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U.S.-China Economic Talks Resume While Defense Dialogue Stalls

U.S. Commerce Secretary Gina Raimondo met Thursday with Chinese counterpart Wang Wentao in Washington, the first bilateral cabinet-level encounter since an American fighter jet downed a Chinese surveillance balloon off the coast of South Carolina in February.

The meeting was held days after President Joe Biden stressed that a “thaw” in bilateral relations would occur soon during a press conference at the conclusion of the Group of Seven annual leaders meeting in Hiroshima, Japan. But while talks resume on the economic front, Washington and Beijing remain in a standoff over a meeting of their foreign and defense ministers.

According to a readout provided by the U.S. Commerce Department, Raimondo and Wang had “candid and substantive discussions” on issues including the overall environment in both countries for trade and investment and areas for potential cooperation.

Raimondo raised concerns about the recent Beijing’s actions against U.S. companies operating in China and committed to maintaining open lines of communications, the readout said.

The meeting of commerce chiefs grew out of talks on May 10-11 between U.S. national security adviser Jake Sullivan and top Chinese diplomat Wang Yi. They agreed to resume talks between senior officials during a conversation in Vienna that stretched for more than eight hours.

U.S. Trade Representative Katherine Tai is expected to meet with Wang this week on the sidelines as Asia-Pacific Economic Cooperation trade ministers gather in Detroit. Xie Feng, China’s new ambassador to the U.S., arrived in Washington on Tuesday, an indication that China is open to more talks.

Evan Medeiros, who worked as director of China policy in the Obama White House, said Chinese President Xi Jinping has begun to lay the groundwork for his potential trip to San Francisco, where the U.S. will host the APEC leaders meeting in November.

“I think the Chinese recognize that it’s in their interest to improve the relationship, because Xi Jinping will very likely be coming to the U.S. to attend the APEC meeting,” Medeiros said. “They need to rebuild ties in the relationship, so that it’s not awkward and uncomfortable for Xi Jinping to attend APEC in the United States.

“They are trying to rebuild channels of communications, and it’s always easy to start with those [economic] things that we agree on,” he added. “So, we can both agree on our bilateral economic relationship. We can both agree that it’s important to work on global macroeconomic issues — and then to build from there.”

There is little prospect for a breakthrough on advanced technology and other economic issues. While Washington has tightened export controls on advanced semiconductors to China, Beijing cracked down on U.S. chipmaker Micron Technology on Sunday.

“I think it’s important to remember that there’s still a great amount of distrust in the relationship. The signs of repair we now see are very early and tentative,” said Jude Blanchette, Freedom Chair in China Studies at the Center for Strategic and International Studies (CSIS). “I don’t think they are striving for any major breakthroughs.”

As for the defense talks, the prospect is much grimmer.

U.S. Defense Secretary Lloyd Austin is scheduled to visit Singapore in early June to attend the region’s major international security conference, the Shangri-La Dialogue, top Pentagon official for the Indo-Pacific Ely Ratner said at an event host by the CSIS Thursday. Austin will stop in Japan before Singapore and visit India and France after the conference.

Ratner mentioned that Austin is seeking a meeting with Chinese Defense Minister Gen. Li Shangfu in Singapore, but China has yet to confirm.

“Several weeks ago, Secretary Austin and the Department of Defense initiated a request to meet with Gen. Li. That request has not been answered one way or another,” Ratner said.

“We think it’s important both during peacetime and of course during crisis to prevent misperception and miscalculation and to prevent crisis from spinning out of control,” he emphasized.

China has insisted that sanctions imposed on Li be lifted to have the first conversation between the defense leaders, sources familiar with the matter told Nikkei. Li, who became defense minister in March, has been under U.S. sanctions for his involvement in the procurement of Russian advanced fighter jets and missile defense systems since 2018.

“If the U.S. does not lift the sanctions on Gen. Li Shangfu, there could be no direct contact between the U.S. secretary of defense and China’s defense minister for General Li’s entire tenure as minister,” said Bonnie Glaser, China expert at the German Marshall Fund of the United States.

China has rejected Austin’s request for talks since the U.S. shot down the Chinese spy balloon in February. Chairman of the Joint Chiefs of Staff Gen. Mark Milley and Adm. John Aquilino, commander of the U.S. Indo-Pacific Command, have not talked with their Chinese counterparts for a while.

Mark Esper, the predecessor to Austin, said that Xi’s consolidation of power in the Chinese Communist Party might prevent his defense aide from engaging with an American secretary of defense.

There are circumstances “when maybe people below Xi Jinping don’t really know exactly what to say, and so they’re not going to get out in front of the party leadership and talk to their American counterparts about this issue or that without having clear talking points,” Esper said.

Austin initially looked to establish a line of communication with a vice chairman of the Central Military Commission in the Communist Party, much closer to Xi’s inner circle, but his attempt appears to have failed so far.

A Chinese defense minister is “not exactly counterparts to U.S. secretary of defense. But that’s what China is willing to offer, and I think some communication is better than no communication,” Esper said

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