After the completion of the first round of “get-acquainted” meetings aimed at laying the foundation for cooperation on a broad range of issues, both the U.S. and China agree that the bilateral relationship has gotten off to a good start.  While there is acute awareness on both sides of the challenges, there is a shared sense that their futures are inextricably linked and that cooperation is essential to global economic prosperity and security.  The quarter opened with the first face-to-face meeting between Presidents Hu and Obama on the sidelines of the G20 financial summit in London.  On separate visits to Beijing, Todd Stern, the U.S. special envoy for climate change, and House Speaker Nancy Pelosi underscored the importance of combating the effects of global warming.  U.S. Treasury Secretary Timothy Geithner traveled to China to prepare for the first round of the Strategic and Economic Dialogue.  Washington sought China’s cooperation on pressing regional security issues, including North Korea and Afghanistan-Pakistan.  After an 18 month hiatus, the Defense Consultative Talks were held in Beijing, giving a desperately needed boost to the bilateral military relationship.

First Hu-Obama tête-à-tête

The quarter opened with the first face-to-face meeting between U.S. President Barack Obama and Chinese President Hu Jintao in London on the sidelines of the G20 financial summit.  The meeting produced three important outcomes: 1) Obama accepted Hu’s invitation to visit China later this year; 2) the two heads of state agreed to work together to build a positive, cooperative, and comprehensive U.S.-China relationship for the 21^st century and to maintain and strengthen exchanges at all levels; and 3) the two sides established the U.S.-China Strategic and Economic Dialogue (S&ED), to be headed on the U.S. side by Secretary of State Hillary Clinton and Secretary of Treasury Timothy Geithner and on the Chinese side by Vice Premier Wang Qishan and State Councilor Dai Bingguo.  Topics discussed included the global economy, climate change, North Korea, Iran, Sudan, Taiwan, Tibet, human rights, Pakistan, and Afghanistan.

The hoped for establishment of a close personal rapport or at least “good chemistry” between Hu and Obama – admittedly difficult to achieve in a single meeting – seems to have not been realized.  In a background briefing on the leaders’ discussions, a senior administration official twice described the meeting as “business-like.”  By contrast, President Obama’s meeting with South Korean President Lee Myong-bak was depicted as “warm,” probably by the same senior administration official.  PRC media treatment of the meeting was generally upbeat, but betrayed Chinese concern that differences over Taiwan and Tibet could disrupt progress in bilateral ties.  Xinhua cited Hu as warning that while the situation in the Taiwan Strait is “continuing to ease and improve,” it “may change.”  Hu also called on the U.S. to “fully understand and respect” China’s stand on Tibet and oppose Tibetan independence.

Consultations between the two heads of state subsequently took place in two telephone conversations.  On May 6, Hu and Obama reportedly discussed bilateral relations, North Korea, South Asia, and the H1N1 flu epidemic.  On June 3, they exchanged views on the situation on the Korean Peninsula in the aftermath of North Korea’s second nuclear test.

Climate change emerges as early priority for Obama administration

House of Representatives Speaker Nancy Pelosi led a delegation from the U.S. Congress to China in late May on a working visit devoted mostly to energy and climate change issues.  Prior to her departure, she told a Capitol Hill press conference that she hoped to explore the possibilities for common ground so that “we’re able to seal the deal by the time we go to Copenhagen,” referring to the United Nations-sponsored climate conference planned for December in Denmark.  Speaking at a clean energy forum in Beijing, Pelosi characterized the climate change crisis as a “game changer” in U.S.-China relations, noting that “it is an opportunity that we cannot miss.”  The California Democrat also met President Hu Jintao, Premier Wen Jiabao, and her counterpart Wu Bangguo, head of the National People’s Congress.

The Congressional delegation left Beijing divided over whether their visit yielded progress.  Pelosi told a news conference that she was “hopeful” after their meetings that common ground could be reached on climate change.  Her optimistic assessment was echoed by Sen. John Kerry, who said he was encouraged by Chinese leaders’ commitment to tackling the consequences of global warming and impressed by China’s steps in recent years to enact tough vehicle fuel standards and expand its capacity for wind generation.  But Rep. F. James Sensenbrenner, the ranking Republican on the House Select Committee for Energy Independence and Global Warming who joined the delegation, said that he was discouraged by China’s refusal to commit to greater cuts in greenhouse gases while insisting that developed nations do more to reduce their emissions, according to the New York Times.  He criticized Beijing’s linkage of their proposed reductions to the size of China’s economy, which, he said, would result in “a significant increase in emissions in China.”

