The U.S. and China This Week
Week of July 18, 2003
The U.S. and China This Week
U.S.-China Relations: North Korea Problem Heats Up, and So
Does Chinese Diplomacy
Slow progress and recent escalation in the standoff between
North Korea and the U.S. has prompted Beijing to step up its diplomatic effort
to peaceably resolve the nuclear issue on the Korean peninsula. The eight-month
standoff began in October when North Korea acknowledged that it had a nuclear
weapons program in violation of a 1994 accord. The terms of the accord, known
as the Agreed Framework, were that the U.S. and its allies would supply fuel
and help build two light nuclear reactors if North Korea would shut down its
existing nuclear reactor and abandon all plans to build atomic weapons. As
soon as North Korea divulged that it had a nuclear program, the U.S. suspended
work on the reactors and stopped shipping fuel. North Korea responded by firing
up its five-megaton nuclear reactor, pulling out of the Nuclear Non-proliferation
Treaty, and expelling international Atomic Energy Agency (IAEA) inspectors.
Since October North Korea has repeatedly hinted that it would
be willing to exchange its nuclear program for yet more economic aid, and
has insisted on direct talks with the U.S. over the matter. The Bush administration
has asserted that it wont succumb to blackmail, and insists on a multilateral
framework for talks that includes Japan, South Korea, and China. In the most
recent escalation, gunfire was exchanged across the DMZ for the first time
since November 2001, an apparent North Korean provocation designed to remind
South Korean and Western diplomats that it could inflict considerable damage
All of this has prompted a barrage of diplomacy from China aimed
at peaceably resolving the dispute. Last week Beijing sent Wang Yi to the
U.S. for bilateral talks over the North Korea issue. South Korean President
Roh Moo Hyun was in Beijing last week for similar discussions. A Chinese special
envoy held talks in Pyongyang with NK leaders including Kim Jong Il. During
the visit, Chinese Foreign Minister Dai Bingguo handed Kim a personal letter
from Hu Jintao. Wednesday U.S. Secretary of State Collin Powel discussed the
situation with Chinese Foreign Minister Li Zhaoxing by phone, and arranged
for Dai Bingguo to be dispatched to the U.S. for face-to-face talks. Beijing
is expected to present a plan for reinitiating talks on a multilateral basis,
but with one-on-one discussions between U.S. and North Korean officials taking
place on the side.
Chinese diplomacy centers on fostering a stable Asia-Pacific region conducive
to attracting foreign investment and reforming and growing its economy. It
would not welcome a crisis situation that diverts resources away from its
development and modernization drives. Also, a military crisis on the Korean
peninsula would assuredly result in a more prevalent American presence in
the region, especially if an Iraq-style war and occupation were to take place.
China also favors a nuclear-free Korean peninsula due to its worries that
a nuclear North Korea would prompt Japan to develop a nuclear capability.
International: ROK President Visits China
Republic of Korea President Roh Moo-hyun met with Chinese
leaders in Beijing this week for discussions on a wide array of regional
and international issues. Officials from the ROK's relevant finance and
economic departments and a delegation of businessmen from over 30 major
companies accompanied Roh to China, indicating the emphasis placed on the
two countries' deepening economic relationship in the talks. Since normalization
of relations in 1992, the volume of trade between the two countries has
increased from US$5 billion to US$44 billion. Roh expressed his opinion
that China's rapid economic growth, far from being a threat, constitutes
an opportunity for regional prosperity and cooperation. Roh said the two
sides should intensify their economic cooperation, and that "the ROK
and China should become a regional economic community."
Also high on the agenda was an exchange of views regarding
the DPRK's nuclear program, a current focal point of the international community.
Chinese president Hu Jintao and visiting ROK president Roh Moo-hyun took
the opportunity to jointly reiterate their commitment to maintaining a nuclear-free
Korean Peninsula through peaceful means. Both sides also agreed to work
for an early resumption of direct talks aimed at resolving the nuclear issue.
Progress on the matter has been stalled since largely ceremonial three-way
talks took place between Pyongyang, Beijing, and Washington in April, at
which time little headway was made in the talks, save for all three countries
agreeing that further talks would be useful.
Roh's visit to China follows in the wake of visits to the
United stated and Japan, and precedes his upcoming visit to Russia. Roh
is expected to finalize his country's foreign policy agenda after visiting
all four countries.
U.S.-China Relations: On-Going Debate Over Outsourcing
High-tech R&D to China
In June, Senator Joe Lieberman's office weighed in on what
is becoming an increasingly front-page-worthy issue: the national security
implications of outsourcing high-tech R&D to the PRC. The white paper
his office published, entitled National Security Aspects of the Global
Migration of the U.S. Semiconductor Industry, explains that "East
Asian countries are leveraging market forces through their national trade
and industrial policies to drive a migration of semiconductor manufacturing
to that region, particularly China." The implication is that China
is leveraging access to its market to obtain sensitive high-tech know-how
so it can improve its defense capability vis-à-vis the United States.
The paper also asserts that "relying on integrated circuits fabricated
outside the U.S. is not an acceptable national security option."
For major IT firms the debate centers much less on matters
of national security and more on matters of national prosperity. From
their perspective, whoever wins the Chinese market wins the world. This
is why throughout the 1990's U.S. companies were willing to accept the
risks involved in entering into joint ventures with Chinese partners in
exchange for market access. They had no choice, as the joint venture requirement
was codified in Chinese law. So imperative was it to gain market access,
multinationals were willing to expose themselves to the rampant corruption,
overstaffing, management headaches, and other risks inherent in Chinese
business culture. They were even willing to accept technology transfer
requirements, i.e. less control over their intellectual property.
Today, this debate is taking on new life following China's
accession to the WTO. Under WTO rules and regulations, China must discontinue
requiring technology transfer as a prerequisite for market access. Under
the new system, multinationals can opt to set up wholly foreign owned
enterprises that will allow them to covet their intellectual property
and minimize their investment risks while still gaining market share.
By implication, China's ability to leverage market share for dual-use
technological know-how will be reduced.
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views expressed herein are those of the writers and editors
do not reflect the views of USCPF itself.
Last Updated: 5 December 2001