Chapter 2. Closer and more balanced: China–US relations in transition

To begin with, the relationship has been changing from limited contact to comprehensive engagement. When President Nixon visited China in 1972, the two countries had almost no contact with each other—largely a result of a 20-year US policy of isolation and containment against China after the Korean War. Their economies were completely independent of each other and there were few people-to-people contacts between the two countries. Since then, especially since China’s adoption of its policy of openness and reform in 1979, the two countries have developed comprehensive relations with a high and still increasing degree of economic interdependence.

Trade and economic relations between the two countries have grown dramatically in breath and depth. According to the US Commerce Department, China–US trade in 2007 amounted to US$386.7 billion, representing 12.7 per cent growth from 2006 (<http://www.uschina.org/statistics/tradetable.html>).

Table 2.1 China’s trade with the United States ($ billion)

Note: US exports reported on FOB basis; imports on a general customs value, CIF basis.

Sources: US International Trade Commission, US Department of Commerce and US Census Bureau.

Because of the different methods of compiling statistics, Chinese figures are quite different. According to the Chinese Ministry of Commerce, the trade volume between the two countries in 2007 stood at US$302.08 billion, representing 15 per cent growth from the previous year (<http://zhs.mofcom.gov.cn/ tongji.shtml>). By any standards, however, the trade volume between the two countries is huge. As a result, the United States is China’s second-largest trading partner and China is the United States’ third-largest trading partner.

In terms of investment, by the end of July 2007, US companies had invested in 53 754 projects in China with an actualised value of US$55.42 billion. By the end of June 2007, Chinese companies had invested close to US$3 billion in the United States (<http://finance.people.com.cn/GB/71364/6316169.html>). According to the US Department of Treasury, China was holding US$652.9 billion in US Government Treasury bonds by October 2008 (<http:// www.treas.gov/tic/mfh.txt>). Meanwhile, increasing numbers of Chinese companies are listed on US stock exchanges and increasing numbers of US retirement funds are investing in China’s stock markets (Carrel 2007). Consequently, the two countries’ economies are more closely tied up with each other than at any time in history.

Besides increasing economic relations, the two countries have developed close political contacts. Top leaders of the two countries regularly meet and talk on the phone. Lower-level officials are meeting and talking with each other all the time. Various mechanisms have been set up to facilitate such contacts, most prominent of which are the strategic dialogues between the officials of the two countries at the ministerial level. Numerous Chinese and American official delegations travel across the Pacific. As a result, no longer is there any significant communication problem between the two countries.

A military relationship has also been forged, although still in a limited and hesitant way. After the traumatic Hainan air collision, the two militaries gradually resumed a relationship. Among the exchanges, in January 2004, General Richard Myers, Chairman of the US Joint Chiefs of Staff, visited Beijing. In October 2004, Cao Gangchuan, Chinese Defence Minister, paid a visit to Washington, DC. The then US Secretary of Defence, Donald Rumsfeld, visited China in the autumn of 2005. In November 2006, General Gary Roughhead, Commander-In-Chief of the Pacific Fleet, visited China. In March 2007, General Peter Pace, Chairman of the US Joint Chiefs of Staff, visited China. In May 2007, Roughhead’s successor, General Timothy J. Keating, visited China. In addition, the two countries have engaged in military or defence dialogues such as defence consultative talks between senior officials of the two defence departments and the Consultation Mechanism to Strengthen Military Maritime Safety. They have also exchanged naval vessel port calls (‘US Navy vessel pays port call to Qingdao’, China Military Online, 23 May 2007, < http://english.pladaily.com.cn/site2/news-channels/ 2007-05/23/content_824047.htm >; ‘China takes positive attitude towards military co-op with US’, Xinhua, 14 September 2006, <http://english.cri.cn/2946/2006/09/14/167@139430.htm>). More recently, the two militaries even conducted a military exercise together (<http://jczs.sina.com.cn/2006-09-21/2032399999.html>). There are also press reports to the effect that the two militaries are talking about conducting anti-terrorist and disaster relief joint military exercises in the near future (‘China and US navies may conduct anti-terrorist joint exercises’, < http://mil.chinaiiss.org/content/2008-5-4/4155326.shtml >; ‘Commander-In-Chief of the US Pacific Fleet: China and the US militaries may hold disaster relief joint military exercises next year’, Global Times, 18 July 2008, <http://war.news.163.com/08/0718/09/4H4GS42100011MTO.html>).

At the societal level, exchanges have been intensive. In addition to the hundreds of thousands of students crossing the Pacific to study in the other country, tens of millions of people travel between the two countries for business, family visits, cultural exchanges and holidays. According to a news report (< http://news.xinhuanet.com/fortune/2005-05/12/content_2947950.htm >), the number of flights between China and the United States was already 54 a week in 2005 and was projected to reach 249 a week in six years.

