South-South Technology Cooperation: The Case of Brazil and China’s Wind Industry

In a piece prepared especially for the United Nations Department of Economic and Social Affairs (UN DESA), the authors look at the “South-South” relationship between China and Brazil to understand the extent, drivers and lessons from their technology cooperation.


By Hyosun Bae & Zoraida Velasco, 7th May, 2014.

Cooperation in the fields of technology is under the constant pressure of global competition. Countries are finding themselves in a race to increase their innovation capacity. This is particularly the case for emerging markets like Brazil and China. This race includes significant multi-dimensional commitments from government towards industry development and collaboration in an effort to develop mutually benefitting opportunities. Fully utilizing their growth in financial and technological capacity, Brazil and China have expanded their collaboration on renewable energy technology. Technology cooperation is a way to develop opportunities for reciprocal knowledge-sharing and investment. Through the use of case study and literature review, this paper analyses the bilateral cooperation between Brazil and China on wind power technology. It focuses on the public and private sectors’ research and development (R&D) of wind technology between the two countries.

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Can China’s Growing Demand for Energy be Satisfied Without Conflict?

In this essay, the author assess the threat of China’s increasing demand of energy and whether conflict is imminent. The author analyzes the cases of potential conflict, particularly in the East China Sea and the Middle East. The probability of conflict is then assessed in each of these cases in accordance with recent developments.  


By Abd Al-Aziz Abu Al-Huda, 20th April, 2012

Access to energy resources is a vital ingredient to the economic and military development of any state in the international system. Yet, within the past two decades, China’s quest for energy resources has particularly generated much debate and criticism. The commonly held opinion is that China’s pursuit for energy resources is a prelude to conflict with the International community because China poses a long term threat on energy supplies. However, such observations have been criticized by scholars such as Kung-wing Au and Hongyi Harry Lai, who emphasize that China’s growing demand for energy has in fact increased its vulnerability resulting in gradual cooperation.

This paper then attempts to assess the threat of China’s increasing demand of energy and whether conflict is imminent. The paper will begin by looking at cases of potential conflict particularly in the East China Sea and the Middle East. The paper will then attempt to assess the probability of conflict in each of these cases according to recent developments. The discussion will then conclude by examining the level of cooperation in each of the cases and the probability of its persistence. Following an examination of the literature, one can argue that conflict will highly depend on developments in internal state policies, perceptions and more importantly the development of negotiations which can be hindered by historical and political factors.

East China Sea

Development and dependency on imported oil is not restricted to China alone, but is shared by the wider Asian region as states seek to expand production, electricity generation, and energy access to their military. The East China Sea is said to hold 60-70% of the regions oil and natural gas resources which creates conditions for conflictual foreign policy due to uncertainty in the global supply of energy resources (Lai, 2007). The most conflictual competition is that between China and Japan due to the unresolved sea border dilemma between the two countries. This is followed by Chinese fears over U.S presence in the Straits of Malacca, the key energy supply route for China. With Chinese and Japanese case particularly, the fundamental cause of the conflict is not just competition over resources but the conflict also results from political distrust resulting from historical grievances (Liao, 2008).

Sino-Japan Relations

Despite conflicting claims over the demarcation of the East China Sea, Japan and China continued to negotiate joint development in the disputed area (Au, 2008). Both sides proposed solutions to finalize the conflict particularly Japan which tried to come up with an equitable solution by coming up with the Median line. The Median line according to Au “runs from the north to the south and separates the sea with equal distances from the shores of the two countries”  (Au, 2008, p. 224). While this may seem like a fair solution, China still has not acknowledged the median line highlighting that it was unilaterally drawn by Japan without consulting China (Buszynski & Sazlan, 2007).

Alternatively, China argues that it has the right to develop the “subterranean resources on its continental shelf” which go past the median line creating overlapping claims with Japan  (Au, 2008, p. 224). Japan despite having proposed the Median line, is also concerned that many oil and gas deposits in Chinese waters are situated in close proximity to the Japanese side allowing Japanese reserves to be tapped by Chinese operations (Au, 2008). In return, Japan aimed at limiting Chinese operations by blocked joint development in the Diaoyu and Senkaku islands (Buszynski & Sazlan, 2007). The islands remain subject to territorial dispute despite being under current Japanese control. However, Japan feared that cooperation with China over the Islands would, according to the Law of the Sea, enhance China’s share in regional waters.

