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The sixth joint meeting of the U.S.-China Strategic and Economic Dialogue (S&ED) was held in Beijing from July 8-10. It is a very convenient point to assess the present state of the bilateral Sino-US relationship, considering that almost all departments from both sides were represented at the talks. The importance can also be seen in that Chinese President Xi Jinping personally opened the proceedings and stated that 'our interests are more than ever inter-connected,' and that the two nations 'stand to gain from cooperation and lose from confrontation'.
Jinping went on to say that 'if we are in confrontation, it will surely spell disaster for both countries and for the world,' adding that the Pacific powers need to 'break the old pattern of inevitable confrontation'. Earlier in a statement issued by the White House, President Obama said the US was committed to building a 'new model' of relations with China that is defined by cooperation and the constructive management of differences. 'We remain determined to ensure that cooperation defines the overall relationship,' Obama said. But what is the reality?
Let us examine strategic issues first. In the first decade of the 21st Century, the US became involved in costly mis-adventures, first in Iraq and then in Afghanistan that have cost it nearly US $ 4-6 trillion and huge losses in both men and material; whilst China remained largely insulated. China has since then quadrupled its military spending, quietly abandoned Deng Xiaoping's 'taoguangyanghui' [bide your time, hide your strength] policy directive and has started asserting itself on its perceived claims in both the East and South China Sea areas.
The US believes that Chinese claims are 'inconsistent with international law' and that China is following a policy that is deliberately low key to slowly establish its position in this vital area by generating minor incidents that do not invite US retaliation. The US assessment is that by following this policy, the Chinese hope to strengthen the conviction amongst East and South East Asian countries that the US is an 'unreliable' security provider and that they would be better served if they came to an accommodation with China.
The Chinese perceive that it was Japan, conscious of the strength of the vital US-Japan Security Treaty, which initiated the tension in East Asia by 'nationalizing' the Diaoyu/Senkaku Islands and thus deliberately changed the status quo in East Asia. Chinese spokespersons repeatedly stress that both Hanoi and Manila have in the past admitted that China had sovereignty over all islands and islets on the Chinese side of the Nine-Dash Line in the South China Sea and therefore Beijing deems the Philippines' occupation of some of these islands as unacceptable. Unless there is some real engagement among the various parties, tensions are likely to continue to rise. As the US is an ally of both Japan and the Philippines, it has made itself an interested party in the disputes. The issues that surround the complex security relationship between China and the US with regard to East and South East Asia have thus remained unresolved despite sentiments of co-operation expressed both by Xi and Obama and even after the present S&ED dialogue.
On the other hand, the US desperately needs Chinese help to dampen North Korean ambitions, particularly when it comes to their missile and nuclear programmes. The US watched with some satisfaction when Xi Jinping visited Seoul, having already met President Park of South Korea five times, before he has yet to even meet the North Korean leader. Similarly, the US needs Chinese co-operation in the UN Security Council, in climate change negotiations, as also with regard to Syria, Iraq and Iran's nuclear file [5+1 Talks].
The paradox of the relationship cannot be starker or unlike any other when economic/trade/ investment issues are discussed or when the people to people interface takes place. Last year about one and a half million Chinese tourists visited the US and, according to a report by the National Association of Realtors [NAR], the Chinese are the largest foreign buyers of US real estate, spending nearly US $ 22billionI . Both countries will become each other's largest trading partners by 2020, although at present the US was China's second largest trading partner after the EUII .
Overall, nearly 12.5% of China's total trade is with the US.III Both are equally keen on seeking further investment. Yet both are also equally wary. The Chinese complain of restrictions placed on Chinese Telecom giant Huawei's investments in the US while the US complains that Chinese hackers are 'stealing' US corporate technological secrets. The US has recently charged five PLA personnel with trying to 'steal' data from US corporations. Even the imbroglio over the question of cyber security remains unresolved.
The question therefore is will the globalization of the economic relationship trump the geo-politics that is being played out in East and South East Asia? For the US, the dilemma is acute for it cannot ignore the pleas of its allies in the region nor allow an incremental drift to take place in the relationship. For the Chinese, the key is whether the US 'respects' the core interests that they have enumerated from time to time. The Chinese feel that this is an absolute prerequisite for stability and if the relationship is to develop well. Nevertheless, some analysts believe that the relationship between China and the US is indeed headed towards what is euphemistically referred to as the 'contest of the century.' What actually transpires in the future only time can tell.
(R S Kalha is a retired diplomat who has dealt with China at the Ministry of External Affairs for several years.)
By Special Arrangement with : Observer Research Foundation (www.orfonline.org)