The U.S. and China This Week
Week of August 15, 2003
The U.S. and China This Week
International: China to Host Multilateral Talks
American 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.
China's interests in bringing both sides together clear: Since 1979, Chinese
diplomacy has centered on fostering a stable Asia-Pacific region, which is
conducive to attracting foreign investment and reforming and growing its economy.
China 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.
Regional: WWII Mustard Gas Uncovered in Northeast China
At 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.
US-China Relations: Congress Targets Overvalued Renminbi
In 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.
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do not reflect the views of USCPF itself.
Last Updated: 5 December 2001