The UN convention on the Law of the Sea specifies that coastal countries can “claim 200 nautical miles from their shores as their Exclusive economic zones (EEZ)” (Au, 2008, p. 225). In regards to the East China Sea, the widest point is only 360 nautical miles barely permitting Japan and China to demarcate territorial waters without conflicting claims (Liao, 2008). Coupled with historical animosity, China has considered investing in a naval defense force to guard Chinese seaborne energy imports going through the Straits of Malacca and territorial claims (Kennedy, 2010).  The Japanese air force near the Median line have identified the presence of Chinese military warships on a few occasions and considered this a ‘Show of force’ by China (Liao, 2008, p. 66).

“The Malacca Dilemma”

Around 80% of China’s oil and gas imports pass through the Straits of Malacca (Bustelo, 2005). Being dependent on energy imports, the Straits of Malacca is particularly problematic for China because the United States navy patrols the straits. Initially, the U.S naval presence is beneficial to China because it wards off piracy. However, U.S naval presence also risks the U.S blocking the flow of energy due to China’s criticized increasing role in the Middle East and Africa. The U.S naval forces also pose a threat to China should they interfere in Taiwan by using their bases in the Philippines or Kyrgyzstan (Kennedy, 2010). Even without U.S naval presence, China seeks to diversity its land based imports because they lack a developed navy to challenge the U.S (Downs, 2004). China has specifically looked at Russia to build  the Tayshet-Skovorodino-Nakhodka oil pipeline but was challenged and beaten by Japan over the route (Lai, 2007).

The Middle East

Like the Straits of Malacca, China’s energy dependency also increases concern over the Straits of Hormuz in the Arabian Gulf where most of the Middle East’s energy passes (Calabrese, 1998). Despite heavy presence of U.S influence in the Middle East, China’s foreign policy gradually developed into building closer diplomatic relations with the Arab world and Iran in order to secure access to energy deposits. From the U.S standpoint, China’s ties with the Middle East poses several challenges because it goes against the U.S’s policy of containment (Calabrese, 1998). However, China views U.S policies as a unilateral initiative which doesn’t involve them because China’s ties in region are free from ideological or historical hostilities (Yetiv & Lu, 2007).

The Middle Eastern perspective holds positive views of China particularly after the U.S campaign on the ‘War on Terror’ which alienated most of the region increasing anti-Americanism (Garrison, 2009, p. 13). As sales to the U.S declined, The Middle East, particularly Saudi Arabia, began a series of ‘loans for oil’ deals creating new investments (Kennedy, 2010, p. 140). Saudi Arabia, as a result of increasing political and economic cooperation, also allowed the Chinese oil company SINOPEC to extract natural gas from one of Saudi Arabia’s basin’s (Lai, 2007).

With the wider Arab world, China has devised an agreement with the 15 members of the Arab League to establish a forum on politics and economy. The agreement specifically targeted concessions for mutual market access and cooperation in investment especially in oil and gas (Lai, 2007). Unlike the U.S, China has been successful in dealing with the Middle East because it sympathizes with the Arab world’s stance on Palestine. Since the ‘War on Terror’, China has been active in voicing Arab concerns calling for an end to regional violence and support for the ‘Land for peace’ and ‘Nuclear free Middle East’ initiatives (Yetiv & Lu, 2007). Additionally, Arabs prefer dealing with China because they share China’s policy of non-interference regardless Human rights issues unlike the U.S which seeks to impose democratization on authoritarian regimes (Ziegler, 2006).

Iran, like the Arab world favours Chinese energy involvement. China’s relationship with Iran also includes military cooperation which the US particularly criticizes even though reports confirmed that China is not involved in selling sensitive military technology to Iran (Calabrese, 1998). A more pressing concern for the U.S has also been China’s assistance in developing Iran’s oil extracting capabilities and purchasing it which violates U.N Security Council sanctions (Yetiv & Lu, 2007). The U.S perceives this action as assistance to the rogue Iranian regime as well as irresponsibility on China’s part for violating International norms.

