The Clash of the Titans

Contributed by Ian Chan

Ahead of his official visit to Washington, D.C. tomorrow, President Hu Jintao of the People's Republic of China shed some light on the views of the ruling Communist Party in a series of answers to submitted questions by the Washington Post and Wall Street Journal. His answers were broadly compromising and conciliatory, but also reflected a growing assertiveness and alternate opinion that will likely clash with the U.S. position.

Relations between the two biggest economies of the world have been rough in 2010. China's reluctance to rein in North Korea's increasingly erratic and militant regime; U.S. sale of arms to Taiwan; China's unwillingness to revalue the Yuan, its domestic currency; and the second round of quantitative easing initiated by the Federal Reserve. It is on this economic front that the real clash is likely to happen between the leaders in their closed-door talks in the coming week, but other issues such as human rights and political reform will probably be raised in private.

China's argument against the Fed's actions reflects a general sentiment among the developing world that the inflationary efforts by the central bank is artificially devaluing the U.S. dollar and exporting inflation to other countries, often developing ones, that are experiencing increased money flows. The American argument against China's currency policy (or manipulation) points toward the cheapness of its exports that distort international trade surpluses and deficits. The U.S. economy, desperately in need of a boost, is trying to double its exports in the near future but will be hard pressed if cheap Chinese goods continue to flood the market. Many economists attribute China's increasing inflationary pressures on the undervalued currency.

But the real meat in President Hu's comments come in his not so subtle remarks against the international financial and currency system. "The current international currency system is the product of the past," he said, directly attacking the Dollar-dominated system that the world currently operates in and which the PRC government is an active participant. China's central bank is the largest holder of U.S. Treasury bonds that are all denominated in the Dollar. Moreover, President Hu highlighted the success of recent moves to allow Yuan trading in offshore sites such as Hong Kong and stated his hope that the Yuan will one day be an international reserve currency.

Whatever the rhetoric is from China, it is unlikely that there will be a substantial move by the central bank to try to replace the Dollar with the Yuan as the global currency. China itself is too much involved with the success and stability of the Dollar to want to change the system as it is. Moreover, the Yuan is not a freely traded currency, and only available for international settlement through Hong Kong, though a vibrant market, is limited in scope. Until China's currency is freely traded on the market and available for international transactions, there is little chance that either the central bank will pursue expansion, or investors/traders will be interested in trading in Yuan. The Dollar dominated system looks like it will stay for the foreseeable future.

Since President Obama's conciliatory tone toward China, coupled with a humbling visit in 2009, has produced little warming of relations or change of policy, many political pundits and politicians on both sides of the aisle have been clamoring for the President to confront China on more fronts directly. The issue of human rights and democracy has been noticeably missing in the President's statements concerning China, and unlike the Clintoninan era where American officials often lectured their Chinese counterparts on economic and social policy, officials these days often avoid confrontational remarks and aim to compromise on all fronts. Given the President's need for a public boost and broadly intepreting China's reluctance to change, it may be Obama's best shot if he is seen in public to emphasis human rights and democracy and press the Chinese President for substantive reforms in the political system. Reformers, who seem to be led by the Chinese Prime Minister Wen Jiabao, have been noticeably silenced in the past year on the issues of reform, as hardliners including President Hu and the military have dominated public appearances and the media. Although the President's attitude and statements are unlikely to change much at the top, it may be seen by activists on both sides of the Pacific as a rally to action and progress.

China's Military: More Control and More of a Role?

Contributed by Autumn Carter

In a Time article last week, Fareed Zakaria took a look back at the tensing of U.S.-China relations over the past few years. His piece focused on the political relations between the two current regimes and used the angle to frame the nations' bilateral military relations.

Zakaria asserted,

"Over the past two years, China has dealt with the Obama Administration in a puzzling manner. Barack Obama came into office talking about the importance of great-power relationships and the supreme importance of strategic ties with China. He traveled to China and marked the trip by accommodating the Chinese in various symbolic ways. Despite all this, China has been distinctly combative toward Obama."

While it is true that President Obama did make official statements about building the relationship between the U.S. and China, and while he did make a major visit to China early on in his term, his administration's approach to China has also been muddled with contradictory words and actions. In the same breath, administration officials could be heard assuring the Chinese that buying the dollar was not a gamble but also supporting the imposition of broad tariffs on Chinese imports into America. One can certainly argue that there have been confusing diplomatic gestures on both sides of the ocean.

But ultimately, Zakaria does not really seem to doubt that the CCP is moving more towards political cooperation with the U.S. and away from hostility towards the U.S. Zakaria does pose the question of whether the Chinese military has that same stance towards the U.S. military. He argues that as the Chinese military has become a stronger player within China, its influence may begin to bleed more into relations with the U.S. And the major fear put forth is that the CCP might be in the process of loosing control of the military, and he for support he offered the following, "During his recent trip to China, when meeting with President Hu Jintao, Gates mentioned the Chinese military's test of its new stealth fighter. Hu appeared not to know about the test flight."