Widely known as an outspoken critic of China’s human rights record and specifically for unfurling a banner in Tiananmen Square in 1991 commemorating those who died there on June 4, 1989, Pelosi conspicuously refrained from mentioning human rights in public remarks while in China.  In response to critics, Pelosi insisted, however, that she did not shy away from raising human rights concerns with Chinese leaders.  After her return, Pelosi sought to reburnish her credentials as a staunch advocate of human rights at the Brookings Institution, where she stated that U.S. advocacy for protection of human rights in China has not achieved progress, adding that “somehow or other we have to find a way to do that.”

Two weeks after Pelosi’s visit, U.S. Special Envoy for Climate Change Todd Stern traveled to Beijing to press China to agree to hard numbers on emission reductions under the next treaty on global warming that will supplant the Kyoto Protocol Treaty that was negotiated in 1997, came into force in February 2005, and expires at the end of 2012.  Stern reportedly met China’s Climate Change Envoy Xie Zhenhua twice during his visit.  Vice Premier Li Keqiang reiterated to Stern China’s long-standing position that developing countries like China should be held to a different standard than developed countries.  “China would like to maintain the principle of ‘common but differentiated responsibilities,’ actively participate in negotiations and play a constructive role to promote positive results from the Copenhagen conference,” Li told his interlocutor.

So far, the gap between the U.S. and China remains wide.  China says the U.S. should reduce its greenhouse gas emissions by 40 percent below 1990 levels by 2020.  The bill that passed the House of Representatives at the end of June, which some view as too ambitious, would require U.S. emissions to decline 17 percent by 2020.  Both countries say they are committed to finding common ground for cooperation, however.  In a briefing on Stern’s visit, China’s Foreign Ministry spokesman said that China and the U.S. “had unanimously agreed, on the basis of the principle of common yet discriminative responsibility,” to strengthen their “partnership cooperation” on clean energy and climate change.  During Stern’s visit, an article on the China Daily website reported that although a “major breakthrough” eluded the two sides during the talks, they reached agreement to strengthen scientific cooperation in the fight against global warming.

Geithner visits the Middle Kingdom

On his first visit to China, Treasury Secretary Geithner encouraged China to keep up massive stimulus spending and diversify its economy away from a heavy reliance on exports, while offering assurances that Washington intends to protect the value of China’s investment in U.S. government debt.  His approach to dealing with the Chinese marked a radical shift from his predecessor, Henry Paulson, President George W. Bush’s Treasury secretary.  Whereas Paulson constantly prodded Beijing to allow its currency, the yuan, to rise in value against the dollar so that U.S. exports to China would be more affordable to Chinese, Geithner sought to persuade his counterparts to continue to buy U.S. Treasury bonds and to ease China’s concerns about the ballooning U.S. budget deficit.

In a speech to Beijing University, where Geithner was a student in the summer of 1981, he stressed that the steps taken now to address the immediate financial and economic crisis should lay the foundations for more balanced, sustained growth of the global economy. “How successful we are in Washington and Beijing will be critically important to the economic fortunes of the rest of the world,” he stated.  Geithner acknowledged the “special responsibility” that the U.S. has to play in creating a strong and stable international financial system and promised that after the U.S. recovers from the crisis it would cut the fiscal deficit, eliminate extraordinary governmental support that has been put in place to overcome the crisis, preserve the openness of the U.S. economy, and maintain the policy framework necessary for durable and lasting sustained non-inflationary growth.  He called on China to implement measures to raise household incomes and reduce the need for households to save large amounts, which will enable a shift to basing future growth on domestic demand.  In addition, Geithner pledged that the U.S. would fully support a greater role for China in the principal cooperative arrangements that help shape the international system.

In the Q&A following the speech, a Chinese student voiced concern about the security of China’s dollar assets.  Secretary Geithner began his response by stating that “China’s assets in the United States are very secure.”  He then paused as if he had completed his answer, prompting laughter from his audience.  Geithner also chuckled and then added: “Our financial system has begun its reconstruction, and the government will also maintain a strong dollar policy.”

