Modern Sino-US relations, essentially defining the world situation, with a certain stretch of the imagination can be divided into political and economic components, each of which has specific problems.
The political component has sharply deteriorated in the course of the latest crisis in the South China Sea, which emerged in the autumn of 2014. In its base there are territorial disputes over the South China Sea between China on the one hand, and its southern neighbors on the other. But in these arguments the United States is actively intervening, and it is clear on which side.
However, the further accumulation of negativity in the relationship between Washington and Beijing because of the worsening situation in the South China Sea makes real the prospect of direct conflict and, in particular, calls into question the first state visit of President Xi Jinping to the US, scheduled for September this year.
In these conditions both major global rivals apparently decided to take a “break”, as evidenced by a number of bilateral events in the last two or three weeks.
First of all, attention has been drawn to the visit to the United States from June 11 to 15 2015 of Colonel-General Fan Changlong, one of the two deputies of Xi Jinping, who also occupies the post of chairman of the Central Military Council – the supreme body of state management of the armed forces of the PRC.
The tour of the Chinese guest began in the port city of San Diego, which is one of the main naval bases of the US Pacific Command. There Fan Changlong was invited to visit the deck of the latest strike aircraft carrier “Ronald Reagan”.
From the American hosts the ambiguity of the event in relation to the Chinese guests was that a month ago it was announced that the aircraft carrier would be relocated to the Japanese port of Yokosuka.
Thus, “Ronald Reagan” will be the leader of the forward deployed carrier strike group, which will be responsible for “power projection” in the entire sea area adjacent to the coast of China. According to experts, it is likely that the periodic appearance of an aircraft carrier in the South China Sea will dramatically enhance the potential for military confrontation between China and its southern neighbors.
During the visit, Fan Changlong held talks with the Minister of Defense Ashton Carter and Susan Rice – advisor to the US President for National Security.
Gen. Fan He assured his American interlocutors that China will do everything possible for the success of the forthcoming visit of Xi Jinping. In this regard, it is worth to note the statement of the Chinese Foreign Ministry on the “soon” completion of work on the creation of artificial islands in the South China Sea that served the immediate occasion for the latest exacerbation of tension in the region.
General Fan Changlong discussed with the leadership of the US Department of Defense some aspects of bilateral cooperation between military divisions. The Chinese guest invited E. Carter and the new head of Pacific Command Harry Harris to visit China later this year.
As for the economy, the US claims against China are periodically set out in the reports of the “US-China Business Council” (USCBC), positioning itself as a “private, nonpartisan, nonprofit organization of roughly 220 American companies that do business with China.”
Guests of the events held by USCBC at different times were former and current politicians of the highest rank of the two countries, such as Hu Jintao, Wen Jiabao, Li Keqiang, Joe Biden, Hillary Clinton, and Timothy Geithner.
In early June the USCBC issued another 80-page report, whose title “USCBC China Economic Reform Scorecard – Marginal Improvement; Impact Still Limited” reflects the main conclusions of the authors.
It specifically states that, despite the recent slogan “let the market play a decisive role”, reforms in the key sectors of China’s economy are moving slowly, and this causes some concern among American companies over the development of business in China.
In order to demonstrate the definition of “slow” the authors of the report depicted a semi-circle (like car’s speedometer), in which an arrow marking the pace of reform in China has hardly moved away from the initial left edge.
Pointing “to the preservation [in China] of market barriers to benefit its own companies,” the authors expressed the hope that during the next meeting of the US-China Strategic and Economic Dialogue (SED), as well as the forthcoming visit of Xi Jinping to the US, progress will be made in the areas of Chinese reforms and bilateral economic relations.
Naturally, the opinion of such an influential organization with respect to the reforms carried out in China did not go unnoticed by Chinese experts. It is noted, for example, that while the Chinese economy does have problems, China still remains one of the main markets of sale of US goods, the volume of which has tripled over the last 10 years.
However, the real significance of these figures can only be assessed against the backdrop of changes in recent years in both US exports to China, and China’s exports as well as balance of bilateral trade.
US exports to China in 2012, 2013 and 2014 amounted to 110.5, 121.7 and 123.7 billion dollars, respectively. Accordingly, the volume of Chinese exports to the US amounted to 426.7, 440.4 and 466.8 billion dollars.
Therefore, the negative trade balance with China that accumulated over a long time has over the last three years remained at the level of more than 300 billion dollars, with a trend of slow growth. Americans tend to blame this on “unfair manipulation” of the Chinese exchange rate of the national currency, which is considered to be “artificially low.“
The above-mentioned US-China Strategic and Economic Dialogue held its seventh meeting in Washington on June 23 – 25, 2015. In parallel with the SED the 6th Forum of the bilateral committee on ” people-to-people diplomacy” was also held.
The importance that both sides attach to these events is indicated by the level of management of the delegations. China’s was led by State Councilor Yang Jiechi and Vice Premier Liu Yandong, the US’ by Secretary of State John Kerry and Finance Minister Jacob Lew.
The participants were greeted with a welcoming speech by Vice President Joe Biden, who assured Chinese counterparts that the US does not fear China’s peaceful rise, and John Kerry stated that US-China relations could have a substantial impact on global development in the 21st century.
However, the Chinese Global Times, responding to the remarks of American politicians, said that although the bilateral relationship really has been on a “trend towards co-operation, there nevertheless remain sources for mutual suspicion, and still too many opportunities to slide into conflict”.
With regard to the American experts, they also see a positive outcome of the latest SED in the mere fact of the meeting being held. In their view, fundamental questions will not receive concrete answers, but the important thing is that key issues in bilateral economic relations are touched upon.
However, there were emotional remarks concerning a number of particular problems. For example, Under Secretary of State for the Environment Catherine Novelli called the results of the bilateral committee for the protection of the ocean from the effects of human activities “amazingly positive.”
Finally, it should be noted that in the sinusoidally developing US-China relations this is not the first détente encountered. But it will be possible to say something definite about the depth and duration of this period only after the visit of Xi Jinping to the US.
The key issue remains the extent (and the very possibility) of endorsing the objectives and strategies of the two leading world powers in the region and the world at large.
How can the US’ strategic “pivot to Asia” (with its obvious anti-China subtext) and Xi Jinping’s formula that China is continuing on the path of peaceful development and will never give up its “legitimate rights” and will not trade “key national interest” be reconciled with one another?
This formula of the current Chinese leader was delivered at the beginning of 2013, i.e. on the eve of his election to the highest office. By the way, Joe Biden chose not to mention the second part in his statement.
Also, quite remarkable is the mutual swordplay on the topic of human rights violations (very “fruitful” in this regard), which happened just in the course of attempts to restore bilateral political and economic dialogue.
Vladimir Terekhov, expert on the Asia-Pacific region, specially for the online magazine “New Eastern Outlook”.