Senior US and Chinese officials publicly emphasized positive developments in the bilateral relationship at the eighth US-China Strategic and Economic Dialogue, while privately raising concerns. The second US-China Cybercrime and Related Issues High-Level Joint Dialogue convened a week later. The South China Sea persisted as a major area of tension as an UNCLOS Tribunal ruled in favor of the Philippines in its case against China. National Security Adviser Susan Rice traveled to Beijing in late July to prepare for the US participation in the G20 Summit in Hangzhou and what is likely to be the last meeting between Xi Jinping and President Obama. Bilateral military ties maintained an active pace with a visit by the US chief of naval operations to China in July, a port visit by a US guided-missile destroyer to Qingdao in August, and Chinese participation in the Rim of the Pacific (RIMPAC) military exercises in Hawaii.

The South China Sea remained the most contentious issue in the US-China relationship in the early months of 2016. North Korea’s fourth nuclear test and missile launches posed both a challenge and an opportunity. After two months of intense consultations, the US and China struck a deal that led to unprecedentedly tough sanctions on Pyongyang. Xi Jinping attended the Nuclear Security Summit in Washington DC at the end of March and met President Obama. Their joint statements called for cooperation on nuclear security and climate change. Relations between the militaries hit a snag as Secretary of Defense Ashton Carter postponed a planned visit to China and Beijing rejected a request for a US aircraft carrier battle group to visit Hong Kong. Talks continued on a bilateral investment treaty, but China failed to submit a new “negative list,” leaving prospects uncertain for concluding a BIT by the end of Obama’s term.

Despite growing friction between the US and China on a number of issues, Xi Jinping’s state visit to the US in September was mostly positive and produced important outcomes on climate change, cyber security, and avoiding accidents between military aircraft. Tensions persisted in the South China Sea with China unwilling to stop its construction and militarization of terraformed reefs. The USS Lassen, a US Navy guided-missile destroyer, exercised international rights of freedom of navigation by sailing within 12nm of Chinese-occupied Subi Reef. The Obama administration notified Congress of its intent to sell a $1.83 billion arms package to Taiwan prompting Chinese objections, but no suspension of bilateral military exchanges. Presidents Obama and Xi met again on the margins of the Paris climate change conference in late November. They also conferred by phone, helping to conclude an historic, ambitious, global, agreement to reduce emissions at COP21.

Preparations for Chinese President Xi Jinping’s state visit to the US in September were the primary focus of the US-China relationship from May to August. The seventh Strategic and Economic Dialogue (S&ED) was held in June in an effort to tee up agreements for the summit. Friction increased on a range of issues, including China’s artificial island building in the South China Sea, Chinese cyber hacking against US companies and the US government, and repressive laws and actions undertaken by the Chinese government, some of which are likely to have negative repercussions for future US-China people-to-people exchanges. National Security Adviser Susan Rice traveled to China at the end of August to finalize deliverables for the summit amid reports of a possible Obama administration decision to impose sanctions on China for cyber-enabled theft of US intellectual property before Xi’s arrival.

2015 opened with high-level exchanges in preparation for the Strategic and Economic Dialogue, scheduled for early summer, and Xi Jinping’s state visit in September. Visits to China were made by Deputy Secretary of State Tony Blinken, Treasury Secretary Jacob Lew, Commerce Secretary Penny Pritzker, and Homeland Security Secretary Jeh Johnson. Chinese State Councilor Yang Jiechi met National Security Adviser Susan Rice in New York. Military exchanges included dialogues, ship visits, joint drills, and video calls. The South China Sea remained a source of friction as evidence mounted that China is building military outposts on reefs in the Spratly Islands. In response to the issuance of the revised US-Japan Defense Guidelines, China voiced concerns and called the alliance outdated. Despite US objections, a total of 57 countries signed up to be founding members of the Chinese-led Asian Infrastructure Investment Bank. China held its annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Congress, announcing an economic growth target of around 7 percent and an increase in its defense budget of 10.1 percent in 2015.

The highlight of the final months of 2014 was the summit between Presidents Obama and Xi Jinping, which produced agreements on visa extensions, military confidence-building measures, climate change, and information technology. Alongside progress, tensions persisted over China’s activities in the South China Sea and its continued promotion of regional security architecture fashioned by Asian nations, with the US role unclear at best. The 25th Joint Commission on Commerce and Trade (JCCT) convened in Chicago in mid-December. The “Umbrella Movement” in Hong Kong introduced a new source of friction in the bilateral relationship as Beijing suspected Washington’s instigation behind the scenes.

The US and China held the sixth Strategic and Economic Dialogue in Beijing in July.  None of the myriad of problems in the relationship were solved, but the annual meetings provided an opportunity to take stock of bilateral relations and hold high-level discussions.  Tensions in the South China Sea caused by China’s deployment of an oil rig off the Paracel Islands dominated many bilateral and multilateral meetings.  There were several military exchanges, with a visit to the US by Chief of the General Staff of the PLA Fang Fenghui and a visit to China by Chief of Naval Operations Adm. Jonathan Greenert.  The PLA Navy participated in the US-led RIMPAC military exercises for the first time. In an incident reminiscent of the 2001 collision between a Chinese fighter jet and a US surveillance plane, a Chinese fighter flew dangerously close to a US Navy P-8 Poseidon aircraft.

