China and the US: A G-2 by another name
By Jing-dong Yuan
SINGAPORE - At the first United States-China Strategic and Economic Dialogue
(S&ED) in Washington on July 27-28, the two countries signed a memorandum
of understanding to enhance cooperation in climate change, energy and the
environment and pledged closer cooperation on restructuring their respective
economies and working toward more balanced global growth.
While the meeting itself did not result in major agreements, it nonetheless set
the tone for the bilateral relationship in the coming years. The US and China
have never been so interdependent economically and both recognize the
importance of working together to confront the challenges they face and seek
solutions.
The S&ED builds on past high-level bilateral consultations on
strategic and economic issues, but its rationale is different. During the
George W Bush administration, a senior dialogue on security issues was
initiated in 2005, followed by the Strategic Economic Dialogue a year later.
The former sought to encourage Beijing to become a stakeholder in the
international system while the latter focused on key disputes in Sino-US
economic relations, ranging from alleged currency manipulation by China to
trade imbalances.
In other words, as China rose as a major power on the global stage, and as it
benefited from greater economic integration, it was expected to follow
international norms and practices adopted by members of the international
community. Implicitly, Washington as the teacher was giving advice to China the
student on its diplomatic responsibilities as well as codes of conduct in
international economic affairs.
These processes, regardless of their initial motivations, served as the basis
for more institutionalized, regular and high-level bilateral consultations to
handle disputes and promote common interests in a candid, constructive and
cooperative manner. They also eased Congressional pressure in the US and
potentially damaging punitive US legislative measures against China.
The Barack Obama administration in Washington has inherited a relatively stable
US-China relationship as it assumed office in the midst of the most serious
global economic crisis since the Great Depression. The essence of Obama's
approach is the willingness to embrace multilateralism and best captured by his
remark: "We exercise our leadership best when we are listening."
And listen Washington did. China's role has been elevated in recent years,
given its accumulated economic power. There is greater emphasis on the
importance of how the two countries should work together to deal with global
challenges, from the economic crisis to climate change, from the environment to
the proliferation of weapons of mass destruction. As acknowledged in a joint
statement on July 27 from US Secretary of State Hillary Clinton and Secretary
of the Treasury Timothy Geithner, "Few global problems can be solved by the US
or China alone. And few can be solved without the US and China together."
Obama laid out at the meeting what he envisioned as the top priority areas for
US-China cooperation, given their mutual interests: a lasting economic
recovery, a clean energy future, prevention of proliferation of weapons of mass
destruction and emerging non-traditional and transnational security threats.
The Chinese delegation was more concerned with the value of the US dollars and
ballooning US deficits, with good reason: China holds more than US$800 billion
in US Treasury bonds.
Vice Premier Wang Qishan asked that the US properly balance and handle its
money supply, but also conceded that China should rebalance its economy to
encourage greater domestic consumption. Major adjustments await the two
countries in the coming months and years as they seek long-term and sustainable
economic recovery. None will be easy and some could have major consequences for
employment, consumption and general economic growth.
While the two countries agreed on the importance of dealing with the North
Korean and Iranian nuclear issues, they left out the specifics such as whether
China will be willing to step up pressure on Pyongyang. Nor was it clear that
Beijing was receptive to harsher sanctions on Tehran for its uranium enrichment
program. This also suggests that on strategic issues, differences remain
between Beijing and Washington in terms of perspectives and specific
approaches.
The strategic side of the dialogue left much to be desired. One positive
outcome out of the meeting was the resumption of high-level military visits,
which were temporarily disrupted last year due to the US decision to sell arms
to Taiwan.
Military-to-military contacts remain limited and it will require greater
efforts from both sides to enhance mutual understanding and develop
crisis-management mechanisms. Beijing and Washington must also address the
issue of power transition and manage strategic competition - perceived or real
- as China builds up its military capabilities and the US adjusts its global
defense posture. Recent months have already witnessed maritime incidents that
could have unwelcome consequences if left untended.
Beijing and Washington came away from the first S&ED with limited, albeit
important, accomplishments. They demonstrated a strong commitment to build a
positive, cooperative and comprehensive relationship and set the tone for
future consultation based on shared interests in bilateral, regional and global
contexts. Most fundamentally, they both recognized that only by working
together can they address the many challenges. This is perhaps the most
important accomplishment made in the two days of meetings.
Dr Jing-dong Yuan is director of the East Asia Non-proliferation Program
at the James Martin Center for Non-proliferation Studies, Monterey Institute of
International Studies. He is currently a visiting senior research fellow at the
East Asian Institute, National University of Singapore. The views expressed are
his own.
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