Chinese President and Communist Party General Secretary Hu Jintao toured Australian cities, engaged in summitry, and presided over the Chinese delegation at the Sydney APEC meeting. The events elicited positive publicity that underlined a good Chinese image and redounded to the benefit of Hu and the party leadership as they stressed stability and harmony at home and abroad in the lead up to the 17^th Chinese Communist Party Congress in Beijing in October. Regional harmony and China’s international image were seriously challenged in late September when the military junta in Myanmar, which regards China as its major foreign supporter, cracked down violently on swelling anti-government demonstrations led by thousands of Buddhist monks. China has long worked to block UN and other international pressure against the military regime, but faced strong pressure led by U.S. President George W. Bush to support UN and other international efforts to stop the crackdown.

Beijing is preparing for the 17^th Party Congress, projecting an image of orderly authoritarian politics.  In Taiwan, the volatile and unpredictable democratic politics of the presidential campaign are raising issues and prompting expressions of serious concern in Beijing and Washington.  The focal points have been President Chen Shui-bian’s quixotic appeals to join the UN as “Taiwan,” the Democratic Progressive Party’s (DPP) promotion of a referendum on UN membership under that name and DPP Chairman Yu Shyi-kun’s proposal for a new DPP resolution on making Taiwan a “normal country.”   The strong international reaction to these maneuvers has not deterred Chen or the DPP from the referendum on UN membership that is driven by their domestic political calculations.  However, the U.S. position did provoke debate and contributed to a DPP decision to reject the most provocative aspects of Yu’s proposals on the “Normal Country Resolution.”  What the Taiwan voters will do remains to be seen.  Against this background, it is hardly surprising that the few authorized cross-Strait contacts that have occurred have produced no results.

The main event between the two Koreas in the third quarter of 2007 was, obviously, President Roh Moo-hyun’s visit to Pyongyang. This was the first North-South summit meeting in seven years, and only the second in the 59 years since two rival states were declared in 1948 under respective U.S. and Soviet patronage, each claiming – as they do still, even after a decade of “Sunshine” – to be the sole legitimate government on the peninsula. Originally scheduled for late August, the summit was postponed until early October after North Korea was hit – yet again, and worse than ever – by crippling floods. Strictly, then, it fell outside the third quarter. But it would be perverse to exclude so key an event, especially since anticipation of how it would go dominated August and September.

Moreover, the fact that the summit coincided, almost to the day, with further progress at the Six-Party Talks (SPT) added an extra twist to what, however one evaluates it, was a crucial moment in the tangled history of inter-Korean relations. Time will tell, and we shall have a clearer idea by the year’s end; or maybe not till early 2008, when a new and almost certainly more conservative leader in Seoul – Roh’s successor will be elected Dec. 19, taking office Feb. 25 – must decide how far to accept and implement the eight-point agreement that Roh signed with Kim Jong-il.

To this writer, skeptical like many, this looks a better deal than feared. Despite regrettable if predictable brevity on the nuclear issue, and a deafening silence on human rights, the new agreement, if implemented – always a big proviso with the DPRK – presages the start of serious, large-scale, and wide-ranging inter-Korean economic cooperation. If some critics still find this one-sided – no prizes for guessing who will write the checks – at least now the focus is on solid infrastructure and joint business; it’s not simply aid (much less cash) that Kim Jong-il can use as he pleases, as was too often the case hitherto.

China and South Korea commemorated the 15^th anniversary of diplomatic normalization Aug. 24.  In contrast to the unbridled optimism and buoyant lure of mutual economic opportunity that characterized the 10^th anniversary of normalization, this one was greeted with more realism and mixed feelings about the future of the relationship.  China’s relationship with North Korea, in contrast, remained estranged as ever despite an important meeting between Foreign Minister Yang Jiechi and National Defense Commission Chairman Kim Jong-il in Pyongyang. This was the first Chinese high-level contact with Kim Jong-il since Tang Jiaxuan went to Pyongyang as a special envoy immediately following North Korea’s nuclear test in October of 2006.

