2014 ends on pos­i­tive note for US, China

The year ends, ex­perts see huge po­ten­tial in China-US re­la­tions, but thorny is­sues rang­ing from cy­ber se­cu­rity and mar­itime dis­putes to arms sales to Tai­wan stand in the way of im­prov­ing the com­plex re­la­tion­ship, CHEN WEIHUA re­ports from Wash­ing­ton.

China Daily (Canada) - - IN DEPTH -

For ob­servers who have wit­nessed the of­ten bumpy and some­times roller coaster rides in the 35 years of diplo­matic ties be­tween China and the United States, many applauded that the in­creas­ingly com­plex re­la­tion­ship ended in 2014 on a pos­i­tive note.

The mood looked some­what somber in the first half of 2014. Head­lines were dom­i­nated by height­ened ten­sions over mar­itime ter­ri­to­rial dis­putes in the South and East China seas and dis­putes in the cy­ber do­main.

That mood started to lighten up in the sec­ond half, es­pe­cially after US Pres­i­dent Barack Obama and Chi­nese Pres­i­dent Xi Jin­ping met in Beijing in Novem­ber to an­nounce a long list of co­op­er­a­tive agree­ments from car­bon re­duc­tion to visa ex­ten­sion.

Li de­scribed China-US co­op­er­a­tion in cy­ber se­cu­rity as ex­tremely im­por­tant be­cause of the spe­cial fea­tures of at­tacks on that front. “There is a huge ad­van­tage for one side to take pre-emp­tive strike; it is of­ten hard to know where the at­tack comes from, prob­a­bly from just a lone wolf; and the con­se­quences of such at­tacks could also be unimag­in­able,” he said. Mar­itime dis­putes

To Zha Dao­jiong, a pro­fes­sor at the School of In­ter­na­tional Stud­ies of Pek­ing Univer­sity, the most no­tice­able low point of China-US re­la­tions in 2014 came in a highly vis­i­ble dis­play of mu­tual ac­ri­mony over mar­itime af­fairs in the East China and South China seas.

Zha cited that at the Shangri-La se­cu­rity fo­rum in Sin­ga­pore in early June, US Sec­re­tary of De­fense Chuck Hagel called China a “desta­bi­liz­ing” ac­tor, and it led to his Chi­nese coun­ter­part la­bel­ing the US as “provoca­tive”.

Hagel’s words came right after Obama’s re­marks made at the US Mil­i­tary Academy at West Point at the end of May that China’s eco­nomic rise and mil­i­tary reach wor­ries its neigh­bors, ac­cord­ing to Zha.

“A se­ries of sum­mits on re­gional se­cu­rity were due to take place in the lat­ter half of the year. Beijing and Wash­ing­ton were seem­ingly mov­ing down a sure path of open con­fronta­tion, with China’s mar­itime neigh­bors caught in be­tween,” Zha said.

The US has been ea­ger to as­sure its treaty al­lies, in par­tic­u­lar Ja­pan and the Philip­pines, both of which have his­tor­i­cal mar­itime ter­ri­to­rial dis­putes with China.

While the US stated that it does not take a po­si­tion on sovereignty but it does take a po­si­tion on a peace­ful res­o­lu­tion of dis­putes, many Chi­nese see US be­hav­ior as em­bold­en­ing those na­tions to take a con­fronta­tional at­ti­tude in the dis­putes.

Zha said the good news is that the joint state­ments pro­duced at the ASEAN Re­gional Fo­rum and East Asia Sum­mit did not repli­cate the same fer­vor over mar­itime se­cu­rity. “In ad­di­tion to ef­forts by China and the US to tone down the tem­per, South­east Asian states demon­strated their ca­pac­ity to avoid fur­ther es­ca­la­tion as well,” he said.

Li from Brook­ings said he would give a grade of “B’’ to China’s per­for­mance in the re­gion in the first half of the year and an “A’’ in the sec­ond half.

In Li’s views, the Chi­nese have be­come more proac­tive in its diplo­macy in the re­gion since the sixth China-US Strate­gic & Eco­nomic Di­a­logue in Beijing (S&ED) in July, cit­ing the trips by Pres­i­dent Xi to Rus­sia, In­dia and South Amer­ica and the meet­ing with Ja­panese Prime Min­is­ter Shinzo Abe dur­ing the Novem­ber APEC sum­mit.

“This demon­strates that Chi­nese for­eign pol­icy has be­come more ma­ture,” he said.

How­ever, Li cau­tioned that prob­lems such as ter­ri­to­rial dis­putes won’t be solved any­time soon and will re­main a long-term chal­lenge. Silk Road

While both US and Chi­nese of­fi­cials have toned down con­fronta­tional rhetoric, many ex­perts have ex­pressed dis­ap­point­ment that that the US has failed to show support to pos­i­tive roles played by China on the re­gional and global stage.

