At present, U.S.-China relations that largely define the international situation, with a certain stretch, can be divided into political and economic components, each with own set of specific problems. The political component suddenly aggravated in the course of a crisis in the South China Sea developing since fall of 2014. The underlying issue is the territorial disputes in the South China Sea, with China on one side and its neighbors on the other. Nevertheless, the U.S. gets actively involved with these disputes and their anti-China bias is evident.
The process of accumulation of negativity in the relations between Washington and Beijing, owing to the escalation of the situation in the South China Sea, makes the prospects of direct conflict viable, and particularly questions the realization of the first state visit of the PRC’s President Xi Jinping to the U.S., scheduled for September. Under such circumstances, the global rivals decided to “take a break”, and several bilateral events held in the last two-three weeks were a testimony to that.
One of the notable ones was the visit to the U.S. by one of the two deputies of President Xi Jinping – the Colonel-General Fan Chanlun, the Deputy Chairman of the Central Military Commission of China – the supreme state body managing the Armed Forces of PRC. The Chinese guest started his visit from the port-city of San Diego – one of the main naval bases of the U.S. Pacific Fleet. There, Fan Chanlun was invited to inspect the latest strike aircraft carrier ‘Ronald Reagan’. It was an ambiguous move by the hosts with respect to the Chinese guest, given that a month ago the announcement came that the same vessel was expecting deployment to the Japanese port of Yokosuka.
Thus, the USS Ronald Reagan would become the flagship of the Carrier Strike Group, projecting prowess across the ocean space washing the shores of China. According to the experts, potentially frequent emergence of this carrier in the South China Sea would augment the potential of China’s Southern neighbors violently confronting Beijing. During the visit, Fan Chanlun held talks with U.S. Defense Secretary Ashton Carter and President’s National Security Adviser Susan Rice. The Chinese General assured its American interlocutors that China would do its utmost for a successful outcome of the Xi Jinping’s upcoming visit.
In this connection, the statement by the China’s Foreign Ministry about the construction of the artificial islands in the South China Sea “nearing completion” – the exact issue that provoked next escalation of tensions in the region – was also fascinating. Fan Chanlun discussed certain aspects of bilateral cooperation between the defense authorities with the Pentagon Chief Ashton Carter. The Chinese guest took the opportunity to invite Secretary Carter and the newly appointed Commander of the U.S. Pacific Command Harry Harris to the PRC already this year.
As far as the economy is concerned, the U.S.-China Business Council – USCBC that positions itself as a “private, non-profit organization uniting some 220 American companies with business relations in China”, issue regular reports containing U.S. claims against Beijing. At various times, former and current high-ranking politicians of both countries, such as Hu Tsintao (Hu Jintao), Wen Jiabao, Li Keqiang, Joe Biden, Hillary Clinton and Timothy Geithner were among the guests at the events hosted by the USCBC.
The USCBC’s 80-pages long report released early June and called ‘China Economic Reform Scorecard – Marginal Improvement, Impact Still Limited’ contains key conclusions of the authors. It particularly highlights that despite of the recent reform message of “letting the market play a decisive role”, the speed of reform in the essential areas of the PRC’s economy was slow and that created certain concern with the American companies regarding the issue of developing the business in China.
To illustrate the term “slow” the authors used a semicircle (resembling the car’s speedometer), where the arrow indicating the pace of reforms in China barely moved from standstill. Pointing out the ”signs of protectionism in certain sectors” the authors expressed hope that progress on economic reform could come in the upcoming US-China Strategic & Economic Dialogue (S&ED), during President Xi Jinping’s September 2015 state visit to the United States.
Naturally, the Chinese experts were not indifferent to the opinion of such a significant organization on the reforms in China. Although certain problems in China’s economy have been acknowledged, China remains the key market for the American goods, the volume of which has grown three times in ten years. Yet the real significance of these figures can be appreciated against the changes in both the U.S. exports to China and former’s exports to the U.S, and the balance in the bilateral trade. The U.S. exports to China amounted to $110.5, $121.7 and $123.7 billion in 2012, 2013 and 2014 respectively. While the volume of China’s exports to the U.S. stood at $426.7, $440.4 and $466.8 billion during the same period. Thus, the well-established negative trade balance between the U.S. and China has remained above the $300 billion mark in the past three years, with a trend of gradual increase. The Americans tend to blame the ‘unfair manipulation’ of the exchange rate of the national currency that is viewed as ”artificially low”.
The US-China Strategic & Economic Dialogue mentioned above, recently convened in Washington on 23-25 June 2015, and was coupled with the holding of the sixth U.S.-China High-Level Consultation on People-to-People Exchange. The level of the delegations testified to the significance attached to these events by both sides. The Chinese were represented by the Vice-Premier Liu Yandong and the State Councilor Yang Jiechi. Secretary of State John Kerry and Treasury Secretary Jacob Lew represented the U.S. Vice-President Joe Biden addressed the gathering and assured his Chinese colleagues that the U.S. wasn’t concerned with China’s peaceful development, while John Kerry spoke of the U.S.-China relations having crucial importance for the international development in the 21st century.
China’s “Global Times” responded to the remarks by the American politicians by acknowledging “the actual cooperation trend’ in the bilateral relations, but adding that ‘there remained sources of mutual suspicions and too many prospects of sliding into crisis”. When it comes to the American experts, they find the fact of the very holding of the next round of the SED as a positive development. They contended that although clear answers to fundamental questions were not provided, the key issues in the bilateral economic relations were nonetheless addressed.
Some evaluations of the outcome of discussions of a specific nature, however, were more expressive. Catherine Novelli – U.S. Under Secretary of State for Economic Growth, Energy, and the Environment – described the talks within the bilateral ocean meeting as ‘fantastic progress’. It has to be stressed that this is not the first diffusion of tensions in the otherwise vacillating U.S.-China relations. Yet anything certain about its depth and longevity could only be said after the Xi Jinping’s visit to the United States. The degree and viability of agreeing on objectives and strategies by the two leading world powers, on the regional and global matters, remain a lingering problem.
So how can America’s strategic ”Pivot to Asia” (with its underlying anti-China theme) and Xi Jinping’s formula about China continuing along the path of peaceful international development, without renouncing its “legitimate rights” and “not bargaining on its key national interests” be combined? China’s leader announced the very formula in the early 2013, prior to his election to the highest public office position. By the way, Joe Biden opted to skip the second part of the formula during his remarks at the aforementioned event.
It is fascinating that the parties resorted to mutual accusations on the issue of human rights violations (quite gratifying in this sense) just at the height of the efforts to relaunch the political and economic dialogue.