Changes in the Sino-South Korean economic relationship, driven by China’s rising international competitiveness, changes in Chinese investment regulations safety, and concerns attached to Chinese consumer products, were reinforced by the sudden death due to medical error of South Korea’s number two diplomat in Beijing. South Korean caution regarding Chinese policies toward North Korea remained a central focus of concern, as China’s economic growth and influence continued to expand in both parts of the Korean Peninsula.

As the second half of 2007 began, Japan focused on the Upper House election held July 29. Beset by political scandals and dogged by questions of competency, the Liberal Democratic Party (LDP) suffered a historic defeat. Following the election, Prime Minister Abe Shinzo was preoccupied with a Cabinet reshuffle that resulted in the appointment of Machimura Nobutaka as foreign minister and Komura Masahiko as minister of defense.  At the same time, the government was preoccupied with preparations for the Japan-North Korea Working Group meetings as the Six-Party Talks appeared to gather momentum. Meanwhile, Beijing worked to accentuate the positive, the approaching anniversary of the normalization of Japan-China relations (1972) and to downplay history, the July anniversary of the Marco Polo Bridge Incident (1937).

The tempo in the bilateral relationship began to pick up with the late August visit to Japan of China’s minister of defense and the early September meetings between Prime Minister Abe and President Hu Jintao on the sidelines of the APEC meeting in Sydney.  On Sept. 12, Abe announced his resignation. Beijing’s reaction was to make clear the importance China places on the development of a stable bilateral relationship.  On Sept. 25 Beijing congratulated Prime Minister Fukuda Yasuo on his accession to office and expressed hope that the reciprocal strategic relationship would continue to develop in a healthy and stable manner.

If the previous quarter was marked with little movement in the stalemate between Tokyo and Pyongyang, this quarter appears to be transitional. North Korea shut down the Yongbyon nuclear reactor and announced its intention to disable other nuclear facilities by the year’s end. In Japan – Abe Shinzo who gained national popularity for his hardline approach to North Korea – stepped down in September, and Japan’s new Prime Minister Fukuda Yasuo has hinted at softening Japan’s stance toward the North. Arguably, the quarter’s developments signaled that the pendulum of Japanese foreign policy may swing back closer toward dialogue with Pyongyang.

Abe’s decision not to visit Yasukuni Shrine on Aug. 15 was welcomed by Seoul, keeping bilateral relations relatively cool compared to the wars of words that had occurred under Koizumi. History issues continued to linger between Japan and South Korea, as Seoul made noises about Japan’s “lack of repentance” on its 62^nd Liberation Day and the two countries continued to clash over the naming of the Sea of Japan/East Sea and over Japan’s 2007 Defense White Paper’s inclusion of the Dokdo/Takeshima islets as part of Japanese territory. But the quarter also witnessed important efforts aimed at strengthening bilateral cooperation. Tokyo and Seoul agreed to conduct joint surveys on the level of radiation in waters near the Dokdo/Takeshima islets and on daylight savings time policies. South Korea seemed reasonably happy with Fukuda as Japan’s new prime minister, as he said early on that he would seek more friendly relations with China and South Korea and not visit Yasukuni Shrine. Tokyo expressed concerns over the timing of the inter-Korean summit, watchful of its possible impact on the December presidential election in South Korea, and of one-sided payoffs from Seoul to Pyongyang.

By any standard, the third quarter appeared to be the finest moment for the Shanghai Cooperation Organization (SCO):  the seventh summit in Bishkek, Kyrgyzstan was the largest summit ever held by the regional organization; the SCO heads of state signed its first multilateral treaty (Treaty among the Member States of Good Neighborliness, Friendship and Cooperation, or “The Friendly Treaty”) and it was the first time all member countries participated in a joint antiterrorism military exercise in Russia.