Chinese officials seized the opportunity presented by Geithner’s visit to Beijing to signal their desire for a constructive working relationship with the Obama administration.  According to Xinhua, President Hu highlighted the two countries’ “extensive common interests” and “important responsibilities.”  Hu reportedly said that China is willing to “work alongside the United States” and “further strengthen dialogue and consultation.”  Hu and Geithner both noted the importance of the U.S.-China S&ED.  Hu called the new dialogue mechanism an “important platform for deepening understanding, mutual trust, and cooperation between the two countries.”  Geithner said the U.S. is looking forward to seeing positive results from the first round of the S&ED in July.

U.S. seeks China’s cooperation on regional security issues

Washington appealed to a reticent China to get more deeply involved in America’s two-front war with Islamist militants in Afghanistan and Pakistan, dubbed Af-Pak.  In mid-April, the Obama administration dispatched Richard Holbrooke, its special representative for Afghanistan and Pakistan, to China and Saudi Arabia as part of an effort to enlist the aid of key allies of Pakistan in the effort to stabilize the country.  Although China has been traditionally reluctant to interfere in the internal affairs of other countries, growing Chinese concerns about the militant threat near its western border that could destabilize the region and threaten China’s growing economic interests in Pakistan generated hope that the U.S. might be able to persuade Beijing to play a more active role.

The U.S. requested that China provide training and equipment to help Pakistan counter a growing militant threat.  In addition, Washington urged Beijing to use its good offices with the Pakistanis to press them to crack down harder on the insurgency.  The escalating war in Pakistan was high on the agenda when the U.S. and Chinese presidents spoke by phone on May 6 on the heels of President Obama’s meeting with the Afghan and Pakistani presidents.  A White House statement maintained that Obama conveyed his concerns about threats to Pakistan by militant extremists and terrorists.

U.S. appeals appear to have been heeded.  In mid-June it was reported that the Chinese were sharing intelligence and equipment with the Pakistanis and that the two countries were teaming up to fight what government officials called a “syndicate” formed between the Taliban and Chinese Muslim separatists.  To enhance Pakistan’s ability to police the border region, China reportedly offered to sell Pakistan $280 million in equipment, including vehicle and mobile scanners that can detect car bombs.

The U.S. also sought more help from Beijing in creating stability and promoting economic development in Afghanistan.  Among other requests, the Obama administration asked China to open an alternative logistics route through western China into Afghanistan.  In addition to being raised by executive branch officials, the proposal was broached by Congressman Mark Kirk (R-IL), co-chair of the U.S.-China working group, on a visit to China in May.  In a talk to the Center for Strategic and International Studies (CSIS) delivered with his co-chair Rick Larsen (D-WA) on June 8, Kirk noted that when he was in Beijing with Speaker Pelosi, he proposed to the Chinese that the U.S. and China seek to cooperatively provide assistance to the International Security Assistance Force (ISAF) in Afghanistan.  Specifically, Kirk suggested that the Afghan government be permitted to purchase food and fuel in western China, which would benefit the economies of both Kashgar and Urumqi, while ensuring reliable deliveries of needed goods to ISAF.  “The U.S. and China are up against the same enemy – a very well funded radical Islamic narco-insurgency” that is challenging the public security bureau and the PLA on the Chinese side of the border and challenging the ISAF and Afghan government on the Afghan side of the border, he told CSIS.   Kirk revealed that he had received “pretty positive signals” from the Chinese government and upon his return had discussed what he learned with Ambassador Holbrooke.

Consultations also took place on Sudan when retired Air Force Maj. Gen. J. Scott Gration, President Obama’s newly appointed special envoy on Sudan, visited China on May 23, the first stop on a multination tour that included Qatar, Britain, and France to revive efforts to bring peace to Sudan’s western Darfur region.  Gration met with China’s Special Representative for Darfur Liu Guijin and discussed “deepening U.S.-China cooperation over shared concerns in Sudan.”

