JAYADEVA RANADE   September 2015

 Dated: September 15, 2015

                                                               by JAYADEVA  RANADE 
Chinese President Xi Jinping’s first state visit to the US later this month is important and comes amidst escalating testiness in the Sino-US bilateral relationship and growing wariness in the higher echelons of the Chinese leadership about US intentions. Cyber security, Yuan appreciation, China’s maritime claims, Taiwan, Japan, North Korea and human rights are among the issues creating turbulence and will be on the agenda. Viewed in Beijing as China’s most important bilateral relationship, the visit will be carefully monitored inside China and other world capitals. Countries around the South China Sea and particularly Taiwan and Japan will evaluate it with an added sense of immediacy.
The visit is slated to begin in Seattle on September 23, 2015, with a series of engagements after which Xi Jinping will proceed to Washington for summit talks and a formal state banquet with US President Obama on September 24-25. He will conclude his sojourn in the US with a speech at the United Nations on September 28.
Prior to commencement of the visit and to restore some of the sheen lost by the rout in the Shanghai stock market which highlighted the vulnerabilities in the Chinese economy, Xi Jinping has taken care to project that China’s economy is sound and the leadership is strong. China’s maritime ambitions have also been unambiguously spelt out. Beijing is also putting a positive spin on the visit with influential Chinese analysts and academics asserting that “Xi’s visit is as important as the US visit of Deng Xiaoping in 1979, which changed American views on the Chinese overnight.” China’s Ambassador to the US, Cui Tiankai, also told reporters that the outcomes of Xi Jinping's visit would be "a pleasant surprise when made public".
The sudden jolt to the economy caused by the wiping out of just under US$ 1 trillion in two weeks in Shanghai has been halted. Last month the IMF independently endorsed China’s economic policies and China’s banks just early this week announced that funds totaling between Yuan 1.2 trillion (US$ 188 billion) to Yuan 1.5 trillion would soon be injected to revive investment projects. Official forecasts are that China’s GDP will grow at seven per cent. 
At the same time, Xi Jinping reviewed a well choreographed grand military parade in Beijing on September 3, 2015, where over 800 weapons and at least 6 IRBMs and ICBMs were displayed publicly for the first time and where 120,000 soldiers goose-stepped 25-abreast with precision. Intended mainly to appeal to nationalist sentiments of a domestic audience, the parade was designed to simultaneously project China’s military might and diplomatic influence. China’s official media highlighted that 30 heads of state attended. To evoke Mao nostalgia and remind people about the Chinese Communist Party (CCP)’s leadership role and traditions, Xi Jinping appeared dressed in a grey Mao suit – all other senior leaders on the podium were dressed in western-style suits – and reviewed the parade in the iconic Chinese communist Hongqi (Red Flag) limousine.  
Significant was the attendance at the parade of former Chinese President Jiang Zemin. Following the arrests and detention over the past year of many of Jiang Zemin’s protégés on charges of corruption, Beijing had for months been abuzz with reports that Jiang Zemin and his family had also been placed under house detention. A very unusual commentary front-paged in the CCP mouthpiece People’s Daily on August 10, 2015, had warned “senior retired cadres” against intervening in the organizations they formerly worked for as this made new leaders feel that “their hands and feet were fettered” and they had to work with “unnecessary concerns”. This has been widely interpreted as targeting Jiang Zemin. Jiang Zemin’s presence next to Xi Jinping now is undoubtedly intended to dispel such speculation as well as send a signal prior to his visit to the US that Xi Jinping continues to enjoy the support of the veteran cadres.  He also utilised the opportunity to demonstrate his firm grip on the People’s Liberation Army (PLA) by announcing a troop reduction of 300,000 personnel thereby signaling a definite push to major military reforms. 
The US-China relationship is comprehensive and extensive with over 85 points of strategic contact and dialogue that entail meetings between officials of the two countries almost daily. There are 200,000 Chinese students in the US and over 5,000 American students in Chinese universities. In a wide-ranging interview to the official English-language China Daily on September 11, 2015, Chinese State Councillor and former Foreign Minister Yang Jiechi described both countries as “very important”. Pointing to last year’s two-way trade valued at US$ 550 billion and two-way cumulative investment totaling almost US$120 billion, he said the new visa arrangement between the two countries facilitates visits by businessmen and students. Observing that military contacts continue, Yang Jiechi said these show “that a new model of major country relationship between our two countries will work in the best interest of China”.  
A major agenda item for Xi Jinping’s talks with US President Obama will be to push Washington to acquiesce to Beijing’s new formula for “a new type of major power relations”. Put forward in June 2013 and again in July 2014 and November 2014, the main objectives of this are that: US and China should have no conflict or confrontation; should emphasise dialogue and treat each others intentions objectively; and, most importantly, that both powers should acknowledge and respect each others “core interests”.  In other words, Beijing wants Washington to acknowledge and accept Beijing’s claims over areas it defines as within its “core interests” and which it maintains are non-negotiable. The US has thus far declined to accept the formulation.
Beijing presently lists Taiwan, Tibet and Xinjiang as China’s areas of “core interest”, but since Beijing has left open the possibility of expanding its definition of “core interests” this will, in future, probably include the South China Sea and other claimed territories.  
Pertinent in this context is former Chinese State Councillor Dai Bingguo’s official definition of “core interests”. In August 2009, when he was China’s principle interlocutor with the US and Russia and with India for the boundary negotiations, he said: “China’s number one core interest is to maintain its fundamental system and state security; next is state sovereignty and territorial integrity; and third is the continued stable development of the economy and society”. Beijing also wants that the US and China should discuss and jointly be the arbiters on major international, regional and sub-regional issues. 