For many years after President Nixon visited China, cooperation between the two countries was restricted to the strategic realm—that is, to containing perceived Soviet expansion. Gradually, cooperation between the two countries extended to trade, education and cultural realms, especially after China adopted its policy of openness and reform in 1979. The end of the Cold War removed the anti-Soviet rationale for strategic cooperation; however, economic, cultural and societal interests in the relationship were strong enough to sustain the relationship. Even the Tiananmen Square incident in 1989 did not break the trend of development. As China’s domestic politics stabilised, especially as its economy resumed rapid growth and its international influence increased, the two countries found more reasons to expand and deepen cooperation between them. Over time, such cooperation had covered not only most areas in relations between the two countries, but issues at the regional and global levels.

At the bilateral level, the two countries saw cooperation increasing in areas including the environment, immigration, cross-border crime, rule of law, intellectual property rights, the war against terror as well as economic relations and educational and cultural exchanges. Before Ma Ying-Jieu came to office in Taiwan in March 2008, as separatists pushed for Taiwanese independence more aggressively, the two countries even found it necessary to cooperate on the Taiwan issue. Both were determined not to let Taiwanese separatists drag them into an unnecessary military confrontation (‘Chinese, US presidents meet over bilateral ties, issues of common concern’, <http://news.xinhuanet.com/ english/2003-10/20/content_1131209.htm>).

At the regional level, the two countries have been engaged in cooperation in maintaining peace and stability as well as economic prosperity in the region. The Chinese Government has welcomed a constructive US presence in the region. ^[1] The US Government has encouraged China to play a positive role in regional cooperation such as its participation in the Association of South-East Asian Nations (ASEAN) Regional Forum (ARF) and Asia-Pacific Economic Cooperation (APEC) as well as other official and unofficial regional dialogue mechanisms. One often cited example of this cooperation is the two countries’ joint efforts to manage the North Korean nuclear crisis.

At the global level, the two countries are cooperating on an increasing number of issues including environmental protection, UN peacekeeping, humanitarian disaster relief, maritime safety, free trade, smuggling, cross-border crime, non-proliferation of weapons of mass destruction (WMD) and the war against terrorism.

For a long time after Nixon’s visit to China, interactions between the two countries were largely asymmetrical—that is, more often than not, the United States set the agenda and took the initiative while China responded, although China tried to adhere to its own principles and to defend its perceived core national interests in doing so. During the late 1960s and early 1970s, it was the Nixon Administration’s decision to play the China card in its efforts to achieve détente with the Soviet Union and to seek a face-saving exit from the Vietnam War that provided an opportunity for China to improve its relations with the United States in an effort to alleviate its security predicament. During the early 1980s, it was in part Ronald Reagan’s Administration’s pro-Taiwan rhetoric and gestures that led to the Chinese Government’s decision to reorient its foreign policy from one that sought a strategic alliance with the United States against perceived Soviet expansionism to one that emphasised independence.

During the early 1990s, it was Bill Clinton’s Administration’s policy of forcing political changes in China that led to China’s stiff resistance, resulting in rounds of conflict between the two countries. In the late 1990s, it was the Clinton Administration’s decision to abandon its policy of linking China’s human rights issues with trade and adopting an engagement policy on China that made it possible for the two countries to conclude an agreement vowing to work towards a constructive strategic partnership (Qingguo 2004). At the turn of the century, it was the George W. Bush Administration’s hardline approach towards China that pushed relations between the two countries to the verge of confrontation and its subsequent shift of attention to the war on terror and solicitation of China’s help in this that made it possible for the two countries to develop a positive relationship, which former Secretary of State Colin Powell described as the best of all times (Qingguo 2003:3).

This situation, however, has been undergoing some subtle but fundamental changes in recent years. Increasingly, China does not just respond to US initiatives, it takes some actions on its own to which the United States finds it necessary to respond. For instance, China’s efforts to bring about a peaceful resolution of the North Korean nuclear crisis led to US agreement to the three-party and subsequent six-party talks in Beijing in recent years (Park 2005:76). Also, China’s effective diplomatic efforts to cultivate good relations with its South-East Asian neighbours provided the rationale for the Bush Administration to pay more attention to the region (Economy 2005). At the moment, China is still largely on the receiving end of China–US interactions, however, a change of direction is becoming more and more discernable.

In essence, after more than three decades of contact and interactions, the two countries are finding themselves in a state of comprehensive engagement, more extensive cooperation and more balanced interactions.