Progress, Setbacks in U.S.-China Dialogue

Top officials from the U.S. and China met for the annual bilateral in Washington this week, the first meetings of their kind since Xi Jinping took power in Beijing. A range of topics was discussed, from bilateral investment to cybersecurity, and progress in the former was matched by a stalemate over the latter. From Reuters:

Vice President Joe Biden launched the annual U.S.-China Strategic and Economic Dialogue by stressing the shared stakes and responsibility to support the global economy.

“The next steps that China needs to take for its own economy happen to be in the interests of the United States as well,” he said as the two-day talks opened in Washington.

“Your own plans call for the kinds of changes that have to take place, that are difficult, like here, but if they do, they will benefit us both, including free exchange rate, shifting to a consumption-led economy, enforcing intellectual property rights and renewing innovation,” said Biden.

But Biden did not mince words when he raised the hot-button issue of theft of intellectual property through hacking of computer networks, a conversation complicated by the fugitive spy agency contractor ’s revelations of U.S. electronic surveillance around the world. [Source]

The Wall Street Journal reports that despite the high stakes agenda, Chinese Vice Premier Wang Yang tried to lighten the mood with humor:

The relationship between Washington and Beijing has been rocky for decades. This week’s talks have been clouded particularly by recent revelations by a former U.S. intelligence contractor about Washington’s alleged spying practices in China, after more than a year of U.S. officials accusing Chinese hackers of stealing American corporate secrets.

“It’s vitally important that the relationships among the four men behind me are deepened and become more personal,” Mr. Biden said, referring to Secretary of State John Kerry, Treasury Secretary Jacob Lew, Vice Premier Wang Yang and State Councilor Yang Jiechi.

Mr. Wang helped break the diplomatic ice with humor, cracking a joke about how the relationship is like a marriage, with the new officials paired for separate strategic and economic tracks.

“He was quite amusing at times during the meetings,” said one U.S. administration official involved in the talks of Mr. Wang, though “sometimes humor doesn’t translate into a foreign language.” [Source]

While Wang’s joke reportedly created an awkward moment in the meeting rooms, it was welcomed at home by some, not by others.

Jokes aside, the major takeaway from the meetings was China’s agreement to participate in negotiations over a bilateral investment treaty. From AP:

China made the concession during annual U.S.-China security and economic talks in Washington. Commerce Minister Gao Hucheng told reporters that negotiations on substantive parts of a treaty would start “as soon as possible.”

The U.S. has been pushing for such a treaty for years, and American businesses had been looking for progress in this week’s talks, saying it would facilitate more protections and market access for American investors in China, where state-owned company enjoy many competitive advantages. [Source]

Such a treaty would be unprecedented, and U.S. officials heralded the announcement as a major step forward. From the New York Times:

Treasury Secretary Jacob J. Lew called the development a significant breakthrough. It represents “the first time China has agreed to negotiate a bilateral investment treaty, to include all sectors and stages of investment, with another country,” he said in a statement.

[…] But concerns over espionage and theft using the Internet have complicated the economic discussions, with diplomats working on those issues this week. Protections against cyberspying would presumably have to be part of any investment treaty, and could be a major sticking point.

The United States has repeatedly warned that the theft of American companies’ intellectual property, often over computer networks, could make businesses hesitant to invest. And the United States has blocked some Chinese investments, fearing that they could facilitate electronic espionage. [Source]

But the United States’ position on cybersecurity has been undermined by the revelations alleged by National Security Agency whistleblower Edward Snowden, who claimed that the U.S. government has conducted widespread hacking into Chinese institutions, including universities. From the New York Times:

An American official who was sent out to brief reporters after the first day of talks said that when it came to the theft of intellectual property — including the designs of commercial products and military aircraft — “we don’t do it, and we don’t think any country should do it.”

China has always viewed the issue differently, seeing far less of a distinction involving what it regards as issues of economic and military security.

“For many Chinese, it is bizarre that how Washington can continue to pose as the biggest cyberespionage victim and demand others behave well,” China Daily, a government-influenced publication, wrote before the meeting, “after former U.S. intelligence contractor Edward Snowden revealed that U.S. spy agencies hacked deep into China and other countries’ computer networks, including those of government, military, research, educational and business organizations.”

It concluded that “by dividing cyberespionage into ‘bad’ and ‘good’ activities, Washington is trying to dictate the rules for global cyberdomain, which is a public space.” [Source]

For its part, the English edition of Global Times issued a blistering editorial accusing the U.S. of “hypocrisy and jiggery-pokery”:

Washington is also good at manipulating public opinion. It has shaped itself as a victim of cyber espionage in the past years. However, it has been proved now that the US is behind the world’s most serious spying activities.

Washington is accustomed to being hollow and assertive, which China has to curb. The Snowden affair offered a chance, but Beijing hasn’t made a big deal out of it. China acted rather restrainedly when handling the Snowden case, and there’s no need for China to hype the case in the strategic and economic dialogue. However, it should be a tool of the Chinese delegation to psychologically deter the US delegation. The US should stop making the case for accusing China of cyber espionage and showing off their moral high ground of human rights protection.

With a capital advantage, expanding market and technological progress, China is moving closer to an equal position with the US. It’s time for the US to reflect on its attitude on China. [Source]

But on a more optimistic note, Asia Society’s Orville Schell and John Delury write that the Snowden affair may have had an unexpected positive impact on the long-term China-U.S. relationship by leveling the playing field:

By suggesting how putting ourselves on a more equal footing may serve as a solvent, the Snowden affair may also help us see that projections of America as the all-knowing, all-righteous, all-mighty and all-too ready to hector father-figure-to-the-world – a depiction that old-style party propaganda in China tirelessly exploits – is not destined for success, especially for a country to whom equality and face are so important.

Of course, there will be no magic if America alone makes new vows to seek a more equal and collaborative relationship if China, too, does not also shed some historical baggage. And a good place to begin would be to start retiring the old narrative of China as a victim. It is time for the party to acknowledge that China is no longer a “semi-colonial, semi-feudal” country living in the early 20th century, and that Western imperialism is not what it used to be and the Great Powers are no longer so “great.”

It’s time to retire the hoary Marxist-Leninist-Maoist narrative of foreign oppression, exploitation, and persecution of an inferior confected by the party over the century. Only then will Chinese be able to put the humiliation of their unequal past behind them, transcend their deep sense of grievance, and finally reformat the suspicious mindset that has characterised so much of their approach to the US to become true equals. [Source]

Read the full transcript of opening remarks by Biden, Wang, and other participants. See also more about the Edward Snowden case, cybersecurity, and previous U.S.-China Strategic and Economic Dialogues, via CDT.