The complexity of the US-China relationship was in sharp relief in the first four months of 2014.  Differences over maritime disputes along China’s eastern periphery were at the top of the agenda.  Russia’s seizure of Crimea introduced a new point of contention. Despite much diplomatic activity, little progress was made on a way forward in seeking denuclearization of North Korea.  US Defense Secretary Chuck Hagel made a fruitful visit to China that included very sharp exchanges with his Chinese counterparts and a tour of China’s aircraft carrier.  Michele Obama along with her children and mother toured China promoting education and people-to-people exchanges.  The full range of issues in the bilateral relationship was discussed by Presidents Obama and Xi Jinping when they met on the margins of the Nuclear Security Summit in The Hague.

Bilateral interactions in the final months of 2013 were characteristically active. Secretary of State John Kerry attended the APEC Economic Leaders Meeting and the East Asia Summit in President Obama’s place, and met President Xi Jinping and Premier Li Keqiang. There were several military exchanges, including the first-ever live drill involving members of the US and Chinese armed forces. A week after the Chinese military announced the establishment of its East China Sea Air Defense Identification Zone (ADIZ), Vice President Biden visited China along with Japan and South Korea. On the economic front, the 24^th Joint Commission on Commerce and Trade (JCCT) was held in Beijing. US and Chinese navy ships got within 100 yards of each other in yet another close call.

With their domestic challenges in mind and a shared need for a stable bilateral relationship, Presidents Barack Obama and Xi Jinping met for a day and a half “no necktie” official working meeting to discuss the panoply of bilateral, regional, and global issues that affect US and Chinese interests. The fifth annual Strategic and Economic Dialogue (S&ED) was held in Washington on July 10-11, along with the Strategic Security Dialogue (SSD) and the first Cyber Working Group.  Cyber security, especially cyber theft, was a prominent and contentious issue, aggravated by the revelations of former NSA contractor Edward Snowden.  Maritime disputes in the East and South China Seas were also a source of tension.  The bilateral military relationship was a bright spot, with the visit to the US of Chinese Defense Minister Chang Wanquan.

With Xi Jinping’s assumption to the presidency at the National People’s Congress, China’s leadership transition finally ended and high-level US-China contacts and exchanges picked up steam.  Senior US officials traveled to China in succession to discuss urgent matters such as North Korea’s third nuclear test as well as less pressing questions such as how to define the “new type of major power relationship” between the US and China. Secretary of the Treasury Lew, Secretary of State Kerry, Chairman of the Joint Chiefs of Staff Dempsey, and Deputy Secretary of State Burns visited Beijing.  North Korea’s third nuclear test provided an opportunity for the US and China to cooperate more closely.  Cybersecurity rose to the top of the bilateral agenda as growing evidence revealed the extent of Chinese state-sponsored hacking into US government agencies and companies.

The rare convergence of a US presidential election cycle and China’s once-in-a-decade leadership transition caused both countries to focus their energies and attention domestically in the last four months of 2012. The US held its presidential election on Nov. 6 and China held its 18^th Party Congress Nov. 8-14.  The reelection of President Obama was a relief for Beijing.  Although China has plenty of complaints about his policies, it preferred to deal with him for another four year term, both because of the uncertainty that the election of Mitt Romney would have brought to US foreign policy and because the Chinese generally favor the status quo when it comes to US leadership.   Washington was simply glad to get the Chinese leadership transition underway since it appeared that Chinese leaders and the bureaucracy were distracted and many decisions had been put on hold pending announcement of the new leadership lineup.

In the second trimester of 2012, the US began to flesh out its rebalancing to Asia strategy, prompting Chinese concerns. The fourth round of the Strategic and Economic Dialogue (S&ED) was held in Beijing in May amid a kerfuffle over Chinese dissident lawyer Chen Guangcheng.  Presidents Barack Obama and Hu Jintao held their 12^th and likely final bilateral meeting in June on the margins of the G20 Summit in Los Cabos, Mexico.  Bilateral friction intensified over developments in the South China Sea.  US-China military interactions stepped up with a visit to the US by Chinese Defense Minister Liang Guanglie and a visit to China by Commander of the US Pacific Command Samuel Locklear.  The US-China Human Rights Dialogue was held in Washington in July.

Xi Jinping’s visit to the US went smoothly and laid the foundation for a strong bilateral relationship after the 18^th Party Congress this fall. Speeches to mark the 40^th anniversary of Nixon’s visit to China highlighted progress while recognizing deep mutual strategic mistrust. The third Asia-Pacific Consultation was held to manage suspicions and enhance cooperation. President Obama met Hu Jintao on the sidelines of the Seoul Nuclear Security Summit.  Friction increased with the filing of a complaint with the WTO that charged China with manipulating prices of rare earth elements. Beijing angered Washington by vetoing a UNSC resolution that called for Syria’s president to step down. But, the Council later passed a resolution that authorized observers to monitor the ceasefire. China rebuffed US entreaties to reduce oil imports from Iran and the US imposed sanctions on a Chinese company for selling refined oil to Iran.