Assessment

There is no doubt that China’s increasing presence in the field of energy security creates an ‘Energy security dilemma’ (Kambara, 1984). As China develops into a prominent power on the international scene, emphasis is focused on the fact that China is currently the second largest consumer of oil globally and rising (Downs, 2004). However, what crucially matters is not how much energy resources China consumes, but whether it’s increasing consumption will alter its foreign policy. Estimations of China by 2030 tell us that it will remain dominated by coal because of difficulties in increasing the domestic use of natural gas coupled with lacking infrastructure (Kambara, 1992). Even should demand for oil increase, conflict to ensure supplies will depend on policy makers at the time and how they perceive national interests and threats (Garrison, 2009)

While China is a growing power, it largely remains dependent negotiating deals with Oil producing countries that ultimately control supplies (Garrison, 2009).  One must point out that only a small share of oil actually goes back to China. Around 85% of imported oil and gas reserves are actually sold and injected into the open market (Garrison, 2009). In fact, one can argue that China’s oil deal with Iran actually increases the supply of energy in the global market restricting prices from increasing (Kambara, 1984). Additionally, regardless whether China sold its imports or not, the U.S would still not be affected because its oil imports from the Arab states are minuscule compared to the “1011.6 and 590.3 million tons of oil annually” purchased from Canada and Mexico (Lai, 2007, p. 531). China on the other hand only imports “51.7 million tons roughly 8.8% of the U.S imports” which are not large enough to upset the U.S (Lai, 2007, p. 531).

Arguably, one can also claim that China contributes to global energy security because until recently, they had a high degree of self-reliance of around 90% of energy being generated in China (Garrison, 2009, p. 144).  Now, China actually produces 10% of the world’s oil and so it is likely that no conflict on behalf of China, the U.S, or the region will be imminent because China lacks military capabilities and the U.S and the region, particularly Japan favour increased energy output which decreases the prices of oil and gas. As previously stated, any actual conflict will most likely be due to a political fallout rather than energy scarcity (Yergin, 2006).

Furthermore, China’s current economy is only a fraction compared to the U.S economy and slightly stronger compared to its Asian neighbours. In per capita, Zheng Bijian argues that “China remains a low income country and China faces constraints to get its 1.3 billion population out of poverty” (Bijian, 2005, p. 19). Taking this into consideration, it is likely that China would view continuing oil diplomacy as much more cost effective and successful compared to using its limited military means (Ziegler, 2006, p. 8). China also considers its dependence for supplies of oil products like “gasoline, diesel oil, kerosene and fuel which come from its neighbours in South Korea, Russia, and Singapore as well as Japan and Malaysia and the Philippines” which, with the exception of Russia, has U.S military presence (Lai, 2007, p. 528).

Cooperation

With increasing interdependence, states gradually come to share numerous challenges. China like other states shares the consequences to its economic development if there is a disruption in energy supplies. Additionally, with its continuing use of coal and fossil fuels, China is also affected by the transboundry environmental consequences that emerge (Garrison, 2009).So has China been cooperating? And will the U.S and its neighbours cooperate back? Economically, neighbouring countries according to Jean Garrison actually think that deepening economic ties with China would be beneficial for them in the long run (Garrison, 2009).  Chinese officials have also highlighted the importance of integration with its neighbours as part of their oil diplomacy to provide opportunities to develop economic and military relations (Ziegler, 2006).

Concerning China’s anxiety about U.S presence in the Straits of Malacca, it is highly unlikely that China would increase its naval capability or move them away from the Taiwanese Strait. The cost of forming a defense navy actually makes the idea more of a concept than a reality (Downs, 2004). Even if China should disrupt sea lanes in order to ensure energy demands, the action would provoke numerous lethal moves by the U.S, Japan, and its neighbours. Instead, from the current situation we can assume that China understands the necessary need for strong U.S naval protection to ensure the safety of sea lanes for its oil (Ziegler, 2006).

Logically, China is focusing on improving its diplomatic relations with its neighbours to provide alternate land routes, despite its dependence on seaborne energy imports  (Lai, 2007). One way has been through the “Strings of pearls strategy” which aims at building close ties along coastal countries from the Middle East to the East China Sea in order to defend sea routes from terrorist attacks. (Lai, 2007, p. 528). An example of these close ties is with Pakistan where both countries agreed to build an oil pipeline going from the Port of Gwadar near the straits of Hormuz to the Chinese region Xinjiang which bypasses the Straits of Malacca and the East China Sea (Calabrese, 1998).

