ROUND THE WORLD

New Delhi, 3 May 2006

Hu’s In, Who’s Out!

Bush-Hu Summit Sans Breakthrough

By Monika Chansoria

(School of International Studies, JNU)

Chinese President Hu Jintao recently concluded his four-day visit to the United States. The summit between the leaders of the US and China, which has been widely seen as one of the most crucial relationships of the 21^st century, was being described as vital on various fronts that included the ongoing nuclear crisis in Iran and North Korea, China’s trade and finance policies that have racked up a whopping $202 billion annual US trade deficit with China, along with the perennial issue of Taiwan. Added to these issues, the competition for access to oil also emerged high on the agenda with US President George W. Bush categorically stating that Beijing’s ever-increasing demand for oil was one of the reasons for rising oil prices.

The White House welcome ceremony started on a discomfiture note with quite a few lapses, much to the embarrassment of the hosts. A lady protestor blemished the ceremony by standing in the photographers’ gallery and shouting slogans against the Chinese President right in the middle of his speech. She was later identified as Wenyi Wang, belonging to the religious sect Falun Gong that is banned in China. Further, adding to the misgivings, the Chinese national anthem at the welcome ceremony was introduced as the anthem of the ‘Republic of China’ (the official name of Taiwan) instead of that of the People’s Republic of China. Moreover, the Bush Administration had classed the visit as an “official meeting” rather than a “state visit.” These incidents caused much concern to the Chinese who are very conscious of protocol.

President Hu’s visit highlighted the crisis in the US trade policy in general and with China in particular. Last year, the US trade deficit was a staggering $725.8 billion, and with China alone responsible for $202 billion, the biggest ever recorded with a single country. It is speculated that this could surge to nearly $300 billion in a year’s time. US officials are particularly worried about the six-to-one ratio of imports to exports reflected in the trade deficit. The American Manufacturing Trade Action Coalition (AMTAC) expects it to rise again for 2006.

Meanwhile, 2,885,000 US manufacturing jobs have disappeared since 2001. According to AMTAC Executive Director, Auggie Tantillo: “The trade deficit is unsustainable and must be staunched in short order. China manipulates its currency, doles out billions in non-performing loans from state banks, violates intellectual property rights, and hands out subsidy after subsidy all with the intent of driving out of business US companies forced to play by free-market rules, yet the US government seemingly is powerless to act.” He called China ‘a full-fledged superpower’ in the arena of international trade. This imbalance has spurred calls in the US Congress to impose punitive tariffs on Chinese products unless China halts trade practices that are said to be unfair. In fact, the Congress has drafted two punitive tariff bills directed at China.   

Washington blames this deficit with Beijing on an undervalued yuan, with many US lawmakers reckoning the yuan as much as 40 per cent under-valued. China states that the rate is less important than the fact that they have put in place a system that provides for increasing exchange rate flexibility, which is occurring. During his trip to Seattle, Hu signaled generous purchases from Boeing and Microsoft to help the American economy, thereby hitting the right concessional buttons on the economic sphere, since in the recent months, the Bush administration has attempted to cast the trade deficit as a global rather than a bilateral issue.

Coupled with the economic discrepancy, an evidently persistent difference of opinion on the political front also existed. President Hu stated that China was in favour of a peaceful negotiated solution to the nuke crisis in the Korean peninsula, as well as the settlement of the Iranian nuclear programme. It would be significant to mention that all this while China has been resisting imposition of sanctions on Iran. President Bush failed to get anything substantial and tangible on actions against Iran, with whom China has a close and budding economic and military relationship.

Washington believes that China’s appetite for oil and its heavy investments in Iran also affect its stance on Tehran’s nuke issue. In 2004, China used about 6.5 million barrels of oil a day and overtook Japan as the world’s second largest user of petroleum products. The largest, the United States, consumes about 20 million barrels a day. Sinopec, China’s state-owned oil giant, signed a $70 billion deal with the Iranians in November 2004 to develop the Yadavaran oil field.

The US Department of Energy believes the field could ‘eventually produce 300,000 barrels a day.’ The only available option seems to be to managing energy sources and finding alternative energy sources. Heading towards sustainable alternative fuels could be a good option for China as it has a lot of biomass-crops, forests and wood products—that could be converted into ethanol.       

Moving on to the recurrent issue of Taiwan, President Bush and his Chinese counterpart did not seem to be on the same page during their respective inaugural addresses. President Bush stressed that a solution on the Taiwan issue should be viewed in the backdrop of the 3 Communiqués signed between the United States and China, and the Taiwan Relations Act. In his statement,

Hu openly omitted mentioning the Taiwan Relations Act and only spoke of the 3 Communiqués. Hu appreciated President Bush’s commitment to a “One China” policy on various occasions, but in the same breath reiterated that Taiwan “is an inalienable part of the Chinese territory and we will never allow anyone to secede Taiwan from us by any means,” thereby rebuffing Bush’s caution to avoid confrontation with Taiwan.

Earlier, China’s Foreign Minister Yang Jiechi at a news briefing at Beijing noted that the Taiwan issue was the most important and sensitive one in the China-US relations. Yang further stated that it was in the interests of both China and the US to oppose and contain “Taiwan’s independence” and to maintain peace and stability across the Taiwan Straits.

The reason for Beijing being averse to the Taiwan Relations Act is that it clearly states in its section 2, “the United States will make available to Taiwan such defence articles and defence services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defence capability.” Moreover, the President and the Congress shall determine, in accordance with constitutional processes, appropriate action by the United States in response to any threat to the security or the social or economic system of the people of Taiwan.           

The issue of human rights in China remains contentious. President Bush criticized China’s totalitarian system and called for greater human rights, freedom of assembly and worship much to the displeasure of Beijing. In its last two annual reports on the issue, the State Department asserted that respect for human rights was worsening in China, while China now issues its own assessment of US’ human rights infringements.

Few analysts expected Bush to win anything substantial from the summit that failed to produce any sort of factsheet, agreement or even a joint statement. Washington sought to convince Beijing to be a “responsible stakeholder” on security issues, but could not gain anything substantial. Presiding over a booming economy that is increasingly driving global growth, the leader of China came to the US with an unprecedented edge, signalling to the world a rapidly changing geo-political environment. ---INFA

(Copyright, India News and Feature Alliance)