A spate of measures taken by the Obama administration to bolster US presence and influence in the Asia-Pacific was met with a variety of responses from China.  Official reaction was largely muted and restrained; media responses were often strident and accused the US of seeking to contain and encircle China.  President Obama met President Hu Jintao on the margins of the APEC meeting in Honolulu and Premier Wen Jiabao on the sidelines of the East Asia Summit.  Tension in bilateral economic relations increased as the US stepped up criticism of China’s currency and trade practices, and tit-for-tat trade measures took place with greater frequency.  Amid growing bilateral friction and discontent, the 22^nd Joint Commission on Commerce and Trade (JCCT) convened in Chengdu, China.  An announcement by the US of a major arms sale to Taiwan in September prompted China to postpone a series of planned exchanges, but the Defense Consultative Talks nevertheless proceeded as planned in December.

In pursuit of agreements reached between Presidents Hu and Obama in January, the US and China worked to strengthen their relationship, while managing friction on a number of issues. Renewed tensions in the South China Sea put maritime security at the top of the agenda in many bilateral and multilateral interactions, including the inaugural US-China Consultations on Asia-Pacific Affairs, at the ASEAN Regional Forum meeting in Bali, and in a bilateral meeting between Secretary Clinton and State Councilor Dai Bingguo in Shenzhen.  In early May, the third annual Strategic and Economic Dialogue (S&ED) convened in Washington, DC.  Despite protests from Beijing, President Obama met the Dalai Lama.  In May and July, PLA Chief of the General Staff Gen. Chen Bingde and Chairman of the Joint Chiefs of Staff Adm. Mike Mullen exchanged visits.  In August, Joe Biden made his first visit to China as vice president.

High-level contacts between the US and Chinese militaries resumed in January with a visit by Defense Secretary Robert Gates to China.  Immediately following his trip, President Hu Jintao traveled to the US for a state visit.  The occasion combined informal discussion with all the protocol trappings of a state visit by a leader from an important country.  Both countries exerted great efforts to ensure the visit’s success, which put the bilateral relationship on more solid footing after a year that was characterized by increased tensions and discord.  At the invitation of Secretary of State Hillary Clinton, State Councilor Liu Yandong made a week-long visit to the US in mid-April, during which she co-chaired with Clinton the second round of the Consultation on People-to-People Exchange.  China held its annual “two meetings” – the National People’s Congress and the Chinese People’s Political Consultative Congress – and endorsed the 12^th Five-Year Plan for National Economic and Social Development.

In the final quarter of 2010, China-US relations were marked by the now familiar pattern of friction and cooperation.  Tensions spiked over North Korea, but common ground was eventually reached and a crisis was averted.  President Obama’s 10-day Asia tour, Secretary of State Clinton’s two-week Asia trip, and US-ROK military exercises in the Yellow Sea further intensified Chinese concerns that the administration’s “return to Asia” strategy is aimed at least at counterbalancing China, if not containing China’s rise. In preparation for President Hu Jintao’s state visit to the US in January 2011, Secretary Clinton stopped on Hainan Island for consultations with Chinese State Councilor Dai Bingguo and Deputy Secretary of State Steinberg visited Beijing.  Progress toward resumption of the military-to-military relationship was made with the convening of a plenary session under the US-China Military Maritime Consultative Agreement (MMCA) and the 11^th meeting of the Defense Consultative Talks.  Differences over human rights were accentuated by the awarding of the 2010 Nobel Peace Prize to Chinese dissident Liu Xiaobo.

Diplomatic confrontations over the Yellow Sea and the South China Sea were the source of new bilateral tensions this quarter.  Beijing vigorously objected to the dispatch of the aircraft carrier USS George Washington to waters near where the South Korean corvette Cheonan sunk after being attacked in March, even before Washington had made a decision to deploy it.  Worried about Chinese diplomatic posturing and destabilizing activities in the South China Sea, Secretary of State Clinton delivered a clear statement of US interests at the ASEAN Regional Forum meeting in Hanoi that irritated Beijing.  With the US mid-term elections approaching, US frustration mounted over China’s unwillingness to allow its currency to appreciate against the dollar at a faster pace. The House of Representatives passed legislation that would allow the US to impose import duties on countries that have undervalued currencies. After more than five months of delay, the Pentagon submitted to Congress its annual report assessing Chinese military capabilities.  Finally, two US presidential envoys traveled to Beijing to smooth over relations and President Obama met Premier Wen Jiabao on the margins on the UN General Assembly.

Presidents Barack Obama and Hu Jintao met twice this quarter, first on the sidelines of the Nuclear Security Summit in Washington in April and again on the margins of the G20 Summit in Toronto in June.  Nevertheless, tensions lingered over US arms sale to Taiwan and the military relationship remained suspended. The Chinese rejected a request from Secretary of Defense Robert Gates to visit China.  The second round of the Strategic and Economic Dialogue was held in Beijing in late May, yielding agreements on energy, trade environment, and healthcare.  Many hours were spent during the quarter in discussions between the two countries on an appropriate response to the sinking of the South Korean warship, but the gap was not narrowed.  In June, China finally announced the long-awaited decision to allow its currency to be more flexible, though it remains unclear how fast and to what extent it will permit the yuan to appreciate.