On the international level, China has also been quite accommodating to the U.S and the international community despite criticisms of its involvement with authoritarian regimes. In 2002, China voted in favour of the U.S proposed resolution 1441 at the U.N Security Council which stipulated that Iraq, a Chinese energy partner till 2003, was in “material breach of disarmament obligations”  (Lai, 2007, p. 530). While the decision clearly affected China’s ability to extract Iraqi oil under Saddam Hussein, China did not veto the resolution which allowed the U.S to wage war against Iraq in 2003 (Yetiv & Lu, 2007).

As for Iran, when Iranian-U.S relations were deteriorating over Iran’s nuclear programme, it was widely held that China would support Iran considering the Iranian concessions made to Iran for joint development. But China in fact supported a proposal initiated by the U.S and the European Union to refer Iran’s nuclear programme to the U.N Security Council should Iran fail to cooperate with inspections  (Lai, 2007). Also, China agreed with the international community that Iran should not develop nuclear weapons (Calabrese, 1998).

In its own continent, China has been making gradual progress in cooperating over oil and gas. In 2002, China and ASEAN members assured that they will aim to resolve territorial disputes through peaceful means (Bijian, 2005). In 2005, China agreed to initiate joint exploration programmes of oil and gas with Vietnam and the Philippines including an agreement of cooperation on gas with Indonesia (Liao, 2008). China and India have also attempted to cooperate by signing a memorandum of understanding for enhancing cooperation in the field of oil and natural gas (Kennedy, 2010). Both agreed to cooperate on “energy exploration, production, storage, and stockpiling, research and development, and conservation” which would bring down energy prices in Asia (Lai, 2007, p. 533). Lastly, China was successful in building cooperation between India and Pakistan by proposing an Iran-Pakistan- India “Peace pipeline” (Lai, 2007, p. 533).

As for unstable relations with its Japanese neighbour, both governments have actually been making contributions since 1970 and expressed a willingness to assist each other and Asian states in utilizing non-oil energy like wind and solar power (Liao, 2008). Cooperation between both governments also extends to the East China Sea where Japan has refrained from drilling in disputed waters while offering China technological assistance for joint development (Manicom, 2008). In 2007, both Japan and china advanced dialogue pledging their commitment to peacefully settle territorial issues (Au, 2008).

In 2008, the ‘Cooperation Consensus’ highlighted considerable improvement between China and Japan. Both parties agreed to jointly explore the Northern part of the East China Sea and jointly exploit the Chinese Chunxiao oil and gas fields (Jianjun, 2009). In return for joint cooperation, Japanese energy firms even agreed to follow Chinese national laws and supply assistance for existing oil and gas projects (Jianjun, 2009). This cooperation was the result of, what Goa Jianjun describes as the “Disputed area approach” which allows for development while maintaining consultation about other parts of the East China Sea (Jianjun, 2009, p. 294).

The problem however is that the consensus is not singed but only a verbal agreement between both parties until a finalized territorial settlement (Manicom, 2008). Yet, both states agreed not to take independent decisions which would harm joint development and both states agreed that “no side is to interpret the consensus in way to prejudice the maritime delimitation” in order to maintain stability in the region. (Jianjun, 2009, p. 297). It is likely that if Japan assists China technologically by providing hydro and solar power, then China would be able to maintain its part of the agreement and not venture into further exploration in the East China Sea (Ziegler, 2006).

In conclusion, China’s increasing demand for energy does not have to be met with conflict. Competition does exist but has been exaggerated without highlighting the progress of cooperation. Any conflict, should there be one, will depend on future government policies and how China and the International community interpret energy security. From what we can tell, cooperation is still an option because China has taken international and regional steps not to jeopardize its future development into a world power. Countries like the U.S need to pay greater attention to China’s struggles and China as well. Good will gestures on both sides will help deter conflict. Overall, there is a powerful incentive for a productive, accommodating Chinese Foreign Policy.


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US-China Relations in the Bush Era – Strategic Partners or Competitors?

In this essay, the author reviews the Sino-US relationship during the George W. Bush administration. Specifically, this paper discusses whether or not the countries should be viewed as strategic partners or competitors.

