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#4051, 24 July 2013
China and the US: Fifth Strategic and Economic Dialogue
Teshu Singh
Senior Research Officer, CRP, IPCS
Email: teshu@ipcs.org

The fifth annual China-US Strategic and Economic Dialogue (S&ED) was held in Washington D.C on 10-11 July 2013. Notably, the groundwork for the meeting was already done during the Xi-Obama meeting and further cemented by an article written by Yang Jiechi (Chinese State Councillor) in Washington Post titled, “US China can forge a more cooperative relationship”. The article highlights the major outcome of the dialogue and probes into the objectives and strategies behind these outcomes.

Major Outcome of the Dialogue
The dialogue primarily encapsulates two tracks; the strategic and the economic. In the strategic track, the two sides discussed an array of issues concerning the new relationship between China and the United States, advancing mutual trust, cooperation in the Asia-Pacific region, climate change and energy security. Of the Ninety-one areas (divided into eight sub topics) of cooperation cyber security, climate change and the North Korea were the outstanding ones.

Cyber Security: Amid the growing uproar over Edward Snowden’s leak of the secret government surveillance details; it is no surprise that Cyber Security was discussed. In fact a preparatory meeting of Cyber Working Group (CWG) was held before the dialogue. This is one of the major achievements; until now the two sides were reluctant to discuss cyber theft, cyber espionage and cyber security. With the Snowden revelations now China has realised the damage that cyber attacks might cause and have agreed to make CWG as the main platform for bilateral talks on cyber issues.

Climate Change: The US and China together contribute more than forty per cent of the global carbon dioxide emission. During the dialogue the two countries jointly identified five priority areas: reducing emission from heavy duty and other vehicles, promoting smart grids, increasing energy efficiency in building and industry, strengthening capacity building and improving greenhouse gas data collection and management. The talks further advanced modalities behind agreement struck during Xi-Obama
meetings to reduce the amount of hydro fluorocarbons (HFCs).

Denuclearisation of North Korea: With the US ‘pivot to Asia’ the two countries share overlapping interests in the region; apparently the issue of denuclearisation of North Korea had taken the centre stage in the bilateral relations. The role of all Six –Party members were emphasised in resumption of the talks. Notably, it was agreed to implement UNSCR 2094; the resolution was adopted on 7 March 2013 after recalling all previous resolution on the situation concerning North Korea.

Although the issues of maritime security cooperation and Asia Pacific region were discussed; the major global flashpoints namely the East China Sea and the South China Sea were skipped. Perhaps a discussion on the two issues could have produced frictions as both countries have different stance on the issues.  

Acknowledging the importance of promoting a comprehensive economic relationship; under the economic track, four areas were discussed; strengthening economic policy, promoting open trade and investment, enhancing global cooperation and international rules and fostering financial stability and reform.

Bilateral Investment Treaty: Amongst them the bilateral investment treaty (BIT) is of vital importance. It is an agreement establishing the terms and conditions for private investment by companies of one state in another state, usually called foreign direct investment (FDI). Indeed it is a significant breakthrough as for the first time China has agreed to sign this treaty with another country. The treaty will not only enhance trade and investment but also give a strong strategic cooperation between the two countries to the world.

The Fifth Round: An Assessment
The fifth round was productive in many ways. First, it provided a platform to ease growing tension in bilateral relations. Last year it was the Chen Guancheng issue and this year it was the Snowden issue creating a ‘trust deficit’ in the bilateral relations. Perhaps this exemplifies the fact that despite growing tensions the two great powers can cooperate on multiple issues.

Second, the Chinese and American have expanded their economies substantially over the past three decades. Despite this the bilateral economic relationship has become increasingly complex. It brought top economic officials, as well as U.S. cabinet officials and Chinese heads of ministers on a regular basis to identify their position and priorities on various issues thereby creating a boost to the China-US economic relations.

Third, it was held at a critical moment when both the powers are constructing a new type of relationship after the leadership changes in their respective countries. It helped in building personal relationship between the leaders. Unparalleled in the world history it is for the first time the two great powers are not at war and are engage in both cooperation and competition. The dialogue proves that there are bound to be multiple differences in bilateral relationships.

Though the dialogue may not have produced immediate solution to any of the impending issues but definitely it has shown that the nations can rise above these differences, overshadow them and come to a common platform to create interdependence.  

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