A closer look at the chemistry between Russia and China, however, reveals a far more complex interactive mode of cooperation, competition, and compromise. While security cooperation moved forward culminating in the Peace-Mission 2007 military exercise, the game of petropolitik was heating up in Central Asia with Beijing gaining the upper hand, at least for the time being. The quarter ended, however, with significant progress in energy cooperation as the long-awaited Eastern Siberia-Pacific Ocean (ESPO) oil pipeline was about to extend a branch line to China’s energy-thirsty northeast region. Thus, in his eight years as Russian president, Putin seems to have set a solid record in dealing with Russia’s southern neighbor: pure geostrategy has outweighed market fundamentals and friendly partnership with Beijing.

The quarter opened with Assistant Secretary of State Christopher Hill proclaiming that we were “a few days away” from overcoming the “technical issues” that were holding up the Korean Peninsula denuclearization process. Unfortunately, those few days did not take place until mid-June, postponing the long-awaited 60-day test of the Feb. 13 “action for action” agreement until next quarter. Also pending is a test of the willingness of the nations of Southeast Asia to develop a meaningful Charter in commemoration of ASEAN’s 40^th birthday, following this quarter’s review of (and reported revisions to) the groundbreaking draft provided last quarter by its Eminent Persons Group. The commitment of Thailand’s military leaders to restore democracy is also being tested, as is Beijing’s commitment to Hong Kong’s Basic Law on the 10^th anniversary of reversion. Meanwhile, new U.S. Secretary of Defense Robert Gates and China’s new PLA Deputy Chief of the General Staff Zhang Qinsheng passed their initial diplomatic tests this quarter while making their first appearance at the Shangri-La Dialogue in Singapore. Finally, East Asia’s economy, 10 years after the Asian financial crisis, appears to have nicely survived the test of time.

After taking office last September, Abe Shinzo won kudos at home and abroad by flying to China and South Korea to mend relations with Japan’s two disgruntled neighbors. Critics who worried he would be too blunt and nationalistic to succeed as prime minister were quickly proven wrong. Few anticipated how many problems he would have on the domestic front. In the last quarter, Abe’s high poll ratings were driven down by a series of scandals in his Cabinet and by backroom political maneuvering that gave the impression he was reversing Koizumi’s reformist agenda. At the beginning of this quarter Abe once again used foreign policy – this time a successful summit with President George W. Bush and at the G-8 – to push his poll numbers up again. The success of the summit was particularly reassuring in the context of growing Congressional criticism of Japan over Tokyo’s treatment of the “comfort women” issue.

Abe’s overseas successes were soon offset by a domestic scandal over the government’s mismanagement of pension accounts (that his government could ill afford) in the lead up to Upper House elections at the end of July. Abe will have to survive the Upper House election (he is not running but it will be seen as a referendum on his job) if he is going to move forward with his greatest goal: constitutional revision. Abe and the Liberal Democratic Party (LDP) hoped at one point that the constitutional revision pledge would carry them to victory in the Upper House election, but the pension system scandal has clearly become the issue on voters’ minds – much to the government’s chagrin. Still, Japanese voters appreciate toughness and perseverance, which Abe has in abundant supply, and that may save him yet.

The second round of the Strategic Economic Dialogue produced a few agreements, but failed, as expected, to make headway on the contentious issue of the value of China’s currency. U.S. lawmakers on both sides of the aisle called for Beijing to take immediate steps to reduce its $232 billion trade surplus with the United States. Presidents George Bush and Hu Jintao met on the sidelines of the Group of Eight (G-8) summit in Heiligendamm, Germany. While both countries opposed Germany’s push for binding caps on greenhouse gas emissions, they continued to disagree on the degree of responsibility that emerging economies (that are among the top emitters of greenhouse gasses) should bear for reducing emissions. The failure of many Chinese products to meet safety standards became a new source of friction in the bilateral relationship. The fourth round of the Senior Dialogue provided an opportunity for high-level officials to review a broad range of bilateral, regional, and global issues.