The most urgent regional security concern for the U.S. and China this quarter was North Korea, which undertook a series of destabilizing actions.  In early April, Pyongyang tested a long-range missile. Then, it conducted its second nuclear test in less than three years, declared its intention to withdraw from the 1953 Korean Armistice Agreement, and announced for the first time that it was prepared to use nuclear weapons in an offensive capacity.  Beijing and Washington worked closely in the UN Security Council along with the other UNSC members, Japan, and South Korea to forge a consensus first on a presidential statement condemning the missile launch and subsequently on a new resolution that tightened sanctions against North Korea.

In early June, U.S. Deputy Secretary of State James Steinberg traveled to Beijing after attending the Shangri-La Dialogue in Singapore and holding consultations in Japan and South Korea.  In addition to seeking Beijing’s support for harsher sanctions against North Korea, Steinberg attempted to engage the Chinese in a discussion about a more effective and longer term strategy toward the Korean Peninsula.  A Hong Kong Zhongguo Tongxun She report quoted Steinberg as saying: “Our visit is to discuss from a long-term angle how to establish peace and stability in Northeast Asia and how to meet the challenge brought by the DPRK nuclear program over a long time to come.”

While U.S.-Chinese coordination on North Korea, Sudan, Pakistan and other regional issues remains promising due to increasing overlap in the two countries’ interests, the absence of mutual strategic trust will continue to hamper effective cooperation.  Evidence of this lack of trust and suspicion of each other’s strategic intentions was apparent on several occasions this quarter.  Just one day after Presidents Obama and Hu discussed Pakistan by phone, China’s Ambassador to Pakistan Luo Zhaohui voiced concern about U.S. policy in the region in a speech to Pakistani business leaders.  Luo maintained that China was worried about the presence of a large number of foreign troops in Afghanistan and about the growth of “outside influence” in the region.  Luo declared that U.S. strategies needed some “corrective measures.”

U.S. suspicion toward Chinese intentions was evident in remarks made by Secretary of State Clinton at a town hall meeting at the State Department on May 1.  Criticizing the Bush administration’s attempts to isolate anti-U.S. leaders in Latin America, Clinton said that the U.S. can no longer afford such an approach, especially when competing for influence with countries like Russia, China, and Iran.  “If you look at gains, particularly in Latin America, that Iran is making and China is making, it is quite disturbing.  They are building very strong economic and political connections with a lot of these leaders.  I do not think that is in our interests.”

Military ties progress amid continuing confrontations in China’s EEZ

In a continuing pattern of confrontation between U.S. ocean surveillance ships and Chinese fishing and naval vessels, the USNS Victorious was harassed by Chinese ships 170 miles off the coast of China in the Yellow Sea on May 1.  As in the case of the incidents that were made public by the Pentagon in early March, the U.S. side claimed that the Victorious was engaged in routine operations in international waters.  China insisted that the presence of the U.S. ship in its Exclusive Economic Zone (EEZ) was illegal.  Although the series of dangerous encounters did not result in any damage to U.S. or Chinese ships, in a subsequent incident on June 11 a Chinese submarine reportedly collided with a towed sonar array trailing from the destroyer USS John S. McCain off the Philippines.  The official China Daily cited Chinese military experts as saying that the collision probably occurred due to a misjudgment of distance by the U.S. destroyer, which failed to detect the submarine, and the estimation by the Chinese sub that the McCain was not towing sonar arrays.

Recognizing the potential for accidents involving casualties and the detrimental effect that a major incident such as the April 1, 2001 collision by a Chinese fighter jet with a U.S. E-P3 surveillance plane could have on the bilateral relationship, U.S. officials made concerted efforts throughout the quarter to engage the Chinese in discussions about maritime safety and operational communication to avoid unwanted clashes.  President Obama discussed the naval confrontations with President Hu at the G20 summit meeting.  Adm. Gary Roughead raised U.S. concerns about unsafe maritime maneuvers conducted by Chinese ships in his meeting with PLA Navy chief Adm. Wu Shengli.  Commenting on the talks after his return, Roughhead told Defense News that he and Adm. Wu agreed “that we are going to disagree on the interpretation” of the UN Convention on the Law of the Sea.  He underscored his message to the Chinese was “that there should be nothing done to endanger our sailors or our ships that are operating there.”

