Uncertain Waters: China-US Relations in 2014
February 19, 2014, 5:22 pm

Weeks after China published its 2013 trade figures which show that China has surpassed the US as the world’s largest trading nation, visiting US Secretary of State John Kerry got a warm reception in Beijing. Chinese President Xi Jinping and Premiere Li Keqiang met with him last week while State Councilor Yang Jiechi and Foreign Minister Wang Yi held in-depth discussions with Kerry on a wide range of bilateral and regional issues. Kerry later announced his talks with Chinese leaders as “very constructive and positive”. The shift in the trading pecking order has reflected China’s rising global dominance while America’s ‘Asia pivot’ along with decades of heavy-handed policy gives China an opportunity to rebalance global powers.

2014 is the 35^th anniversary year for establishing diplomatic relations between Beijing and Washington. In the late 1970s of course, the two sides had found it imperative to strengthen their tacit alliance vis-à-vis the Soviet Union. Then Moscow’s very expansive foreign policy posed common and severe threat to them, which was evidenced by its invasion of Afghanistan at the end of December 1979. Another driving force for bringing these two countries together was the mutual economic and trade interests. China, especially, in the very beginning of its reform and opening-up years, desperately needed the US as an indispensable partner. It was some very deft diplomacy by US President Jimmy Carter’s national security advisor Zbigniew Brzezinski and his Chinese counterpart that led to a grand mutual compromise on the Taiwan issue.

Now, however, international observers have good reason to worry about the trajectory of this bilateral relation. Japan and the Philippines–US allies in the Asia-Pacific—are unwilling to continue to shelve their territorial disputes with China while Beijing’s responses have been blamed as “revisionist and provocative”. Days before Kerry’s visit, Admiral Jonathan Greenert, chief of naval operations of the US Navy, said in Manila that the US will support the Philippines in the event of conflict with China over disputed waters in the South China Sea. If the US abandons its “not choosing sides” policy line in these territorial disputes and decides to more explicitly back its allies’ claims, the probability of a China-US faceoff, even a limited armed conflict will soar.

The China-Japan row has, of course, gone from bad to worse. The Japanese Abe administration is very determined to implement its emboldened national security agenda—modifying the pacifist constitution, pursuing a long-buried “collective-defense rights” and seeking to alter Japan’s official stance toward its wartime history in the WWII for the sake of revitalizing its national confidence.

Indeed, Japan has had its share of legitimate security concerns but Tokyo now is hardly to be seen as a status quo power.

Abe, meanwhile, has brazenly insisted on his distorted historical views on “comfort women” and other war atrocities of imperial Japan’s army during its invasion of China and Korea. This despite its greatest ally, the Obama administration very publicly expressed disappointment at the Japanese Prime Minister’s visit to a controversial shine linked to Japan’s militarist past.

Japan has cited China’s growing military spending as a legitimate excuse to increase its own defense budget. Ironically, China’s national defense budget amounts to about 1.3 per cent of its GDP compared to the more than 4 per cent of GDP in the case of the US. According to data from the Stockholm International Peace Research Institute, China’s per capita military spending ($95, 2011) is far less than the one of Japan ($380, 2011). Logic therefore says it is Japan that should be viewed as a great latent military power. The ever-deepening US-Japan alliance with China and North Korea as overarching targets is a narrative that needs to be bartered for a fresh new one, understanding the ground realities of the present.

For Xi Jinping and the rest of the Chinese top leadership, 2014 marks a very crucial beginning for implementing the Reform and Opening-up 2.0 grand plan which was promulgated during the 3^rd Plenary Session of the 18^th Central Committee of the CPC last November.

Xi is personally leading an unprecedented large-scale anti-corruption campaign to improve China’s domestic conditions for new and comprehensive reform. A relatively stable and favorable external environment is necessary as well, and such logic can in part explain why China attaches more and more strategic importance to its relations with Russia. President Xi attended the Sochi Olympic opening ceremony amid a marked Western resistance to the event, which is very rare in terms of China’s traditional top-leadership’s diplomatic practices but definitely signifies a new outlook on the Chinese grand strategy.

However, Xi is also firmly committed to cultivating what he termed “a new model of major power relationship” with Washington. Xi told Kerry in Beijing last week that China will continue to enhance dialogue and properly handle differences in 2014. Beijing will expect the US to be more cautious in intervening in the territorial disputes in the region. The tension and conflicts between the two sides on this front has the potential to derail their cooperation on regional and global common challenges. In particular, on North Korea, Kerry said China “could not have made it clearer” about the denuclearization on the Korean peninsula. Besides this hot spot, China and the US have been exploring joint efforts to help stabilize Afghanistan in the context of US combat troop withdrawal by the end of 2014.

Meanwhile, attempts to dispel unwarranted fears like those of China posing the greatest threat to the US economy are being made at every level. Premier Li Keqiang in talks with Kerry has emphasized the importance and urgency of completing the China-US bilateral investment treaty (BIT) negotiations and expending substantive cooperation on green economy. To promote mutual investments, especially Chinese investments in the US, could serve as a new strong pillar for the bilateral economic relations. According to New York-based investment consulting firm Rhodium Group, in the next decade, Chinese outward direct investments would amount to about 1-2 trillion US dollars and many Chinese entrepreneurs aiming to “go global” are much more ambitious to obtain high-valued assets in the US as well as other advanced economies.

Although set-differences over a number of international issues will prove much more difficult to be bridged, Kerry ended his conversations with Chinese leaders with, what he termed, “a profound sense of optimism”. For Obama, ‘safeguarding stability’ and protecting American interests in the Asia-Pacific region may be top-priority given the Democrats’ disadvantageous position in the coming mid-term congressional election. Indeed, stability in domestic and foreign affairs is equally essential for the Chinese top leadership concentrating on unfolding the grand reform drama in the next few years. Reportedly, another Obama-Xi meeting is on the anvil during the 2014 Nuclear Security Summit held in Hague this March. Hopefully, the “profound sense of optimism”, the kind Kerry professed will endure.