_____________________________________________________________________________

By Anna Rabin, 1 February, 2012

Whilst fluctuating during the early stages of George W. Bush’s presidency, China and the United States (US) maintained a fairly stable strategic partnership throughout the two terms of the Bush administration. The idea of a strategic partnership was advocated through the signing of the Sino-US Joint Statement during the presidencies of Bill Clinton and Jiang Zemin. The document set the foundations for the two countries to ‘work together to set up a constructive strategic partnership.’ This essay will discuss the transition in the Sino-US relationship from Clinton to Bush and the status of the relationship throughout Bush’s presidency.

Bush’s electoral campaign stance on China will initially be reviewed. An analysis of Bush’s electoral campaign characterisation of China as a strategic competitor of the US will then be provided. The September 11th terrorist attacks will then be extensively analysed. The ways in which the attacks acted as a catalyst for a sustained Sino-US strategic partnership throughout the rest of the Bush administration will be discussed. The US’s preoccupation with terrorism, which allowed China to assume a more prominent role within the Asia Pacific, will then be discussed.

This increased role was allowed in spite of Sino-US tensions surrounding Taiwan’s sovereignty. Sino-US co-operation on the issue of North Korea’s nuclear weapons will be seen as a source of creating a more stable relationship between the two countries. The growing economic interdependence between the two countries and the stabilising impact that this has had on the Sino-US strategic relationship will also be examined. This essay will provide an extensive discussion that will demonstrate the relatively stable Sino-US strategic relationship that occurred during the Bush administration.

Whilst principally a foreign policy concern, the Sino-US strategic relationship figures prominently in US domestic politics. Since a diplomatic relationship was formed between the two countries in 1979, Sino-US relations have become an important policy platform in US presidential elections. US foreign policy towards China is a key area in which a presidential candidate can differentiate themself from their competitors and predecessors. The trend has been however, that once elected, the new administrations’ policy towards China is then moderated.

Political scientist Yu Wanli believes that the Sino-US relationship is influenced by small cycle and big cycle politics. The small cycle, as with any bilateral relationship is influenced by everyday political discussions. The big cycle, also referred to as the China syndrome, is a trend in which ‘the candidate from the opposition party always brings out and criticizes the China policy of the incumbent administration and makes Sino-US relations the victim of party politics.’ Whilst Wanli asserts that there was a relatively smooth transition from republican President Reagan to republican George H.W. Bush, the big cycle trend that has seen China become a political ‘punching bag’ within US domestic politics was evident during the transition from Bill Clinton to George W. Bush.

During his electoral campaign, Bush, and those who would become key members of his administration, made it clear that they would shift the Sino-US relationship away from the strategic partnership advocated by Clinton. They did this by enacting a campaign that portrayed China as a strategic threat to the US. The Bush administration undertook an ABC (Anything But Clinton) approach to Sino-US relations. Such a campaign was undertaken at a time when voters in the US were becoming disenfranchised with Clinton’s approach to the Sino-US relationship. A 1999 survey conducted by the Gallup Organization, found forty-seven percent of those people surveyed believed that ‘the Clinton administration goes too far in trying to maintain a constructive relationship with China.’

Bush, and the conservative Republicans that surrounded him, therefore set out a foreign policy distinctly different to that of Clinton, one that took a unilateralist stance on issues of security and defence. It must be noted that the vast ideological differences between the one party Chinese communist state and the democratically elected government of the US call into question what exactly a constructive strategic partnership would produce.

Professor of Chinese Studies, David Lampton, used the phrase ‘same bed different dreams’ to characterise the relationship between the two countries during the 1990s. Whilst through the Sino-US Joint Statement, Clinton and Zemin were advocating increased dialogue and improved relations between the two countries, due to their vastly differing ideologies and values, the strategic partnership they talked about would most probably not lead to the two countries becoming allies.

In a speech during the electoral campaign, Bush announced that ‘China should be seen as a competitor, not a partner and treated without ill will but without illusions.’ In the lead up to the election, China’s role within the Asia Pacific region was also addressed by those who would become key members of the Bush administration. Condoleezza Rices declared that she believed that China was a country ‘that would like to alter Asia’s balance of power in its own favor’. These comments were made at a time when Sino-US relations were already tense. A rift in the relationship had occurred after the 1999 bombing of the Chinese embassy in Belgrade by NATO (Northern Atlantic Treaty Organization) forces.

