What's Gone Wrong With China-US Ties?

After relations between China and the US saw a relatively harmonious 2009, during which both sides celebrated the 30th anniversary of establishing diplomatic ties, a vastly different picture seems to be emerging as we enter 2010. As the relationship between Washington and Beijing is being strained on a number of different fronts, CRI's Today program invited four experts to discuss the current state of bilateral ties between these two global powers on February 8, 2010. The following article is a summary of that discussion. A link to the unedited audio recording can be found at the end of the article.

From disagreements on arms sales to Taiwan, trade disputes and China's fury over US president Barack Obama's planned meeting with the Dali Lama, relations between Washington and Beijing have not exactly got off to the best start as we enter the new decade. The last few weeks of accusations and finger pointing from both sides of the Pacific have lead many to worry where this is all headed.

Recently Washington seriously displeased the Chinese government with its decision to sell over 6 billion dollars of weapons to Taiwan, severely threatening the stability that has been achieved in the cross-Straits relationship.

Many within China are furious that this sale is going ahead and question the benefit to either side. Liu Youfa is Deputy Director of the American Studies Center at the China Institute of International Studies.

"There should be no sales at all at any time because when you look at the current situation across the Taiwan straits, when the two parties are trying to get closer to each other, what does the sale mean? You're simply placing a wedge into this conversion of interests across the Taiwan Straits."

Steven Clemons, a Senior Fellow at the Washington-based think tank the New America Foundation, admits that the Obama administration could have dealt with the Taiwan situation in a more sensitive way, but says the policy of selling arms to Taiwan is one the current administration is unlikely to change anytime soon.

"Had I been advising the Obama administration I would probably have done this in a less robust and less visible way, and I would have done it in a way that tried to take account of Chinese sensibilities," Mr Clemons said. "But the notion that we're going to disavow ourselves from Taiwan and its security is one that US national interest is not going to accept."

Another key sticking point between the US and China has been Washington's repeated calls for Beijing to raise the value of its currency. The Obama administration believes the current level of the yuan is not high enough and therefore gives China an unfair advantage by making the cost of Chinese products artificially low and that of American products artificially high.

However, Liu Youfa says, if China does concede to Washington's demands, it runs the risk of seriously reducing profit margins of Chinese companies, with little to gain and potentially disastrous consequences.

"Once China allows its currency to appreciate as much as the US side expects then it will totally wipe out profit margins resulting in many industries simply collapsing," warns Liu Youfa.

Stephen Clemons, however, says it would be impossible for China to appreciate its currency more than the global market would accept.

"There's no way that China, if it were to appreciate its currency, could do this beyond what the global market would accept. And the idea that industries would go under or have a hard time because the currency appreciates is what industries all round the world are dealing with," Mr Clemons argues.

"China's joined at the hip with us. If the American consumer doesn't come back; if China, which is one of the great surplus nations of the world today, doesn't figure out how to bring some of that capital, some of that manufacturing capacity back to the United States in partnership and in collaboration in a positive way, then we're in really big trouble," he adds.

Another seriously provocative move the US has made with respect to Chinese relations has been the recent announcement that President Obama will meet the Dali Lama. Clearly this riled Beijing. Professor Xu Hui, from China's National Defense University interprets the decision as a sign of Washington flexing its muscles on the world stage.

"Obama did this knowingly because he wants to show the world 'we are the number one. We would like to have freedom of choice. We don't need to ask agreement from the Chinese government'," says Professor Xu Hui.

Dr David Finkelstein, Director of China Studies at the US-based think tank CNA, believes Obama's proposed meeting with the Dali Lama does not necessarily imply that Washington supports Tibet separation.

"The meeting with the Dali Lama as an individual is because, one is told, he is a world religious leader, and were the president of the United States not to meet with a world religious leader it looks terribly bad given the principles of the country, which is also why some European leaders have met with him as well," Dr Finkelstein explains.

However, Liu Youfa disagrees and says the US is using the Dali Lama as a tool to destabilize relations with Beijing.

"Simply put, it's a convenient tool by the US side to apply this issue to irritate the whole aspect of US-China relations," says Mr Liu Youfa.

How exactly Washington's relationship with Beijing will play out over the coming year is still up in the air. What's clear is that political analysts on both sides are likely to have their work cut out for the foreseeable future.　

Dominic Swire, CRI news.