In a May 15 online article, China Daily cited a senior Chinese military source as saying that the Chinese and U.S. navies were searching for ways to “alleviate disagreements” over international law on maritime rights.  The article quoted Adm. Robert Willard, commander of the Pacific Fleet, stating on the sidelines of the Shangri-La Dialogue that “the UN Law of the Sea permits military activity inside exclusive economic zones, and we’ll continue to do that.”  At the same time, Willard said the two nations are going to “have to work our way through” differences on maritime rights “so they don’t continue to escalate.”

A step was taken toward avoiding such dangerous maritime encounters at the 10^th round of the Defense Consultative Talks (DCT), which was held in Beijing in late June.  The Chinese and U.S. sides, led respectively by Deputy Chief of the PLA General Staff Lt. Gen. Ma Xiaotian and Undersecretary of Defense for Policy Michele Flournoy, “expressed willingness to avoid a recurrence of recent incidents of confrontation between Chinese vessels and U.S. naval ships off China’s southern coast” and agreed to resolve such incidents “as carefully as possible” should they happen to occur again,” according to the China Daily.  Moreover, they agreed to discuss the dispute at a special meeting in August under the umbrella of the U.S.-China Military Maritime Consultation Agreement (MMCA), which was established in 1998 to improve maritime safety between the U.S. and China.

Other issues discussed at the DCT included North Korea, counter-piracy activities in the Gulf of Aden, the Obama administration’s Af-Pak strategy, U.S. arms sales to Taiwan, and U.S.-Chinese military exchanges.  The two nations agreed to a series of senior military-to-military activities and visits in the latter half of this year, some of which had been scheduled to take place in 2008 but were postponed due to China’s protests over the approval of a $6.5 billion weapons package for Taiwan last October.

A few weeks before the DCT, several Chinese complaints about the bilateral military relationship appeared on the China Daily website.  Maj. Gen. Jin Yinan, director of the Institute of Strategic Studies at China’s National Defense University, objected to the U.S. pinning blame on China for obstructing military exchanges.  He accused the U.S. of reversing its prior willingness to invite China to observe its “advanced weapons and key military training.”  Maj. Gen. Luo Yuan, a senior researcher with the PLA’s Academy of Military Sciences, warned the U.S. against asking “for China’s help without taking into consideration its security concerns and the opinion of ordinary Chinese.”

However, after the defense talks closed, China’s appraisal of both the talks and the military relationship was upbeat.  China Daily portrayed the talks as “more than an exercise in routine diplomatic courtesy as the two militaries reached substantial agreement on major issues of mutual concern.”  The newspaper hailed the agreement to exercise the “utmost discretion” at sea as indicating a “maturing of military relations based on mutual respect, trust, and benefit.”  At a press conference, Flournoy called the talks “constructive” and stressed the shared perspective that “engaging in continuous dialogue on strategic issues will lead to a much more sustained and cooperative relationship between the United States and China over time.”  She added that the U.S. hopes to build on the common interests that were identified to move the defense relationship forward.  Flournoy further stated that the U.S. does not view China as an adversary and that, despite differences, there are substantial issues on which the two countries can cooperate.

The only other notable U.S.-Chinese military-to-military interaction this quarter was a meeting between Secretary of Defense Robert Gates and Lt. Gen. Ma Xiaotian on the margins of the Shangri-La Dialogue in Singapore and talks between U.S. Chief of Naval Operations Adm. Roughead and Chinese Navy chief Adm. Wu in Qingdao during celebrations to mark the 60^th anniversary of the founding of the People’s Liberation Army Navy.  Among the 21 foreign naval vessels from 14 countries that assembled in Qingdao to participate in an international fleet review was the U.S. missile destroyer USS Fitzgerald, a Japan-based ship from the 7^th Fleet.

Looking ahead

The groundwork has been laid for strengthened bilateral cooperation but the issues are complex and the challenges are significant.  It remains to be seen whether cooperation will yield concrete results.  The first opportunity to achieve progress will be the inaugural meeting of the S&ED, which is scheduled to be held in July in Washington D.C.  In November, President Obama will make his first visit to China.  Wu Bangguo, head of the National People’s Congress, and Lt. Gen. Xu Caihou, vice chairman of the Central Military Commission of the Communist Party, will visit Washington before the end of the year. The United Nations conference on climate change in Copenhagen, Denmark in December will provide a test of both countries’ will and ability to find common cause in the interest of reversing the negative effects of global warming.