After a relatively smooth period in US-China relations through the first year of the Obama administration, the “honeymoon” ended in the first quarter of 2010.  The new year brought new frictions and returned to the spotlight many problem areas.  The quarter began with an unexpected announcement from an unlikely player in China-US relations: Google, the internet giant, reported extensive hacking of its networks traced back to China and then redirected Google.cn users to its Hong Kong site to evade Chinese censorship.  Tensions were further stoked by the administration’s notification to Congress of a major weapons sale to Taiwan and President Obama’s meeting with the Dalai Lama. Throughout the quarter, economic frictions intensified, particularly over the valuation of China’s currency.  Despite these numerous difficulties, the quarter closed with the pendulum swinging back toward the center.  At the end of March, President Obama and Deputy Secretary of State James Steinberg both reaffirmed the US commitment to a positive relationship with China; Beijing announced that President Hu would attend a major international nuclear security summit in the US in April 2010; and Obama and Hu, in a friendly phone call, renewed their determination to sustain healthy and stable ties.

President Obama’s first-ever trip to China was the main attraction of the fourth quarter. In addition to meeting Chinese leaders, Obama held a town hall-style assembly with Chinese students in Shanghai. The two sides signed a joint statement, the first in 12 years, which highlighted the depth and breadth of the relationship and promised greater cooperation. Nevertheless, the US media mostly faulted the president for not making sufficiently concrete progress on a number of problems. The Copenhagen climate talks garnered much attention in December. As the two largest emitters of CO2, negotiations between China and the US not only occupied the meeting’s spotlight, but also ultimately decided its outcome. Trade friction continued to intensify with both countries launching new investigations and imposing duties on several products. The bilateral military relationship took a step forward with the visit to the US by Xu Caihou, vice chairman of China’s powerful Central Military Commission.

The inaugural session of the Strategic and Economic Dialogue was held in Washington in July, combining pomp with substantive discussions on issues of great consequence for the two countries and the world.  High-level exchanges continued with the visit to the U.S. by Wu Bangguo, the head of the National People’s Congress – the first visit by China’s top legislator in two decades.  A special meeting of the Military Maritime Consultative Agreement was held in Beijing to discuss the confrontations inside China’s exclusive economic zone between U.S. Navy surveillance ships and Chinese vessels that took place earlier this year.  The U.S. imposed tariffs on tire imports from China, prompting Beijing to file a formal complaint against the U.S. at the WTO and launch an investigation into U.S. exports of chicken meat and auto parts.  Presidents Barack Obama and Hu Jintao met in New York and both attended the G20 in Pittsburgh.  They will meet again in November when Hu hosts Obama for his first visit to China.

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.

The U.S.-China relationship got off to a good start under the Obama administration, putting to rest Chinese worries that a prolonged period would be required to educate the new U.S. president about China’s importance.  “Positive” and “cooperative” were the two watchwords used repeatedly by Secretary of State Hillary Clinton in her discussions with Chinese leaders, which focused on the need to deepen and broaden the U.S.-China relationship, and to elevate cooperation to address urgent global problems, especially the financial crisis and global warming. In late February, U.S.-China military-to-military ties, which had been suspended by Beijing after the U.S. sold a large weapons package to Taiwan last October, partially resumed with the visit of U.S. Deputy Assistant Secretary of Defense David Sedney to Beijing.  A naval confrontation between U.S. and Chinese ships took place near Hainan Island, which was quickly defused, although the underlying causes remain.  Chinese Foreign Minister Yang Jiechi visited Washington D.C. in March to prepare for the first meeting between the two countries’ presidents, which took place on the margins of the G20 meeting in London on April 1.

The U.S. and China held the 5^th Strategic Economic Dialogue and the 6^th Senior Dialogue this quarter.  The global financial crisis was a focal point of discussion in both dialogues, as well as in the meeting between Presidents Bush and Hu Jintao on the sidelines of APEC in Lima, Peru. Beijing responded to the announced U.S. sale of $6.5 billion in arms to Taiwan by suspending bilateral military exchanges between the U.S. and China and talks on nonproliferation.  China’s internal debate about the international structure of power and the status of the U.S. was revived as the two prepared to celebrate the 30^th anniversary of the establishment of diplomatic ties.

The Beijing Olympic Games were conducted without a hitch to the great relief of the Chinese leadership and the 1.3 billion Chinese people who had long anticipated the momentous event.  Abroad, the reviews were mixed.  Most agreed that the opening ceremony was spectacular and that China had successfully ensured the safety of the athletic competitions, but many argued that these goals had been achieved at a significant cost that highlighted the undemocratic nature of China’s regime. President Bush’s attendance further consolidated an already close and cooperative U.S.-Chinese relationship, even though Bush seized on several opportunities to criticize China’s human rights practices.  The U.S.-China Joint Commission on Commerce and Trade (JCCT) marked its 25^th anniversary with agreements on food security, loans for medical equipment purchase, promotion of digital TV, and cooperation in agriculture and on trade statistics.  The U.S. presidential campaign heated up, but China received little attention.

Major developments in Sino-U.S. relations took place on the economic, military, and political fronts this quarter.  The fourth U.S.-China Strategic Economic Dialogue was held in Annapolis, Maryland, June 17-18, yielding a 10-year energy and environment cooperation framework.  A telephone link was installed between the U.S. Department of Defense and China’s Ministry of Defense and talks were launched on nuclear policy and strategy.  The U.S. and China held a round of their bilateral dialogue on human rights after a hiatus of six years and vice-foreign minister level talks on security issues were held for the first time in four years.  The U.S. provided assistance to China to ensure the security of the 2008 Olympic Games in Beijing. A massive 7.9 magnitude earthquake rocked China’s southwestern Sichuan Province and the U.S., along with the rest of the international community, provided aid.  Secretary of State Rice visited the quake-hit area and held talks in Beijing focused on North Korea.

