International Relations / United States and China Dialogue Brings Inextricably Linked Economic Giants Back to the Table by Michael Coleman If U.S.-China relations seemed to be on the backburner during the George W. Bush presidency, the upcoming U.S.-China Strategic and Economic Dialogue in Washington later this month signifies a reinvigorated approach, though it remains to be seen how friendly or constructive this dialogue will be, especially in light of strained economic relations in recent years. The initiative expands on the Strategic Economic Dialogue that President Bush and Chinese President Hu Jintao established in 2006 as a Cabinet-level forum on shared long-term objectives and short-term challenges in the nations’ economic relationship. And although economic issues are still at the heart of the dialogue, Presidents Barack Obama and Hu this year upgraded the two nations’ bi-annual meetings to include strategy, or foreign policy, not necessarily directly related to economic concerns. The high-level meetings in late July — coming on the heels of massive economic stimulus programs implemented by both countries — will feature U.S. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner and their Chinese counterparts, Vice Premier Wang Qishan and State Councilor Dai Bingguo. Clinton and Bingguo will chair the “strategic” or foreign policy part of the discussion while Geithner and Qishan will lead the economic talks. Dennis Wilder, a visiting fellow at the Brookings Institution’s John L. Thornton China Center, recently wrote that the Bush administration deserves some credit for putting economic relations with China on the map, despite complaints that China largely slipped off America’s diplomatic radar after 9/11 and the Iraq war. Wilder asserts that under the guidance of former Treasury Secretary Henry Paulson and former Deputy Secretary of State Robert Zoellick and their Chinese counterparts, the Strategic Economic Dialogue (SED) in 2006 and 2008 refocused the two nations on their mutual interests. “At a moment when it looked as if the United States Congress might act to punish China for its ballooning trade surpluses with the United States by enacting high tariffs on Chinese imports unless China adjusted its currency peg to the U.S. dollar, [the SED] helped to ease the congressional concern and, indeed, from the first meeting of the SED in Beijing in December 2006 until the last round in December 2008, the SED accomplished one of its major goals as China’s currency appreciated by an impressive 20 percent against the U.S. dollar,” Wilder wrote. “Congress did not enact punitive legislation and a trade war was avoided,” he added. And those meetings yielded results on the diplomatic front as well. Zoellick and his successor at State, John Negroponte, convinced State Councilor Bingguo to help stem the tide of Chinese arms flowing into Iran and terrorists in Iraq. They also broached the touchy subjects of human rights abuses in Darfur, Burma (Myanmar) and Zimbabwe. Conversely, China used the opportunity to air its concerns over what it viewed as the egregious actions of the Taiwan government. “We have again shown that direct engagement is a pathway to success, that through engagement the United States and China can build a stronger relationship that benefits our citizens and the global economy,” Paulson said at the end of that meeting. So what’s at stake for the upcoming dialogue? Wilder, writing on the Brookings Institution’s Web site, said the inclusion of Clinton in the discussion signals that the United States is taking the dialogue more seriously. “This is no small thing as the secretary of state’s time and energy is typically only engaged on those matters of foreign policy of highest priority to the president and the nation,” Wilder wrote. “Administration officials also point out that Secretary Clinton has elevated the issue of climate change and clean energy to a top priority in the new talks because she believes this is one of the most important issues where the United States and China need to intensify the global dialogue.” Clinton has also voiced optimism for the bilateral talks. “Through the two days of meetings, we look forward to in-depth discussions with our Chinese counterparts to enhance the welfare of the citizens of both countries,” Clinton and Geithner said in a joint statement in late June. In a statement in May, Chinese President Hu lauded the upcoming meetings as “an important platform for both nations to deepen understanding, mutual trust and cooperation.” But the diplomatic niceties belie the strange love-hate economic partnership that has developed between the two powers — one that, despite constant friction, remains indispensable to both sides and to the world economy. The Obama administration has been trying to reassure the Chinese that the United States is tightening up financial regulations and aiming to get its estimated $1.8 trillion budget deficit under control. In recent months, Chinese officials have been unusually vocal in expressing their worry about the safety of China’s assets in the United States. Next Page

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