 Week of August 15, 2003The U.S. and China This Week
International: China to Host Multilateral TalksAmerican and Asian officials confirmed Thursday that China will host six-way talks on North Korea's nuclear weapons program in Beijing from August 27-29. The 10-month crisis began in October 2002 when the Democratic People's Republic of Korea (DPRK) admitted to pursuing a uranium enrichment program, possibly aimed at producing nuclear weapons. then , in late December 2002, the DPRK expelled two U.N. monitors, leaving its feared nuclear program shrouded in secrecy. Tensions escalated further when US President George W. Bush referred to an axis of evil - Iraq, Iran, and North Korea - in his state of the union address on January 29 2001. The DPRK subsequently restarted a nuclear reactor at Yongbyon, north of Pyongyang in late February and formally pulled out of the Nuclear Non-Proliferation Treaty April 10 2003. All of this prompted a barrage of diplomacy from China aimed at peaceably resolving the dispute. In early July, Beijing dispatched Wang Yi to the U.S. for bilateral talks over the North Korea issue. South Korean President Roh Moo Hyun visited Beijing July 7 for similar discussions. A Chinese special envoy held talks in Pyongyang with NK leaders including Kim Jong Il on July 14, during which Chinese Foreign Minister Dai Bingguo handed Kim a personal letter from Hu Jintao. The next day U.S. Secretary of State Collin Powel discussed the situation with Chinese Foreign Minister Li Zhaoxing by phone, and Dai Bingguo was quickly dispatched to the U.S. for face-to-face talks. Apparently, Beijing was successful in pressuring North Korea to participate in the upcoming multilateral talks that will include China, Japan, ROK, DPRK, the U.S., and Russia.
Regional: WWII Mustard Gas Uncovered in Northeast ChinaAt least 36 people in northeastern China were treated for symptoms ranging from vomiting to severe burns after workers mistakenly uncovered five drums of mustard gas allegedly left behind by Japanese troops at the end of World War II. China and Japan are supposed to be celebrating the 25th anniversary of the normalization of their relations this week, but instead both sides find themselves entangled in fresh tensions over their tumultuous past. The Japanese delegation sent to Beijing to commemorate the diplomatic anniversary finds itself overshadowed by the Japanese Foreign Ministry team dispatched to Qiqihar to investigate the accident. Rising tensions may impact the two countries' economic relationship as well. Japan is the frontrunner in one of the world's most lucrative industrial contracts, the construction of an 800mile high-speed rail link between Beijing and Shanghai, which is expected to reduce traveling time between the two cities from 12 to 3 hours. France and Germany are also in the running. In recent days tens of thousands of Chinese have signed Web-based petitions calling on the government not to award the $12 million contract to Japan, in large part due to the mustard gas incident Rising tension is exacerbated by Japanese experts advocating developing nuclear weapons to counterbalance a nuclear North Korea, which has the potential to ignite a costly and dangerous regional arms race. Previous Summary|| Past Summaries
US-China Relations: Congress Targets Overvalued RenminbiIn a letter to George W. Bush in late July, members of Congress expressed their concern over the undervalued RMB, and called on the president to take stronger actions to pressure the Chinese government to allow the RMB to float, or as an intermediate step to fluctuate within a broader band. The letter acknowledged that China has fair comparative advantages in cheap labor and regulatory structure, but asserted that its undervalued currency, sustained through manipulation, constitutes an unfair advantage and violates China's IMF and WTO obligations. Among the signatories was Sen. Joe Leiberman, who recently issued a White Paper asserting that outsourcing high-tech R&D (specifically in the semiconductor industry) to China threatens U.S. long-term security interests. The letter can be viewed by clicking on the following link: http://www.sounddollar.org/mnews75.pdf. This week in Washington DC, the U.S. General Accounting
Office - the audit, evaluation, and investigative arm of Congress - announced
that at the request of Congressional business committees it will review
whether China and other Asian countries are manipulating their currencies
to protect exports. The Renminbi (RMB) is fixed between 8.276 and 8.28
to the dollar. Chinese Premier Wen Jiabao responded to increasing calls
emanating from the United States to allow the Yuan to float saying, "To
keep the stable Yuan [RMB] will not only benefit the stability and development
of the economic and financial order in China, but also international economic
and financial order." However, Wen also said that "As we deepen
financial reform, we will further explore and perfect the renminbi exchange
rate formation mechanism." Pressure from the U.S. and Europe on the
matter is expected to increase. Previous Summary|| Past Summaries
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Last Updated: 5 December 2001 |