Developments on China’s domestic front were prominent this quarter with extreme winter weather coinciding with the Spring Festival, the annual convocation of the “two meetings” in Beijing, and protests in Tibet that spread to neighboring provinces with Tibetan populations.  Key events in Sino-U.S. bilateral ties included the fifth Senior Dialogue in Guiyang, a brief visit by Secretary of State Condoleezza Rice to kick-start the Six-Party Talks, and a visit by FBI Director Robert Mueller to discuss security for the upcoming August Olympic Games.  In the military sphere, the Commander of U.S. Pacific Command Adm. Timothy Keating traveled to China and the Defense Policy Coordination Talks produced several agreements.  Stable and complicated were watchwords for the Sino-U.S. relationship.

China’s refusal to allow the USS Kitty Hawk to make a scheduled visit in Hong Kong for Thanksgiving refocused attention on bilateral differences over Taiwan and Tibet.  It also raised questions about civilian-military coordination in China and highlighted the mistrust between U.S. and Chinese militaries.  A series of agreements were reached to promote better relations between the U.S. and Chinese militaries during a visit to China by Defense Secretary Robert Gates and a subsequent round of the Defense Consultative Talks.  Economic and trade issues were at the top of the bilateral agenda as the Joint Commission on Commerce and Trade and Strategic Economic Dialogue convened and produced some successes, although not on the niggling issue of China’s currency valuation.

Continued recalls of Chinese-made products prompted actions by both the U.S. and China to shore up consumer confidence and enhance bilateral cooperation on food and product safety. Presidents George Bush and Hu Jintao discussed a broad range of economic and security issues on the sidelines of the APEC leaders meeting in Sydney.  Treasury Secretary Henry Paulson traveled to China at the end of July to prepare for the third round of the Strategic Economic Dialogue (SED) scheduled for December amid attempts by Congress to pass legislation that would punish China if it does not revalue its currency.  U.S. Chief of Naval Operations and Chairman of the Joint Chiefs of Staff- designate Adm. Mike Mullen made a six-day visit to China during which he was given unprecedented access to China’s navy.

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.

China’s test of an anti-satellite weapon against a defunct Chinese weather satellite on Jan. 11 prompted concern and criticism that reverberated around the world. A U.S. decision to allow Taiwan President Chen Shui-bian to make a stopover in San Francisco and notification to Congress of a possible arms sale to Taiwan led to Chinese protests. A Private Property Law was passed at the National People’s Congress along with a Corporate Tax Law. U.S. officials credited China with making positive contributions toward strengthening the international system, notably in the Six-Party Talks, but urged China to do more. In a possible signal of toughening U.S. trade policy, the Commerce Department slapped duties on imports of coated paper, reversing a decades-old policy of not applying duties to subsidized goods from non-market economies. Sino-U.S. military ties advanced with the visit to the U.S. by Gen. Ge Zhenfeng, deputy chief of general staff of the People’s Liberation Army, and the visit to China by Gen. Peter Pace, chairman of the U.S. Joint Chiefs of Staff.

A gaggle of Cabinet secretaries, led by U.S. Treasury Secretary Paulson, traveled to Beijing in mid-December to launch the Strategic Economic Dialogue. No breakthroughs were achieved, but both sides had low expectations for near-term results and seemed pleased with the outcome. On the North Korea nuclear front it was all bad news, with Pyongyang testing a nuclear device in early October and no tangible progress achieved at the resumption of the fifth round of Six-Party Talks after a 13-month hiatus. A positive byproduct was that intensive consultations between Washington and Beijing boosted bilateral ties. The U.S. mid-term elections that resulted in the seizure of control over both the House and Senate by the Democratic Party generated some concern in China about increased pressure on trade and human rights. On balance, however, Beijing remained confident that China-U.S. relations would remain on a positive track. Military-to-military ties continued to develop with a three-day U.S. ship visit to Zhanjiang, China, joint military exercises between the U.S. Navy and Marines and their Chinese counterparts, and a visit to China by U.S. Pacific Fleet Commander Adm. Gary Roughead.

Much attention focused on economic issues this quarter with visits to China by U.S. Trade Representative Susan Schwab and U.S. Treasury Secretary Henry Paulson, which launched a new U.S.-China Strategic Economic Dialogue. Bilateral military ties also took a step forward with a visit to the U.S. by Vice Chairman of the Central Military Commission Guo Boxiong and the first ever U.S.-China joint naval exercise. Bush administration officials took China to task for continued proliferation of weapons of mass destruction (WMD) materials and technology due to lax enforcement of its export control laws.  North Korea, Iran, and Sudan dominated the security agenda.  The second round of the China-U.S. Global Issues Forum was held in Beijing.  Bilateral space cooperation was initiated with a “get acquainted” visit to China by a delegation led by NASA Administrator Michael Griffin.

