Strategic and economic dialogue bids to piece together the Sino-US jigsaw

Piecing together the world's two major powers start annual talks today, but a whole new cast of negotiators on both sides will face a series of problematic issues

PUBLISHED : Wednesday, 10 July, 2013, 12:00am
UPDATED : Wednesday, 10 July, 2013, 3:31am

Talks between China and the United States that start today will offer a new cast of diplomats and economic chiefs on both sides of the Pacific their first real chance to address major policy issues concerning the two powers.

The annual strategic and economic dialogue has, in its five years, become an important venue for managing what is arguably the world's most crucial bilateral relationship.

In a sign of the importance the United States gives to the relationship, US Vice-President Joe Biden will open the summit.

But this year's talks in Washington have an added significance, observers say, because they come on the heels of leadership reshuffles in both capitals, with new officials in all the top diplomatic and economic posts.

Adding to the complexity is the issue of cybersecurity, which was a source of growing tension even before former National Security Agency contractor Edward Snowden disclosed US snooping on China while in Hong Kong last month.

There are increased concerns about an economic slowdown in China, as well as a commitment to forge a "new type of relationship between major powers" - a vaguely defined concept stressed when presidents Xi Jinping and Barack Obama met in California last month.

"Officials from both sides need to find ways to implement the concept in concrete and practical issues, and use this concept as a guiding principle to tackle bilateral disputes," said Jia Qingguo , a US affairs expert at Peking University.

Leading the Chinese delegation are Vice-Premier Wang Yang , who is responsible for trade and economic matters, and State Councillor Yang Jiechi , China's top diplomat.

We have four new leaders co-convening this, and they do not have the same set of interests and scope of authority as their predecessors

The US delegation will be led by Secretary of State John Kerry and Treasury Secretary Jacob "Jack" Lew. Kerry and Lew are the US chairs of the talks, although officials said the former's schedule was still being determined after his wife, Teresa Heinz Kerry, was admitted to hospital for an apparent seizure.

Kerry was with his wife yesterday after her condition was upgraded from "critical" to "fair".

In a commentary in The Washington Post yesterday, Yang said it was important for the two nations to "blaze a new trail that is different from the traditional path of conflict and confrontation between great powers".

He said the main task of the dialogue was to implement the agreement reached between the two presidents, with concrete outcomes expected.

Observers expect the officials to take more time to build a working rapport, even though they have had initial encounters.

"We have four new leaders co-convening this, and they do not have the same set of interests and scope of authority as their predecessors," said Dr Kenneth Lieberthal, a senior fellow of the Brookings Institution's John L. Thornton China Centre.

Their predecessors "met several times during the year in various combinations and there were no surprises when they dealt with each other personally at the strategic and economic dialogue," Lieberthal said.

Of the two Chinese officials, Yang has more familiarity with US affairs, since he previously served as foreign minister. But his personal dealings with Kerry have been limited.

Wang has most recently served as party secretary to Guangdong and is a newcomer to international diplomacy. In contrast, his predecessor, Wang Qishan , had deep personal ties with US officials.

Wang Qishan knew former US treasury secretary Henry Paulson from the latter's tenure as chief of Goldman Sachs. He was so well acquainted with the family of Lew's predecessor, Timothy Geithner, he reportedly sent birthday gifts to the ex-treasury chief's father.

Such familiarity may have helped Wang Qishan appear frank and decisive in his dealings with the US.

He once gave an interview on US television in which he criticised the average American's view of China as "simple" and disclosed he sometimes called the State Department to explain Beijing's position on issues.

"The two Wangs have quite different backgrounds," said Dr June Teufel Dreyer, a political professor at the University of Miami. She said Wang Yang's relative inexperience with diplomacy meant he would probably be "very cautious in what he does and says".

Professor Su Hao , of China Foreign Affairs University, expected Wang Yang would refrain from hardline remarks. Previous strategic dialogues were dominated by US calls for faster currency reform in China and demands on both sides for greater access to each other's markets.

Those issues will still be on the agenda this year, but are unlikely to become the main focus, as China's trade and current account surpluses were below their 2007 peaks last year.

The economic portion of the talks would focus on the slowing growth of the Chinese economy, said Pang Zhongying , an international relations professor at Renmin University. The purchasing managers' index for the services industry dropped to 53.9 in June from 54.3 in May, according to the National Bureau of Statistics.

The slowdown has fuelled concerns that those who invest in emerging markets are facing growing risks.

The simultaneous recovery of the US economy may change perceptions that Washington needs Beijing to fix its economic problems, Pang said.

"This is a complicated situation that will add to the uncertainty of how the dialogue will run and the tone of officials engaged," Pang said. "Wang Yang is expected to tell his US counterparts that China has the capability to restructure its economy."

But Su said the current economic situation may put China in a better position to deflect US calls for Beijing to take more responsibility in global affairs. "China can tell the US that it has to fix its internal problems first as it is having difficulties," he said.

Discussions are also likely to touch on Beijing's territorial disputes with US allies, including Japan, Taiwan and the Philippines, said Dreyer. The US will urge Beijing to put pressure on Pyongyang to halt its nuclear programme.

A US official said Kerry "feels deeply" about human rights in China and would raise issues including the status of ethnic minorities.

The meetings also come soon after Snowden's disclosures and the Hong Kong government's subsequent decision to allow the fugitive American to leave.

White House Press Secretary Jay Carney called the move a "setback" for Washington's efforts to build mutual trust with China.

But observers from both countries said the incident would not seriously affect the talks because Beijing wants to steer clear of the case. The issue of cybersecurity will nevertheless be on the agenda.

Asked at a press briefing if Snowden's disclosures would influence the talks, Assistant Foreign Minister Zheng Zeguang said only: "The information released by the media shows once again that China is among the victims of cyberattacks."

Lieberthal said Snowden's revelations gave Beijing an opportunity to "muddy the waters" in the discussion.

In turn, Washington would probably continue to stress that it has not engaged in commercial espionage - something Beijing has been accused of.

Additional reporting by Agence France-Presse