense Donald Rumsfeld this fall, which will provide a boost to the still lagging military relationship.