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A shot in the arm for Sino-US ties

By Harvey Dzodin | China Daily | Updated: 2013-07-22 08:23

A shot in the arm for Sino-US ties

At the time of the historic meeting between Chinese President Xi Jinping and his US counterpart Barack Obama in Sunnylands, California, many wondered if the pronouncements of personal bonhomie and mutual bilateral cooperation were mere diplomatic niceties papering over irreconcilable differences, or truly the start of a new, more positive, relationship between the dominant power, the US, and the rising power, China.

Now with the conclusion of the fifth Strategic and Economic Dialogue, the first fruits of that tie-less encounter are appearing, and the harvest looks promising.

While some cynical observers claim that the only major flowering of the new Sino-American relationship at the S&ED was the fast-tracking of a Chinese garden in Washington's National Botanical Garden, I wholeheartedly disagree.

During the confidence building stage of this new relationship, attitude is as important as substance. China could have easily torpedoed this S&ED to express its pique over former National Security Agency agent Edward Snowden's expos of the US surveillance program. The US could have done so over Hong Kong's refusal to hand Snowden over to it to face the American justice system. Instead, positions were strongly expressed and duly noted, and the dialogue was able to take place.

In addition to progress on issues such as improved military-to-military cooperation, the environment and a host of other matters, China's new stance after nine previous inconclusive sessions on a "Bilateral Investment Treaty" is big news, although the hardest work is yet to come, and because of ongoing congressional paralysis, US approval requiring a two-thirds majority in the Senate should a mutually acceptable treaty be negotiated, is, at best, probably years away. However, this treaty could be a game-changer.

Most BITs are generally limited to adjudicating routine investor disputes. But China has gone on record to negotiate the BIT with "high standards", indicating that it will include all stages of investment and all sectors.

This is the first time China has agreed to do so with any country. The US would benefit from increased access to the Chinese market, particularly in the service sector where it maintains a competitive advantage. China could benefit from more consistent treatment of its investors in the US in addition to benefiting from access to US workplace productivity tools and technologies inside China to improve its productivity and economic efficiency.

According to US Treasury Secretary Jack Lew, the agreement could, for the first time, include all phases of investment, including market access, and sectors of the Chinese economy (except for limited negotiated exceptions).

Lew said: "A high standard US-China BIT is a priority for the United States and is critical to leveling the playing field for American workers and businesses. A successful BIT negotiation would open up China's highly restrictive system to foreign investment and help create a wide range of opportunities for US firms to participate in the Chinese market. Negotiations could address a range of US commercial and economic priorities, including greater market access, removal of investment barriers, protections against technology transfer, and increased transparency."

Chinese Commerce Minister Gao Hucheng has rightly said that "investment is an important area of China-US economic cooperation. It is a mutual concern of both parties, and both parties need to have creative thinking in order to create convenient conditions for the mutually beneficial cooperation between businesses of the two countries."

We will indeed need lots of creative thinking. Graham Allison, a professor at Harvard University, has written about the historical pattern that he calls the "Thucydides trap". His contention is that rarely can a rising nation avoid war with the dominant power. He traces this back to ancient Greece when the historian Thucydides said Athens' rise stoked Sparta's fear that its dominance was threatened. The resulting 30-year war destroyed both civilizations in the process. And closer to our own time, since 1500 in 11 of 15 similar cases, the result was also war.

As the world's two most important countries, it is critical that both sides find as many ways as possible to keep lines of communications open. Why? Knowledge brings understanding. The lack of mutual understanding gives rise to suspicion, leads to miscalculations and can result in both hot and cold wars.

The US-China relations are not like a marriage, as some people like to describe it, rather it is like the ties between conjoined twins who share common organs and cannot be separated without both perishing. In fact, the two countries will continue to share such a relationship in the long term.

No one can be sure whether the two countries can always be best of friends, but they have the potential to be the best of partners. Ignoring each other and the "Thucydides trap" can be their undoing, Working together, while conceding their differences, offers hope not only to the peoples of both countries, but also to the others across the world who are affected by Sino-American relations. The S&ED is a key tool in this regard. And the S&ED, with its more cooperative attitude, especially the opening of serious negotiation on a BIT, bodes well in this regard.

The author is a senior advisor to Tsinghua University and former director and vice-president of ABC Television in New York.

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