Se­nior US of­fi­cials raised doubts about the Asian In­fra­struc­ture In­vest­ment Bank (AIIB) pro­posed by China, while World Bank Pres­i­dent Jim Yong Kim and many coun­tries in the re­gion openly wel­comed the mul­ti­lat­eral bank that seeks to fi­nance in­fra­struc­ture de­vel­op­ment in the Asia-Pa­cific re­gion.

Many in the US have also seen China’s Silk Road ini­tia­tives, both the Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road, as aim­ing to ex­pand China’s geopo­lit­i­cal clout rather than serv­ing as a plat­form for eco­nomic con­nec­tiv­ity in the re­gion as China stated.

China an­nounced on Nov 8 that it will con­trib­ute $40 bil­lion to a Silk Road fund for projects that fa­cil­i­tate con­nec­tiv­ity along the belt and road.

Dou­glas Paal, vice-pres­i­dent for stud­ies at the Carnegie En­dow­ment for In­ter­na­tional Peace, said the Obama ad­min­is­tra­tion made a mis­take try­ing to en­cour­age US friends and al­lies not to be part of the AIIB.

Paal dis­missed the doubt ex­pressed by US of­fi­cials re­gard­ing the gov­er­nance and trans­parency of AIIB, say­ing that Chi­nese Vice-Min­is­ter of Fi­nance Zhu Guangyao has given a lot of as­sur­ances.

To Paal, a for­mer vice-chair­man at JPMor­gan Chase In­ter­na­tional, the AIIB “has a lot of po­ten­tial” and the Silk Road “makes a lot of sense”.

“It’s good for the Cen­tral Asians. They need trade routes, and they need places to em­ploy their young peo­ple,” he said.

Paal said the US should work with China on the Silk Road. “That’s a short­fall of Amer­i­can imag­i­na­tion,” he said.

For­mer US Am­bas­sador to China Jon Huntsman also ex­pressed his dis­ap­point­ment at the Obama ad­min­is­tra­tion’s at­ti­tude on AIIB in a Dec 18 talk at the Cen­ter for Strate­gic and In­ter­na­tional Stud­ies in Wash­ing­ton. Eco­nomic ties

Henry Levine, a se­nior ad­viser at the Wash­ing­ton-based con­sul­tancy Al­bright Stone­bridge Group and a for­mer deputy as­sis­tant sec­re­tary of com­merce for Asia, said that the neg­a­tive im­pact of China tends to be ex­ag­ger­ated in the US, es­pe­cially on US-China eco­nomic and trade ties.

While im­ports from China hurt cer­tain US com­pa­nies and in­dus­tries, Levine be­lieves the pos­i­tive im­pact is more pro­found. He cites rais­ing the stan­dard of liv­ing in the US thanks to in­ex­pen­sive Chi­nese goods, and the abil­ity for the US Fed­eral Re­serve to keep in­ter­est rates low be­cause the goods from China keep down in­fla­tion pres­sure.

“There is a nat­u­ral po­lit­i­cal process (in the US) to ac­cen­tu­ate the neg­a­tive and down­play the pos­i­tive,” he told a sem­i­nar at the Brook­ings on Dec 19.

A US-China Business Coun­cil survey found that 83 per­cent of re­spond­ing mem­bers said their op­er­a­tions in China are prof­itable, a fig­ure con­sis­tent with prior years. And 70 per­cent re­ported that their China op­er­a­tions were per­form­ing bet­ter or the same as their over­all global op­er­a­tions. Almost three-quarters of US firms in­creased their rev­enues in China in 2013 while only 15 per­cent re­ported a de­crease.

David Dol­lar, a se­nior fel­low at Brook­ings, agreed. An ex­pert on Chi­nese econ­omy and US-China eco­nomic re­la­tions, he noted that a suc­cess­ful Bi­lat­eral In­vest­ment Treaty (BIT) will greatly help open the Chi­nese ser­vice in­dus­try mar­ket to US com­pa­nies.

The Chi­nese gov­ern­ment hopes that a BIT could help bet­ter pro­tect the grow­ing Chi­nese for­eign di­rect in­vest­ment in the US, which many Chi­nese see as sub­ject to un­fair and non­trans­par­ent re­view by the Com­mit­tee on For­eign In­vest­ment in the United States (CFIUS), an in­ter-gov­ern­ment agency in the US.

Se­nior Chi­nese of­fi­cials have called for an early con­clu­sion of the BIT ne­go­ti­a­tions, a move that is widely sup­ported by the business com­mu­ni­ties in both China and the US.

