Mutually Assured Growth: Why China and the U.S. Are Getting Along So Well

The Chen Guangcheng case could have been a disaster, but both countries proved how dedicated they are to working together, says Elizabeth C. Economy.

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U.S. Treasury Secretary Timothy Geithner and China's State Councillor Dai Bingguo arrive to read a joint statement in Beijing. / Reuters

Two developments signal a positive shift in U.S.-China relations--progress in last week's high-level talks in Beijing, and the two sides' efforts to cobble an agreement that would allow dissident Chen Guangcheng to leave China for the United States, says Elizabeth C. Economy, who directs Asia studies at the the Council on Foreign Relations. "Both sides are clearly committed to maintaining stability in the relationship and were very unwilling to allow this one striking and important incident to cause the relationship to spiral downward," says Economy. The two sides announced modest economic accords, including an agreement that foreign banks would be allowed a higher stake in Chinese banks, and an agreement to cut import tariffs on some consumer goods. "In the context of the Chen Guangcheng situation," says Economy, "the fact that they were able to announce anything positive is a real compliment to both sides."

Do you think China will let this Chen deal go through?
This deal is a significant accomplishment on the part of China and the United States. I certainly hope Beijing will follow through on it. It wouldn't seem to be in China's interest to block the deal at this point; the international outcry would be significant. Frankly, getting Chen out of China likely has its benefits for Beijing: It gets him off the radar screen in China--particularly on the Internet, where his case was followed with some interest--and minimizes the likelihood that he could cause trouble while he was studying law someplace in China, which was promised in the first deal.
Of course, there is always the possibility that Beijing will renege on the deal based on something Chen says or does--or something someone in the United States says or does--but the greater risk is that Beijing won't let him back into the country when and if he wants to return.
The English-language Chinese press has been attacking the United States for interference, but I guess this is normal.
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Yes. This is par for the course. At this point, the Chinese leadership in Beijing needs to accomplish a couple of different objectives. On the one hand, they are eager to reach accommodation; they are eager to see the Chen Guangcheng situation resolved fully and to move past it. But by the same token, they don't want an avalanche of Chinese political activists or dissidents descending on the U.S. embassy and trying either to seek asylum or put pressure on Beijing to arrive at some new kind of accommodation for them. They want to send a clear message to the Chinese people that the Chen deal represented a unique case that included some poor behavior on the part of the United States, and that no one should expect that this kind of deal will be repeated.
This incident was particularly dramatic because at the same time, Secretary of State Clinton and Treasury Secretary Geithner were both in Beijing for the U.S.-Chinese talks on security and economics. What is the overall state of U.S.-Chinese relations now?
In many respects, this was a fairly astonishing set of discussions that these two countries managed to have in the midst of this emerging crisis surrounding Chen Guangcheng. The fact that Beijing and Washington were able not only to conduct the two days of discussions but also to arrive at some concrete agreements was a sign that there may be an emerging maturity in the relationship. Both sides are clearly committed to maintaining stability in the relationship and were very unwilling to allow this one striking and important incident to cause the relationship to spiral downward, or to cause a real deterioration in the relationship. So perhaps ironically, in some respects, this strategic and economic dialogue demonstrated as positive a state in the relationship as we've seen in a while.
What specifics were worked out?
The only specific achievements that have been noted were on the economic side. It doesn't seem as though there were real advances on the political and security side, although surrounding the dialogue there was the announcement that China had agreed to sanction three additional North Korean companies--but this was out of a list of forty the UN had proposed, and not really an outcome of the strategic and economic dialogue.
But on the finance and economics side, Beijing seemed to make some progress on issues important to the United States, agreeing, for example, that foreign banks could take a larger stake in Chinese banks, from a 33 percent stake to 49 percent stake--that's significant for U.S. financial institutions. They've also indicated that they are going to consider cutting import tariffs on a number of consumer goods, which might allow the United States to export more.
On the U.S. side, they're talking about taking a more serious look at the controls on dual-use high-tech exports. There was no pledge on the part of the United States to change the policy, but there was a commitment to look at it more carefully. And the Chinese side has also suggested that it is going to consider reforming its export financing policy, which has traditionally advantaged Chinese companies at the expense of U.S. and others' multinationals. I know that the Chairman of the Export-Import Bank, Fred Hochberg, has been very aggressive in trying to level the playing field in this area, and if the Chinese actually undertake some change in this area, that would be a significant accomplishment.
These are some small steps that both sides are either going to take or are willing to consider. And again, in the context of the Chen Guangcheng situation, the fact that they were able to announce anything positive is a real compliment to both sides.
What can you tell us about the new Chinese leadership that's likely to take over later this year?
One of the surprises of the past few months has been this very dramatic downfall of Chongqing party secretary and Politburo member Bo Xilai, who many people expected might move into the Standing Committee of the Politburo. The takeaway from that is: It ain't over till it's over, so we really have to wait and see about precisely who will take a seat in the Standing Committee later this year.
But by and large, of the people being considered to hold seats in the Standing Committee of the Politburo, they are a relatively strong group of leaders. They tend to be better traveled than their predecessors were (in advance of assuming positions); they are more grounded in the social sciences as opposed to the hard sciences; and a number of them seem to have ideas about moving forward on reform in terms of good governance, whether that's the rule of law, bringing greater transparency to the system, or enhancing the role of civil society. It's an interesting group, but we're not going to know whether this group might lead China in a different direction or down a different path until we see the precise makeup of the standing committee, and we should know that by late summer or early fall.

Now what about Xi Jinping, who is going to be the next president?

Xi Jinping continues to remain a little bit of a mystery, and I don't think we have a good sense, really, of what he's interested in doing that might differ from what his predecessors have been doing. He seems to hold his cards very close to his vest. One of the accepted truisms of Chinese leadership transition politics is that you keep your head down low so that it doesn't get lopped off; Bo Xilai, in contrast, was quite enamored of the spotlight. There also doesn't seem to be much in Xi Jinping's history that would suggest his orientation on issues such as political reform.

Is the Chinese defense minister in the United States? What is he doing here?

China's defense minister Liang Guanglie is traveling throughout the United States visiting various bases and holding talks with Secretary Panetta. This is the first time a Chinese defense minister has visited the United States in nine years. His trip is an important effort to develop military cooperation and trust between the U.S. military and the People's Liberation Army. From the Chinese perspective, of course, one of their primary concerns at the moment is the South China Sea.

Have things at all eased there?

I don't think they've particularly eased. Tensions are still high between China and the Philippines, for example, and there doesn't seem to be any progress toward real resolution of the issue of sovereignty. The Chinese want to ensure that the United States isn't offering the kind of support to countries like the Philippines and Vietnam that will embolden those countries to be more assertive. No doubt they would like a signal from the United States that it is not going to adopt too active a role in the regional disputes surrounding the South China Sea. At the same time, it appears as though at least some Chinese scholars recognize that the United States is going to continue to be an Asia-Pacific power and that China will not simply be able to assert its interests and assume everyone will fall in line; Beijing may need, in fact, to adjust its behavior to accommodate the interests of these smaller states.

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