It would be a leap to argue that this one instance proves that President Hu's administration is losing control of its geopolitical relations. But there is definitely a question of what role China's military will play in shaping the tone of discourse between China and the U.S. as both nations consider military implications in their short- and long-term bilateral strategies.

Wikileaks and China’s Next Top Duo

Contributed by Cathy Zhu


Two wikileaked conversations from 2007 have brought China’s fifth generation leadership back under the spotlight. Xi Jinping, has been considered “heir” to Hu Jintao ever since his appointment to vice chairmanship of the Central Military Commission (October 18, 2010). Li Keqiang, China’s current Executive Vice-Premier, is speculated as Premier Wen’s likely successor. Recent Wikileaked cables include two conversations these two leaders respectively had with US Ambassador Clark J. Randt back in 2007, when both of them were provincial party secretaries. Recent press commentary suggest that these conversations were surprisingly revealing to the international community.


Li Keqiang was formerly party secretary of Liaoning Province, one of China’s poorer regions. Candidly admitting that China’s GDP figures were “man-made” or “for reference only”, he claimed to use electricity consumption, volume of rail cargo, and amount of loans disbursed as indicators of Liaoning’s economic health. Demystifying the party slogan “harmonious society”, he translated the term into policy as creating jobs for Liaoning residents. He admitted that corruption was the gravest concern of most Liaoning residents. Besides increasing transparency and supervision, Li added prison tours as part of public official education--taking incumbent bureaucrats to visit former corrupt party officials in prison. (Wikileak accessible here.)


As party secretary of one of China’s richer provinces, Xi Jinping faced different concerns. With a relatively low income gap and the one of highest GDP per capita’s among China’s provinces, Zhejiang’s residents were more worried about how to invest their savings in context of China’s undeveloped financial sector. Among healthcare, education, and housing, work styles of party officials was apparently a concern of Zhejiang residents, but not something that people would “take to the streets” for. The Guardian highlights the paragraph in which Xi discusses his preference for Hollywood WWII movies, saying that clearly demarcate between good and evil, unlike certain recent Chinese movies that “neglect the values they should promote”. (Wikileak cable accessible here.)

UN sees China as a Necessary Influence in Sudan and Myanmar Polls

The U.N. Secretary-General Ban Ki-moon asked Security Council China to assist the Sudanese and Myanmar polls. He said in a speech given on Tuesday to the Communist Party, "I asked your government's help in assisting the two sides find their way to a peaceful future, recognizing their shared interests." However, though he claims it is necessary, he has neglected Beijing's own human rights record.

Besides its diplomatic engagement in Sudan, China has a significant peacekeeping mission in the country, which could help with implementing the transport and technical support in the voting.
Additionally, China can ensure that Myanmar, it's southern neighbor moves in a positive direction following the military-run government's staging of the country's first elections in two decades on Sunday.

"I see it as an important test. Will the vote perpetuate an untenable status quo? Or will it set the country on course toward a more open, democratic and inclusive political future?" Ban said.

Criticism towards Ban has been directed due to his disregard of raising specific human rights issues to the Chinese leadership. Primarily, critics are dissatisfied with Ban's fail to act upon the case of dissident writer and Nobel Peace Prize Laureate Li Xiaobo.

Contributed by Iris Yan

US-China relationship to face test with pending Sudan referendum

Contributed by Ying Jiang
Source: www.voanews.com

First of all, a little history of Sudan. Sudan is the largest African country with a conflict between its Northern government (National Congress Party, NCP) and Southern militants (Sudanese People's Liberation Army, SPLA). There will be a referendum in 2011, ie a decision (to be made by the people nominally) whether the South Sudanese want to split and become a more independent political entity.

What has happened these days is that the US congress is intensifying diplomatic actions in this respect by introducing legislature to keep the referendum on schedule. The new bill, having bipartisan support, is expected to pass into law rapidly (before 2011, obviously).

Now China figures greatly in the relationship of Sudan to the world. It is known that China buys 10% of its oil from Sudan, and supplies NCP with firearms and diplomatic support. It's a source of frustration to US diplomats and humanitarian efforts. This results in US-China diplomatic tensions, a manifestation of which being the branding of Beijing's 2008 Olympics as genocidal, a reference to conflicts Darfur then.

What US scholars and humanitarian groups speculate as of now is a mixture of optimism and wariness. While some think that US-China competition over resources/diplomatic high ground is manifest, others opined that its a good opportunity for China and the US to work together in the promotion of Africa peace, and that China would less likely hinder the progress of South Sudan independence for fear of a war destroying its economic interests in that country.