Secretary of State John Kerry and Treasury Secretary Jacob Lew traveled to Beijing this week for the annual Strategic and Economic Dialogue, at a time when U.S.-China tensions are running higher than at any point in the past decade. Though each country’s bureaucrats were able to put on a good face and paper over significant disagreements, they were unable to make progress on any major security or economic issue.
Unfortunately, the U.S. administration passed up a chance to advance and elevate the U.S.-China Bilateral Investment Treaty, an agreement that sets the rules of the road for cross-border investment. Doing so could have yielded major economic benefits and had positive spillover effects on the strategic issues vexing both countries. But now, with little for the two sides to hang their hats on, the relationship is ripe for more tension.
A year ago, when President Barack Obama met with new Chinese President Xi Jinping at the Sunnylands Ranch in California, the two laid out an ambitious agenda, agreeing to discuss contentious cyber issues, the need to increase pressure on North Korea, and more broadly chart a positive course for the world’s most important bilateral relationship.
Since the earlier summit, however, a number of issues have set back relations. Increased Japan-China acrimony in the East China Sea, an aggressive Chinese move to set up oil rigs in disputed waters off Vietnam, and the Edward Snowden espionage revelations have set teeth on edge in Washington and Beijing.
On the economic side, U.S. indictments of Chinese military hackers, a series of ongoing trade disputes, the recent weakening of China’s currency and continued restrictions on foreign investors have each threatened to undermine the countries’ $500-billion-a-year commercial relationship. While the United States continues to describe relations with China as a delicate balance between cooperation and competition, China looks at the United States through a darker lens, convinced that America is determined to “contain” its rise.