June 9, 2016
   Posted in News From Other Sites

By Atul Taneja, The Hindu, 8 June 2016

Talks on security and economy took place in the backdrop of escalating tensions on the bilateral front over the South China Sea issue

Chinese state media has called the Beijing-Washington strategic dialogue that concluded on Tuesday, as being marginally helpful in easing tensions, which had spiraled on account of the growing discord between the two countries over South China Sea (SCS).

An editorial in the state-run tabloid Global Times on Tuesday, titled, “China-U.S. tension eased a bit by dialogue,” points out that talks on the twin security and economic platforms, were “a chance to sort out the bilateral relationship.”

Kerry’s harsh talk

The China-U.S. Strategic and Economic Dialogue (S&ED) dialogue ended on Tuesday, following weeks of spiraling tensions which had peaked when U.S. Secretary of State, John Kerry, responded harshly to poser from the Chinese side that Beijing could impose an Air Defence Identification Zone (ADIZ) in the SCS. The SCS, the international trade artery though which goods worth 5 trillion dollars pass each year, has become a hotbed of contested territorial claims between China and several regional littoral states, including Vietnam, Philippines, Malaysia and Brunei.

Speaking in Mongolia on Sunday, Mr. Kerry warned that a Chinese ADIZ over the SCS would be seen as a “provocative and destabilising act.”

After an article in Hong Kong’s SCMP

Mr. Kerry’s remarks followed an article in the Hong Kong-based South China Morning Post (SCMP), which, quoting sources close to the People’s Liberation Army (PLA), has said that China is preparing an ADIZ in the SCS, two years after it announced a similar one in the East China Sea.

“If the U.S. military keeps making provocative moves to challenge China’s sovereignty in the region, it will give Beijing a good opportunity to declare an ADIZ in the SCS,” the SCMP source said.

‘Freedom of navigation’ patrols

The possibility that China may enforce an ADIZ, in turn, was fueled by the U.S. conduct of “freedom of navigation” patrols in the SCS-moves, which evoked a robust response from China. In May, the U.S. launched its third “freedom of navigation” operation, in the disputed Spratly Islands, followed by the flight of a U.S. EP-3 Aries surveillance aircraft, which was challenged by two Chinese fighter jets.

The back and forth between the U.S. and China, mirrored China’s vocal response in the SCS to President Barack Obama’s “Pivot to Asia” doctrine, which plans to position nearly 60 per cent of U.S. military forces in the Pacific.

The Global Times editorial said that, “The U.S. military has exposed the negative side of Washington’s strategic circle toward China in recent years.” But it added: “Through the S&ED, the US seems to swing back a little. But it still remains uncertain whether Washington will restrain its provocation on the South China Sea issue.”

Economic dialogue

No less riveting was the economic dialogue between the two countries, where the debate over Chinese overcapacity flooding the markets of the West, and , presumably, weakening economic recovery there, had pitted U.S. Treasury Secretary Jack Lew against Luo Jiwei, China’s Finance Minister.

To Mr. Lew’s assertion on Monday, that the off-loading of Chinese excess capacity, especially in the steel and aluminum sectors had a “damaging effect on global markets,” Mr. Lou replied that, the U.S. official was only telling one part of the story.

Mr. Lou stressed that China’s steel overcapacity was accumulated during the post-economic crisis period, when $609bn were pumped into the economy towards infrastructure — a move that contributed to more than half of global growth in the 2009-11 period.

“At the time, the whole world was grateful that China had boosted world growth,” he said. “Now the world is pointing its finger at China’s overcapacity problem, saying it’s dragging down the whole world. What about what the world was saying before?”

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