Despite the bungled welcoming ceremony on the South Lawn and the absence of concrete deliverables, the Hu-Bush summit was a modest success, given the complex nature of China-U.S. ties and the thorny issues that plague the relationship.  Progress was made on market access and intellectual property rights at the Joint Commission on Commerce and Trade meeting that preceded the summit.  In the wake of the summit, Beijing and Washington stepped up cooperation on both the Iranian and DPRK nuclear issues.  Military exchanges were active this quarter, with a visit to China by Commander of U.S. Forces in the Pacific, Adm. William J. Fallon, the convening of the annual Defense Consultative Talks, ship visits by the U.S. Coast Guard Cutter Rush and the USS Blue Ridge, and a 10-member PLA delegation visited Guam to observe the Valiant Shield-06 military exercises.  In its semi-annual report to Congress, the Department of the Treasury noted that it was “extremely dissatisfied with the slow and disappointing pace of reform for the Chinese exchange rate regime,” but refrained from citing China as intentionally manipulating its currency regime.

Economic issues garnered most of the attention this quarter with U.S. officials and members of Congress pressing China to address the trade imbalance, revalue China’s currency, and curtail Intellectual Property Rights (IPR) violations in advance of Hu Jintao’s April visit to the United States. Summit preparations were conducted in high-level visits. Deputy Secretary of State Robert Zoellick met Chinese leaders in Beijing and hugged a panda in Chengdu. Chinese Vice Foreign Minister Yang Jiechi visited Washington, D.C. and urged the Bush administration to rein in Taiwan President Chen Shui-bian. Two major U.S. government reports were issued – the National Security Strategy and the Quadrennial Defense Review – both of which provoked Chinese condemnation. Beijing convened the fourth session of the 10^th National People’s Congress, which focused on domestic priorities, including rural reform, education, public health, social security, and the legal system.

President George W. Bush’s November visit to Beijing produced no concrete deliverables, but provided an important opportunity for U.S. and Chinese leaders to engage in a strategic conversation about the bilateral relationship and the changing world in which it is embedded. After almost six years as secretary of defense, Donald Rumsfeld traveled to China, where he sparred with Chinese military researchers from the Central Party School and the Academy of Military Sciences and became the first foreigner to visit the Second Artillery Corps. In Washington, D.C., the second round of the Senior Dialogue was held, broadening and deepening strategic discussions between senior Chinese and U.S. officials and holding out hope that a new framework for the relationship could help manage U.S. and Chinese differences.

The quarter opened with a 20-hour stopover in Beijing by Secretary of State Condoleezza Rice.  In early August, her deputy Robert Zoellick visited China to launch a senior-level dialogue on strategic issues. The devastation wrought by Hurricane Katrina resulted in the postponement of Chinese President Hu Jintao’s long-planned visit to the United States. Instead, Presidents Hu and Bush met on the sidelines of the UN General Assembly (UNGA) meeting. China played an instrumental and assertive role in forging consensus on a joint statement at the fourth round of the Six-Party Talks. U.S.-China military exchanges picked up this quarter with an exchange of visits by Gen. Liu Zhenwu, the commander of China’s Guangzhou military region, and Adm. Fallon, the commander of U.S. military forces in the Pacific. The economic and trade picture was mixed. Some progress was made on strengthening the protection of intellectual property rights in China. Three rounds of textile negotiations failed to produce an agreement. In July, China abandoned the decade-old peg of the yuan against the dollar, and revalued its currency 2.1 percent.

America’s grievances with China mounted this quarter, signaling a likely end to the post-Sept. 11 honeymoon in China-U.S. relations and the beginning of a rocky phase.  On a range of trade and economic issues, the Bush administration adopted a harsher stance, increasing pressure on Beijing to appreciate its currency to fend off criticism from Congress and domestic groups that blame China for stealing U.S. jobs and unfairly creating a massive trade surplus with the United States.  Trade officials began taking action to curtail the flood of Chinese textiles and punish China for widespread violations of intellectual property rights. A takeover bid for Unocal Corporation by the PRC’s state-owned China National Offshore Oil Company (CNOOC) raised cries in some quarters that Beijing’s offer was part of a long-term national plan to gain strategic advantage over the U.S.

Washington leaned harder on Beijing to apply economic and diplomatic pressure on North Korea to rejoin the Six-Party Talks aimed at eliminating its nuclear weapons programs.  U.S. officials openly declared that they hold China largely responsible for reining in the nuclear ambitions of its formerly “close as lips and teeth” ally, North Korea.

China’s military buildup also came under sharper criticism. Defense Secretary Donald Rumsfeld bluntly warned Beijing that its military spending and procurement programs are unjustified by any threat it faces. And China’s human rights abuses and suppression of political dissent and religious freedom figured prominently in U.S. official statements and reports issued this quarter.

Mindful of the benefits to the U.S. of cooperation with China where the two countries’ interests overlap and the dangers of engaging in full-blown strategic competition with China, President Bush and his Cabinet members attempted to keep the bilateral relationship on an even keel, while urging Chinese leaders to modify their policies to make them more compatible with U.S. national interests.

President Bush’s second term opened with an active agenda of bilateral U.S.-China interactions.  Secretary of State Condoleezza Rice traveled to Beijing on a six-nation tour of South and East Asia during which she sought to enlist China’s help in exerting pressure on North Korea to give up its nuclear weapons. China’s National People’s Congress passed an anti-secession law that the Chinese government viewed as reasonable and necessary, but U.S. officials characterized as “unhelpful” and likely to increase cross-Strait tensions.  Urging China to enhance its protection of intellectual property rights (IPR) was the central task of outgoing U.S. Secretary of Commerce Donald Evans’ visit to Beijing. Deputy Under Secretary of Defense Richard Lawless conducted the first ever “special policy dialogue” between the two militaries. Senior U.S. officials voiced concern about China’s military buildup and its proliferation activities, and strongly opposed the lifting of the EU’s 15-year old arms embargo on China.