The contentious issue of whether the bombing was as a result of an intelligence error or was a deliberate attack resulted in tension between China and the US near the end of Clinton’s administration. Upon Bush’s election, the bombings, coupled with the April 2001 collision of a US EP-3 aircraft with a Chinese J-8 fighter plane within Chinese airspace, placed the two countries as strategic competitors in the early days of the Bush administration.

Whilst campaigning on the presumption of China as a strategic competitor, the September 11th terrorist attacks dramatically altered the nature of the Sino-US relationship. Under the banner of being united by a common threat, the terrorist attacks gave China a ‘historic, strategic opportunity for peaceful rise’. Whilst China was still being portrayed by the Bush administration as a threat to US hegemony, the US found itself in a position in which it needed to secure strategic partners. The move towards a strategic partnership, however, was not immediate.

The 2001 Quadrennial Defence Report, issued in the aftermath of September 11th made a non-explicit reference to China by stating that ‘[a] military competitor with a formidable resource will emerge in the region’. The aftermath of the terrorist attacks, however, demonstrated that whilst the US would still attempt to hedge against an increasing Chinese power, the two countries could unite on issues deemed strategically important by the US.

Following the September terrorist attacks, China’s President Jiang Zemin personally telephoned Bush to convey his sympathy. In the sign of a long-term strategic commitment, China supported the war in Afghanistan. Their support did not waver even though it required China to put aside its historical sensitivities regarding the Japanese military by allowing their vessels to be positioned in the Indian Ocean.

China also contributed $150 million towards the reconstruction of Afghanistan. Chinese influence also helped the US to overcome anti-American sentiments within the region by pressuring Pakistan to co-operate in the war on terror. China’s co-operation in the War on Terror demonstrated the strongest Sino-US strategic partnership since the election of Bush.

Whilst support for the War on Terror strengthened the Sino-US bilateral relationship, China chose not to support the US led War in Iraq. Although supporting the United Nations Security Council Resolution 1441 that gave Saddam Hussein ‘a final opportunity to comply with its disarmament obligations’, China objected to the US’s unsanctioned invasion of Iraq. Ideologically, China opposed the US’s unilateralist approach to defence.

China advocated that whilst the US approach may have fulfilled the short-term goal of overthrowing Saddam Hussein, undermining international institutions such as the United Nations could lead to chaos. In a 2003 statement, the Foreign Affairs Committee of the Chinese People’s Political Consultative Conference, stated that ‘trampling over the UN Charter and the basic norms of international relations, set a vicious precedent for international relations in the 21st century.’

The ideological differences between China and the US are a major hindrance to improved strategic co-operation between the two countries. Competition between the two countries has also arisen as a result of China’s willingness to source raw materials from countries such as Venezuela, Iran and Sudan. The US sees this decision as ‘undermining Western efforts to promote transparency and human rights.’ China’s decision to provide weapons to Iran and North Korea, countries the US deems to be rogue states, also highlights this point. The US suspicion of China was made public when the 2002 Nuclear Posture Review was leaked. The document specified China as a possible target of a US nuclear attack. Whilst China and the US are ‘still very far apart in political ideology and values’ during the Bush administration they were drawn into partnership by mutual security risks.

Colin Powell, Secretary of State in the Bush administration, stated that whilst ‘a competitor, a potential regional rival’ China must be seen as ‘a trading partner willing to cooperate in areas … where our strategic interests overlap.’ The Bush administration encouraged Sino-US strategic co-operation within the Asia Pacific region. This co-operation was, however, on a conditional basis. Whilst promoting co-operation within the region, the Bush administration made it clear that it intended to maintain hegemony.

Deputy Secretary of State Zoellick reinforced the importance of this point by warning Beijing not to ‘maneuver toward a predominance of power.’ The threat of this occurring has been strongly emphasised within US academic circles. Samuel Huntington stressed that with such a fast rate of both internal growth and expansion, it is inevitable that China will seek hegemony.

