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The US-China Strategic & Economic Dialogue: Securing Constructive Bilateral Ties

02 Jul The US-China Strategic & Economic Dialogue: Securing Constructive Bilateral Ties

At last week’s US-China Strategic and Economic Dialogue (S&ED), cybersecurity tensions received much attention as a source of growing friction between the two powers. However, to focus only on this aspect of the dialogue may trivialise the overall significance of the exchange. This year’s S&ED successfully demonstrated that both USA and China are able to communicate on an array of issues, as polemic as they may be, in a transparent setting.

The efforts demonstrated by both sides at the dialogue to foster cooperation despite persistent differences on security issues such as the South China Sea dispute testify to a maturing set of bilateral relations. The meeting’s overall potential to guide US-China ties towards a constructive future trajectory should not be understated even if tangible agreements are not produced.

Updating economic relations through the BIT

This year’s S&ED built on both parties’ momentum in exploring new avenues for cooperation. The US and China moved closer towards a Bilateral Investment Treaty (BIT) that is set to enhance their economic partnership. Through the BIT, the world’s two largest economies would be more tightly interlocked, through increased market access and greater transparency over investment regulations.

Advancing the BIT will allow the US-China relationship to keep pace with other advancing regional economic arrangements. In particular, the BIT can be seen as an important complement to the American-led TPP that does not include China. The BIT could therefore represent a crucial link between regional production networks and global supply chains for the two economic giants. Despite lingering frustrations over the treaty’s negative investment lists, specifying sectors closed off to foreign investment, both sides demonstrated their commitment to identifying mutual gains and potential synergies by tabling the BIT for discussion.

The South China Sea Dispute – A bridge over troubled waters?

Furthermore, the S&ED’s scope extended beyond areas of common interest within US-China relations. The meetings also covered the thornier aspects of their bilateral ties, where hopes of reconciliation may seem bleak in the near term. Take the South China Sea dispute for an example.

At face value, much of what was discussed on the South China Sea dispute seemed to be a continuation of past trends. The US reiterated its unwavering commitment to freedom of navigation. China meanwhile remained committed to its sovereignty claims, in line with its previous warnings of retaliatory actions if provoked.

China’s first publicly accessible military white paper published in May clearly articulates this stance, declaring that “We will not attack unless we are attacked, but we will surely counterattack if attacked.” The paper thus sent a clear signal reaffirming China’s “active defence” military strategy in the South China Sea.

Nonetheless, the angle taken on the South China Sea subtly shifted at this year’s dialogue. Instead of remaining fixated on their deadlocked positions, both sides emphasised the importance of avoiding clashes that would unnecessarily escalate tensions in the disputed waters. China’s Vice Premier Mr. Wang Yang stated that neither side could afford a lack of cooperation or “all-out confrontation.”

The US seemed to echo this sentiment as Secretary of State John Kerry expressed willingness to engage China as a “responsible stakeholder” in order to “reduce tensions rather than add to them.” At least in terms of risk mitigation, both sides seemed to be on the same page, suggesting that the recent S&ED may lay the groundwork to establish a transparent set of rules that avoids provocative actions and safeguards commercial flows in the disputed waters.

Building constructive ties through dialogue

By encompassing both areas of common interest and issues of contention between the two powers, the S&ED served to facilitate confidence-building and reduce the risk of miscalculations between the two powers. Although, the talks may not translate into tangible outputs, they will go far in contributing to a dynamic and constructive US-China relationship. Only through effective and transparent communications can the two states recognise each other’s core interests and identify grounds for cooperation as leaders on the global stage.


US Scolds China for Online Attacks (New York Times, 23 June)

The 2015 US-China Strategic and Economic Dialogue: What (and what not) to expect (The Diplomat, 23 June)

China to expand naval operations amid growing tensions with US (The Wall Street Journal, 26 May)

Photo Credit: US Department of State