Indications are that Xi Jinping is travelling to the US with an agenda that is not defensive but designed to robustly engage with US business, the technology and IT sector as well as US politicians. In a move that caught the US Administration off-guard, China has sought to pre-empt any proposed cyber security-driven US sanctions and counter accusations that state-backed Chinese hackers ‘stole’ the personal data of 21 million US Federal employees, by organizing a high-level meeting with technology leaders in Seattle on September 23, 2015. The lure of China’s economy and vast market for the IT industry ensures that the meeting will be attended by top Chinese and US tech companies such as Alibaba, Baidu, Apple, IBM, Facebook and Google. Chinese analysts expect that this will nudge "State senators and representatives from those states that heavily rely on economic cooperation with China” into “remaining neutral about controversies with China, avoiding harsh criticism over their trading partner." Bill Gates is hosting Xi Jinping to dinner on September 23 evening. Former US Treasury Secretary Henry Paulson’s Paulson Institute is also hosting a CEO Roundtable for Xi Jinping in Seattle.
The selection of Seattle as the venue is deliberate. While Washington State is China’s largest merchandise trade partner, it is also home to the Boeing Company which secures huge orders from China for civilian passenger aircraft and whose factory Chinese Presidents and Premiers usually visit while on visits to the US. In Seattle, Xi Jinping will visit Boeing’s headquarters and tour its Everett factory where a new deal for Boeing to open a “delivery and completion centre” in China is expected to be announced.  China had considered Hawaii and Detroit as possible venues but dropped Hawaii because of the US Pacific Command’s critical attitude towards China on the South China Sea issue and Detroit because of security concerns.
Meanwhile on September 11, Obama made tough remarks on cyber theft asserting that “There comes a point at which we consider this a core national security threat and will treat it as such.” He added “we have been very clear to the Chinese that there are certain practices that they are engaging in, that we know are emanating from China and are not acceptable”. In a symbolic gesture the US Administration separately disclosed that Obama will this year not be staying at the Waldorf Astoria Hotel in New York consequent to its purchase by China’s Anbang Insurance Group. The Chinese insurance company purchased the hotel, where the US President traditionally stays during UNGA sessions, for US$ 1.95 billion last year.
Underscoring the importance of Cyber security and describing the US and China as “countries with highly-developed internet technology”, the authoritative official Chinese news agency Xinhua on September 12, emphasised the importance of enhancing mutual trust and cooperation in this sphere.  It additionally reported that consensus on combating cyber crimes was reached during the 4-day (September 9-12, 2015) visit to Washington of Chinese President Xi Jinping’s special envoy and CCP Politburo member, Meng Jianzhu. Meng Jianzhu, who heads China’s security apparatus, met a number of US officials including US Secretary of State John Kerry, Secretary of the Department of Homeland Security Jeh Johnson and NSA Susan Rice. A US official disclosed on September 15, that an agreement had been reached during Meng Jianzhu’s visit and “there are not going to be any sanctions” before Xi Jinping arrives on September 24. 
While maritime territorial issues and China’s activities in the South China Sea will certainly figure near the top of the agenda for discussions between US President Obama and Chinese President Xi Jinping, China has not resiled from its maritime territorial claims and assertive stance in the South China Sea. It has, instead, chosen to opt for what can best be described as a strategic pause by announcing a unilateral halt to land reclamation on the various shoals, islets and islands in the waters of the South China Sea claimed by it. Also on hold are its plans to build military facilities on these features and announcement of its Air Defence Identification Zone (ADIZ) over the South China Sea though reports claim that plans are ready. These announcements could follow the visit. On the other hand Beijing chose to restate its wider maritime ambitions when the People’s Liberation Army Navy (PLAN) conducted exercises in May with the Russian Navy in the Mediterranean Sea for the first time and when five PLAN ships sailed through US territorial waters close to the Aleutian Islands out in to the Bering Sea again for the very first time earlier this September. 
China has taken steps to diffuse other potential areas of criticism by the US. On the issue of Human Rights and the proposed stringent regulations governing NGOs, a senior Chinese official has stated that a draft law is before the National People’s Congress (NPC) -- China’s version of a parliament --  and it is for the NPC to decide and not the government. Separately, a coalition of US-based NGOs addressed a letter to Obama on September 9, appealing that he take up the issue with Xi Jinping. Regarding the Dalai Lama and resumption of stalled negotiations, which US President Obama has said he will urge Xi Jinping to resume, China has already clarified its position and drawn the parameters for any future negotiations with the issue of the White Papers on Tibet and its ‘liberation’ and the resolutions of the Tibet Work Forum. It has also set pre-conditions for the Dalai Lama.  
China’s effort will be to preserve stability and a cooperative tenor in Sino-US relations, though it is unlikely that there will be any major breakthroughs during the visit. The US is unlikely to endorse the “new type of major power relations”, but despite its critical rhetoric it will probably continue to remain hesitant in its actions in the South China Sea. This will allow China to steadily advance and consolidate its claims over the 3 million sq kms of these waters claimed by it. In addition to bilateral issues, among the international and regional issues that both leaders will discuss in Washington will be terrorism, Afghanistan, Pakistan and India. Xinhua’s reporting on the recent visit of US National Security Advisor Susan Rice to Beijing to prepare for the Obama-Xi Jinping summit noted that she had discussed international and regional issues with Chinese officials. Her stop-over and remarks in Islamabad were indicative of the areas of discussion. Likely areas of agreement could be on climate change and a Bilateral Investment Treaty.  
(The author is a former Additional Secretary in the Cabinet Secretariat, Government of India and is President of the Centre for China Analysis and Strategy.)
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