The US’s willingness, however, to allow China to shoulder the burden of regional security is on the presumption that China will continue to uphold Deng Xiaoping’s promise of ‘taoguang yanghui (keeping one’s head down)’ therefore not seeking hegemony within the region or the international community. In an effort to quell the fears of the US, the Chinese government released a foreign policy statement of reassurance stating that ‘China did not seek hegemony in the past, nor does it now, and will not do so in the future when it gets stronger.’

In 2006, however, in terms of military spending, China ranked fifth in the world and its yearly increase in expenditure was bigger than any Western country. Undoubtedly still the predominant power within the Asia Pacific, the Bush administration’s preoccupation with the threat of terrorism forced it to trust China to increase its role within the region and take on the role as a ‘responsible stakeholder.’ China has undertaken this role willingly, with China’s President Hu Jintao stating that on issues of regional security, ‘China and the United States are not only both stakeholders, they should also be constructive partners’.

In addition to relying on China’s promise to not seek hegemony, the US has secured multiple allies within the region. The US has done so by using the hub and spokes model. This method, inspired by the realist take on international relations, has seen the US act as the hub of the wheel, with its bilateral partners within the region, namely Japan, Australia, Thailand, the Philippines and South Korea, acting as the spokes.

This approach, in which the US has garnered multiple allies within the Asia Pacific region, ‘constitute a de facto containment policy’ of China. The importance of China remaining the second most strategically important power within the region was reinforced by Condoleezza Rice when she stated that the US ‘will seek to dissuade any potential adversary from pursuing a military build-up in the hope of surpassing, or equalling, the power of the United States and [its] allies.’ With their resources tied and the continuation of their hegemonic status in the region reassured, the Bush administration was willing to act in partnership with China on issues of regional security.

China’s unrivalled ability to negotiate with North Korea has significantly strengthened the Sino-US strategic partnership in the Asia Pacific region. The breakdown of the Agreed Framework with North Korea, Bush’s characterisation of it as being in the ‘axis of evil’ and the eventual 2003 withdrawal from the Nuclear Non-proliferation Treaty saw North Korea’s nuclear ambitions become a key area of concern during the period of the Bush administration.

Due to China’s ‘geographical proximity, ideological affinity, and time-weathered friendship’ Bush found himself in a position of reliance on China. With the US unwilling to undertake bilateral discussions with North Korea, China took the lead role in organising Three-party discussions in April 2003 and the eventual Six-party talks that began in August of the same year. This co-operation has continued with China playing host to two more round of Six Party talks.

In addition to fulfilling the role of mediator, China is also a self-interested actor in denuclearising the region. As a signatory to the Non-proliferation treaty, surrounded by nuclear neighbours Pakistan, Russia and India, a nuclear-armed North Korea would most likely be detrimental to the region’s security. Instability and the possibility of conflict regarding North Korea would also result in an influx of refugees into China. This is due to the proximity of North Korea and the country’s 1,000 plus shared borders.

Whilst co-operating with the US on the issue of North Korea’s nuclear ambitions, China and North Korea are still bound by the 1961 Treaty of Friendship, Cooperation and Assistance. When North Korea withdrew from the Non-proliferation treaty in 2003, China behaved in a way contrary to the US expectations by continuing its sale of arms to North Korea. Whilst agreeing that North Korea should suspend its ballistic missile program, in order the avoid a veto by China, the United Nations Resolution 1695 barring states from providing technology and missiles to North Korea, was not made legally binding for fear that China and Russia would block the resolution.

China’s has also been unwilling to exert economic sanctions, such as removing its Lifeline Assistance, toward North Korea. The assistance package accounts for approximately one-third of North Korea’s imports and between seventy – ninety percent of fuel. It is crucial to North Korea’s survival. The stability of North Korea, however, is important to the region’s security and therefore crucial for China to prosper economically.

In the event of North Korea collapsing, there would be an influx of US ground troops in very close proximity to China. Whilst working to increase US dialogue with North Korea, China is not in complete partnership with the US as its overriding objective is to secure its own borders and its region’s security.

The US’s policy towards Taiwan also has a significant impact on the Sino-US strategic relationship. A sensitive issue of historical importance to Mainland China, the US’s stance on Taiwan’s independence has the ability to impact Sino-US relations. Since capitalising on the realist theory that my enemy’s enemy is my friend after the Sino-Soviet rift, the US has recognised the Mainland People’s Republic of China as the government. Ceasing diplomatic relations with Taiwan as a result of this recognition, under the Taiwan Relations Act of 1979 the US retained ‘commercial, cultural and other relations with the people of Taiwan on an unofficial basis’. Whilst maintaining this position since 1979, the status of Taiwan’s sovereignty was an issue of contention between the US and China during the Bush administration.