The quarter opened with a visit by Secretary of State Colin Powell to Beijing, as well as Seoul and Tokyo, that did little to jumpstart the stagnant Six-Party Talks or revive the dormant dialogue between Taiwan and China. Controversy erupted over statements Powell made to the media that endorsed peaceful reunification of the two sides of the Strait and declared that Taiwan does not enjoy sovereignty.  Hu Jintao and George W. Bush talked by phone in October and November, and then met on the sidelines of the 12^th APEC summit in Santiago, Chile. Although cooperation predominated between Washington and Beijing, differences persisted on numerous issues, including China’s proliferation activities, U.S. refusal to return to China exonerated Uighurs held in Guantanamo Bay, the European Union arms embargo on China, Iran’s nuclear programs, China’s human rights practices, China’s currency, and the mushrooming bilateral trade deficit.

After years of entreaties by China to make a solo trip to the Middle Kingdom, National Security Adviser Condoleezza Rice unexpectedly decided to visit Beijing as well as Tokyo and Seoul in early July.  Chinese leaders failed in their efforts to extract a commitment to reduce U.S. arms sales to Taiwan and intensify pressure on Taiwan President Chen Shui-bian to refrain from taking provocative steps toward the establishment of a legally independent state.  The third visit to China by Chief of the U.S. Pacific Command Adm. Thomas Fargo was also dominated by discussions about the Taiwan Strait.  The U.S. and China faced off in the United Nations Security Council twice this quarter over how to respond to the escalating violence in Sudan.  China’s foreign minister personally complained about the alleged beating of a Chinese citizen by officers of the U.S. Customs and Border Protection in Niagara Falls near the U.S.-Canadian border in late July.  Finally, Beijing awaits the U.S. presidential elections with trepidation and ambivalence.

Vice President Dick Cheney made a long-awaited visit to China this quarter and engaged in strategic dialogue with China’s top leaders, who underscored the dangers of Taiwan independence in the aftermath of the re-election of Taiwan’s President Chen Shui-bian.  Despite U.S. efforts to allay Beijing’s fears, Chinese dissatisfaction with U.S. policy toward Taiwan spilled over into other policy arenas, influencing its handling of Iraq and North Korea.  This quarter also saw a host of activity in the economic realm, with the convening of the 15^th U.S.-China Joint Commission on Commerce and Trade, June visits to China by U.S. Secretary of Labor Elaine Chao and U.S. Secretary of Commerce Don Evans, and the signing of numerous bilateral economic agreements.

U.S. and Chinese diplomats shuttled to each other’s capitals for consultations this quarter on a rich agenda of bilateral issues and regional and international security matters, including North Korea, Iraq, Libya, Iran, Taiwan, and curbing proliferation of weapons of mass destruction.  The pace of China-U.S. military exchanges accelerated with visits to Beijing by the Chairman of the Joint Chiefs of Staff Gen. Richard Meyers, the holding of the Defense Consultative Talks, and a U.S. port call to Shanghai.  At the same time, friction mounted on trade and human rights as the U.S. filed the first case against China at the World Trade Organization (WTO) and introduced a resolution condemning Chinese human rights practices for the first time in three years at the UN Commission on Human Rights in Geneva. The disputed presidential election in Taiwan captured attention and elicited concern in both Beijing and Washington, although their responses diverged considerably.

The year 2003 closed with two high-level visits.  Chinese Premier Wen Jiabao toured three cities on the U.S. east coast and was received at the White House with a 19-gun salute.  Wen cemented the visit’s success and boosted his position back home when President Bush stood by his side and rebuked Taiwan President Chen Shui-bian for seeking to change the status quo in the Taiwan Strait.  But there was little progress made on important issues such as China’s burgeoning trade surplus with the U.S. and North Korea’s nuclear weapons.  Chinese Defense Minister and Vice Chairman of the Central Military Commission Cao Gangchuan was hosted by Defense Secretary Donald Rumsfeld.  Presidents Bush and Hu Jintao met early in the quarter on the sidelines of the APEC summit.

Continued cooperation on security matters, especially the challenge posed by North Korea’s nuclear weapons programs, bolstered U.S.-China relations this quarter.  Washington lauded China’s vigorous diplomatic efforts that culminated in the holding of six-party talks in Beijing at the end of August. China formally joined the Container Security Initiative (CSI), agreeing to permit U.S. Customs and Border Protection officials to work side-by-side with their Chinese counterparts to target and pre-screen cargo containers shipped from Shanghai and Shenzhen destined for the United States. U.S. officials publicly rebuked Beijing for not living up to its promises made last December to make progress on specific human rights issues. Treasury Secretary John Snow visited Beijing and tried, but failed, to persuade Chinese officials to appreciate the renminbi (RMB). The Department of Defense released its annual report on July 30 on Chinese military power.

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.

