News Analysis: Clash of the Titans


Geopolitical rivalry between China and the US has intensified despite resumption of high-level exchanges writes Willy Lam.

The Hu Jintao-Barack Obama mini-summit on the sidelines of the World Security Conference in Washington marked a truce in Sino- American wrangling over issues including Taiwan, Tibet and most importantly, trade.
The Chinese government has agreed to shortly repeg the renminbi or yuan to a basket of currencies – instead of just the greenback – and to allow the currency to float within a larger band. This means a resumption of the yuan’s gradualist appreciation trend – perhaps up to five percent within the next 12 months – which was halted at the on-set of the global financial crisis.
While many in the US Congress have considered this concession “too little, too late,” the Obama administration seems amenable to at least not labelling China as a “currency manipulator” this year. In return for Obama and Secretary of the Treasury Tim Geithner’s recognition that China has full sovereignty over its own currency, Beijing has agreed to resume bilateral ties to levels before the White House’s announcement last January of sales of US$6.4 billion worth of weapons to Taiwan. The Chinese government will not carry out threats of penalizing Boeing and other American companies that are manufacturing Taiwanbound military hardware.
The Hu administration has also put an end to what critics call China’s inchoate “people’s warfare” against the US. For example, official websites have wound down Internet-based signature campaigns begun in March, which called on China’s 380 million Netizens to voice their anger at Washington’s “anti-China” policies. Most significantly, President Hu has at least on the rhetorical level pledged to help Washington persuade Iran and North Korea to give up plans to build nuclear arsenals.
After the Hu-Obama tête-à-tête, the White House said the Chinese “were prepared to work with us” on crafting new sanctions on Iran, while the Chinese Foreign Ministry said the two countries “share the same overall goal on the Iranian nuclear issue.” It is clear, however, that Beijing is not going to give anything substantial on Iran.
The day Hu left Washington, Vice Foreign-Minister Cui Tianhai said “China still prefers a diplomatic settlement” to the Iranian question, even though it is “willing to discuss other approaches if they don’t affect other countries’ legitimate interests.” Cui added: “Actually there is no difference between China’s current position and the position we have always stood by.”
In the past year, China’s two state oil monopolies, CNPC and Sinopec, have boosted their stakes in Iranian oilfields, in many instances stepping into the vacuum created by Western companies which have temporarily held off investments in Iran due to American pressure. Relations between Beijing and Pyongyang have improved significantly since the bilateral crisis sparked by the Kim Jong-il regime’s nuclear test in May last year. Beijing earlier this year reportedly offered the DPRK a loan worth US$10 billion to help Pyongyang tide over difficulties emanating from its disastrous monetary policy. Moreover, the Kim regime is poised to lease two islands to Chinese entrepreneurs for 50 years. Dear Leader Kim is scheduled soon to pay a high-profile visit to the Chinese capital. And the Chinese government has all but stopped observing sanctions that the United Nations imposed on the pariah state last summer.
These developments seem to lend credence to the view that while symbiotic economic ties between China and the US will in the foreseeable future prevent an open rupture between the world’s two most powerful countries, bilateral relations will remain prone to disruptions.
Contests between these two “strategic competitors” are tipped to grow in areas including securing mineral supplies in Africa, jockeying for position within the G20 framework – and even outer space.
According to Yan Xuetong, a leading America expert at Beijing’s Tsinghua University, “China and the US are more enemies than friends.” Professor Yan’s main point is that in terms of magnitude and intensity, Sino-US rivalry in security and geopolitical areas outweighs their commonality in economics and trade.
“Both sides want to maintain a false friendship,” he adds.
“This relationship of false friendship is behind the instability in bilateral ties.”
Developments in domestic Chinese politics may also render significant amelioration in Sino-US ties unlikely in the near term.
A wholesale changing of the guard is due to take place at the 18th Chinese Communist Party Congress set for the autumn of 2012, when both Hu and Premier Wen Jiabao will retire from the Politburo in favour of the Fifth- Generation leadership headed by Vice- President Xi Jinping and First Vice-Premier Li Keqiang.
In the interest of ensuring a smooth succession, the Hu-Wen team is putting top priority on stability. Radical reforms in areas such as the full convertibility of the renminbi, which will dramatically enhance China’s standing in the Western world, will likely be put off until after the Hu-Wen leadership has handed the baton to a younger generation.


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