One hundred days into office, when Bush announced that the US would ‘do our utmost to help Taiwan defend itself’ on an ABC interview, the Sino-US strategic relationship became increasingly fragile. Leading up to this statement, Clinton’s decision to deploy aircraft carriers to the Strait in 1996, and the sale of previously denied military technology to Taiwan had created fragility in the Sino-US relationship. In spite of attempts to defuse Bush’s comments, and give reassurance at the Sydney APEC conference that the US does not support Taiwan’s independence, Bush’s reluctance to subscribe to President Zemin’s position of ‘peaceful reunification; one country, two systems’ significantly hampered the Sino-US strategic relationship.

Whilst causing friction, the issue of Taiwan is increasingly unlikely to break the Sino-US strategic relationship. China’s co-operation in the War on Terror and in increasing US dialogue with North Korea decreased the chances that the Bush administration would engage in full-scale combat over Taiwan. Increased cross strait co-operation has also decreased the chances of the US finding itself in a position where it would have to exert power.

The election of Chen Shui-bian in Taiwan during the period of the Bush administration saw cross strait relations improve. Whilst he is a member of the pro-independence Democratic Progressive Party in Taiwan, there has been a move of popular support within Taiwan for improved relations with the Mainland. This popular support has been driven by the economic benefits the Taiwanese have been reaping from Chinese investment. During the Bush era, there was between forty to fifty billion US dollars of mainland investment in Taiwan.

There are also forty thousand companies from Taiwan investing in Mainland China. Under the liberal theory of economic interdependence, China is also unwilling to jeopardise its relations with its two largest trading partners, Japan and the US, by attacking Taiwan. Whilst the issue of Taiwan has the ability to strain relations, the economic and strategic reality during the Bush presidency means that it is highly unlikely that it would turn the US and China into strategic competitors.

The economic interdependence of China and the US has an impact on the two countries’ strategic relationship to the point where it significantly narrows the scope in which the Sino-US strategic relationship will oscillate. When Bush came to power in 2000, US imports from China totalled 100,062 million US dollars. This figure dramatically increased during the period of the Bush administration. By 2004, this figure had increased to 196,698 million US dollars, nearly a two-fold increase in four years.

During this period, US exports to China rose from 16,253 to 34,721 million US dollars and China held 699 billion dollars worth of US securities. Whilst the growing economic interdependence is viewed as the ‘anchor and engine for that relationship, creating growing vested interests on both sides’ selected groups of Americans view the relationship as threatening. With China’s economy sustaining a growth rate of approximately nine percent per year, many American’s see the economic relationship as unbalanced. Whilst US industries exporting advanced technologies have greatly benefited from the increased trade, US manufacturers that compete directly with the lower costs of production in China have been disadvantaged.

With the US exporting significantly less to China than it imports, Bush was criticised for the loss of three million jobs in the US during his presidency. Although facing domestic criticism, interlinking China in the global economy, in which the US is the major player, significantly stabilises any movement within the Sino-US strategic relationship.

Tense at times, the Sino-US strategic relationship did not fluctuate significantly during the period of the Bush administration. Bush’s electoral campaign clearly characterised China as both a strategic threat and competitor to the US. After the September 11th terrorist attacks, the relationship shifted and remained one of strategic co-operation for the duration of Bush’s time in office.

This demonstrates that whilst very far removed in an ideological sense, the mutual security concerns that dominated Bush’s time in office, bound China and the US into a strategic partnership. The power vacuum created by the Bush administration’s preoccupation with fighting global terrorism, and albeit reluctant, allowance of China to increase its role within the Asia Pacific, cemented the strategic partnership in both a global and regional sense. Whilst strained by the US’s stance over Taiwan and the countries’ differing interests regarding North Korea, they retained their strategic partnership.

The binding mutual security concerns, coupled with the economic interdependence of the two countries ensured that whilst tense at times, the Sino-US strategic relationship did not oscillate very far from a relationship of strategic co-operation during the Bush administration.

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