A flurry of diplomatic activity took place this quarter as Chinese and U.S. officials conferred on how to compel Iraqi President Saddam Hussein to relinquish his weapons of mass destruction and manage the emerging crisis over the North Korean nuclear weapons programs. Beijing opposed the U.S. military strike on Iraq, but was cautious to prevent its antiwar position from damaging the bilateral relationship. U.S. and Chinese presidents engaged in telephone diplomacy and U.S. Secretary of State Colin Powell consulted frequently with Chinese Foreign Minister Tang Jiaxuan on the sidelines of meetings at the United Nations in New York. United States Trade Representative Robert Zoellick visited China to discuss the repercussions of its entry into the World Trade Organization (WTO), ongoing Chinese economic reforms, bilateral trade issues, and current global trade negotiations. Cooperation on counterterrorism advanced with the convening of the third U.S.-China antiterrorism consultation and the second meeting on cutting financial fund links to terrorists.

This quarter opened with summitry as Presidents George W. Bush and Jiang Zemin held their third meeting at Bush’s ranch in Crawford, Texas.  Their discussion and subsequent U.S.-Chinese consultations covered a broad range of issues, but security matters received special attention as North Korea acknowledged a previously unknown uranium-enrichment program and the Bush administration stepped up its efforts to disarm Iraq. Beijing issued new export control regulations for all major categories of weapons of mass destruction (WMD), bringing China into closer adherence with international nonproliferation export control standards.  Bilateral human rights talks took place for the first time in over a year and produced an agreement by China to invite UN investigators into the country to examine allegations that it jails people without due process, restricts freedom of religion, and allows torture in its prisons. High-level military contacts also resumed with the convening of the fifth Defense Consultative Talks and a visit to China by Commander, U.S. Pacific Command Adm. Thomas Fargo.

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.

An active agenda of exchanges and consultations took place this quarter, providing Sino-U.S. relations with a modicum of stability as Washington focused on the war on terrorism and other foreign policy priorities.  Chinese Vice President Hu Jintao toured the United States, stopping in Washington for two days of meetings with President George W. Bush, Vice President Dick Cheney, and many Cabinet members. Cooperation between Washington and Beijing in the war on terrorism advanced with the establishment of semi-annual consultations on depriving terrorist networks of their sources of financing.  Broader discussions on combating terrorism were also held in the second round of bi-annual U.S.-Chinese counterterrorism talks.  Sessions were held of the Joint Commission on Economic Cooperation and Trade and the Joint Commission Meeting on Science and Technology, providing a boost to commercial and economic ties.  Beijing remained both suspicious and perplexed by U.S. policy toward Taiwan, and verbal gaffes by President Bush and Deputy Secretary of Defense Paul Wolfowitz created unease on both sides of the Strait.  Finally, representatives from the U.S. and Chinese militaries explored the possibility of resuming contacts.

U.S. President George W. Bush’s visit to Beijing, Feb. 21-22, was the highlight of Sino-U.S. relations in the first quarter of 2002. President Bush and PRC President Jiang Zemin held in-depth discussions on a broad range of international and bilateral issues and both reaffirmed their commitment to a “constructive, cooperative” relationship. They agreed to intensify high-level strategic dialogue and expand bilateral exchanges and cooperation in the areas of economy and trade, energy, science, and technology, environmental protection, the prevention of HIV/AIDS, counterterrorism, and law enforcement.  Differences persisted over nonproliferation, Taiwan, human rights, and religious freedom. In March, following talks in Washington between Chinese and U.S. officials in charge of nonproliferation matters, there were signs that modest progress might be forthcoming later this year in the dispute over Chinese export controls and sales of missile technology.  Improvement in the relationship was to some extent set back by Taiwan’s Defense Minister Tang Yiau-ming’s visit to Florida to attend a unofficial conference that included senior Bush administration officials.  In protest, Beijing canceled a Chinese Navy ship visit to the United States planned for the latter half of 2002.

The re-ordering of U.S. security priorities in the wake of the Sept. 11 terrorist attacks provided an opportunity for Washington and Beijing to work together toward a common goal.  Cooperation against terrorism and the successful first-ever meeting of U.S. President George W. Bush and PRC President Jiang Zemin at the Asia Pacific Economic Council (APEC) Leaders’ Meeting in Shanghai contributed to an improvement in the overall atmosphere of the Sino-U.S. relationship in the final quarter of 2001.  At the same time, however, friction between the two countries persisted on issues of long-standing controversy, including human rights, nonproliferation, missile defense, and Taiwan.  After 15 years of negotiations, China finally joined the World Trade Organization (WTO), bringing a market of 1.3 billion people into the global trading system.

The Sept. 11 terrorist attacks on the World Trade Center and the Pentagon provided a new strategic focus for U.S.-China relations.  Chinese President Jiang Zemin immediately condemned the terrorist actions and offered China’s support for the Bush administration’s global counterterrorism effort.  A week following the attacks, Chinese Foreign Minister Tang Jiaxuan arrived in Washington to prepare for President Bush’s late October summit with President Jiang that was to be held in Beijing following the Asia Pacific Economic Cooperation (APEC) Leaders’ Meeting in Shanghai.  After the Tang visit, Beijing sent a delegation of counterterrorism experts to share intelligence with U.S. officials that might aid the Bush administration’s war on terrorism.  An important step aimed at avoiding future mid-air collisions was taken when Chinese and American military delegations met on Guam in a special meeting of the Military Maritime Consultative Agreement (MMCA).  Earlier in the quarter, discord over China’s alleged transfer of missile components to Pakistan that resulted in the imposition of sanctions on a Chinese company.  U.S. Secretary of State Powell traveled to Beijing in July for talks with Chinese leaders and reassured the Chinese people that the United States views China as a friend, not as an adversary.