China and the US are now each other’s ma­jor trad­ing part­ners with bi­lat­eral trade ex­ceed­ing $520 bil­lion in 2013. Two-way in­vest­ment ex­ceeded $100 bil­lion, ac­cord­ing to China’s Min­istry of Com­merce.

Many, such as Dol­lar from Brook­ings, be­lieve China’s re­form plan rolled out at the Third Plenum of the 18th Cen­tral Com­mit­tee of the Com­mu­nist Party of China a year ago will not only in­ject mo­men­tum to a sus­tain­able de­vel­op­ment of the Chi­nese econ­omy but ben­e­fit US com­pa­nies with huge op­por­tu­ni­ties.

Dol­lar said China’s re­form agenda is not only good for the Chi­nese econ­omy, but will also set a good foun­da­tion for US-China eco­nomic re­la­tions. Peo­ple to peo­ple ties

Li of Brook­ings em­pha­sized that peo­ple should not over­look the sig­nif­i­cance of the re­cip­ro­cal visa agree­ment reached dur­ing Obama’s trip to Beijing when the two coun­tries agreed to ex­tend business and tourist visas to 10 years and stu­dent visa to five years.

“It has linked the re­la­tion­ship of the two coun­tries at a higher level and its im­pact and value may not be able to be pre­dicted at the mo­ment,” he said.

There are now about 10,000 peo­ple fly­ing be­tween China and the US each day. In the 2013/2014 aca­demic year, 270,000 Chi­nese main­land stu­dents were study­ing in univer­si­ties and col­leges in the US, up 16.5 per­cent over the pre­vi­ous year, ac­cord­ing to a Novem­ber re­port by the In­sti­tute of In­ter­na­tional Ed­u­ca­tion.

Mean­while, the num­ber of Chi­nese tourists com­ing to the US has ex­ceeded 2 mil­lion a year. Their av­er­age spend­ing of $7,200 dwarfed the $4,500 by the av­er­age for­eign tourist, ac­cord­ing to the US Travel As­so­ci­a­tion.

For many Chi­nese mid­dle class, the cur­rent US hol­i­day sea­son is time for them to come to the US to shop ‘til they drop.

Shao Qi­wei, di­rec­tor of China’s Na­tional Tourism Bureau, es­ti­mated that there will be 60 mil­lion Chi­nese vis­it­ing the US in the com­ing six years.

US Com­merce Sec­re­tary Penny Pritzker said in Chicago on Dec 17 that with the change in visa pol­icy, 7.3 mil­lion Chi­nese vis­i­tors are ex­pected to travel to the US by 2021, con­tribut­ing nearly $8.5 bil­lion per year to the US econ­omy and sup­port­ing as many as 440,000 jobs. The year ahead

Shen Dingli of Fu­dan Univer­sity be­lieves that he still can­not be very op­ti­mistic of the re­la­tion­ship in the year ahead be­cause of the lin­ger­ing is­sues of cy­ber se­cu­rity, dis­putes over mar­itime se­cu­rity and the pend­ing US arms sales to Tai­wan.

China im­me­di­ately protested three weeks ago after Obama signed into law au­tho­riza­tion for the sale of four Perry-class guided mis­sile frigates to Tai­wan.

“All th­ese need to be sorted out, but none of them could be sorted out,” Shen said.

“If I say that China shall tol­er­ate the US arms sale to Tai­wan, or the US shall stop such sale, or China shall sub­mit its (five PLA) of­fi­cers to the US, or the US openly with­draws its decision of indictment, or China shall re­lin­quish its mar­itime claim, or the US shall re­lin­quish its pro­tec­tion over Ja­pan re­gard­ing Diaoyu Is­lands, it is clear that none of th­ese would be ex­pected to work out,” he said.

Li of Brook­ings said he is cau­tiously op­ti­mistic for the year ahead.

While not­ing that many of the thorny is­sues will re­main, Li said it’s worth ap­plaud­ing that de­spite so many prob­lems in 2014, the two na­tions’ top lead­ers have still man­aged to bring re­la­tions back on the right track, re­fer­ring to the Xi-Obama meet­ing in Novem­ber.

“Is this co­in­ci­den­tal? No. Be­cause they know that go­ing the other di­rec­tion is to­ward a dead end,” Li said. Con­tact the writer at chen­wei­hua@chi­nadai­lyusa.com

KIM KYUNG-HOON / REUTERS

Chi­nese Pres­i­dent Xi Jin­ping shakes hands with US Pres­i­dent Barack Obama dur­ing the APEC Wel­come Ban­quet at the Beijing Na­tional Aquat­ics Cen­ter, or the Wa­ter Cube, in Beijing on Nov 10, 2014.

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