Bloomberg News

Chen Deal Highlights Stakes in U.S.-China Relationship

May 04, 2012

Chen Guangcheng, second from left, meets with Harold Koh, U.S. State Department legal adviser, left, and Gary Locke, U.S. Ambassador to China, second from right, in Beijing on May 2, 2012. Source: U.S. Embassy Beijing Press Office via Bloomberg

Chen Guangcheng, second from left, meets with Harold Koh, U.S. State Department legal adviser, left, and Gary Locke, U.S. Ambassador to China, second from right, in Beijing on May 2, 2012. Source: U.S. Embassy Beijing Press Office via Bloomberg

China’s commitment to allow dissident Chen Guangcheng to go to the U.S. resolved a conflict that threatened to sour ties and demonstrated how the Sino-American relationship is increasingly driven by intertwined economic and security interests.

After a week of diplomatic tension, the U.S. and China forged a solution that promises to enable the blind legal activist to leave China with his family in order to become a visiting scholar at New York University.

The ability to manage a high-profile human-rights dispute, one of the most incendiary topics between the U.S. and China, reflects the large and growing stake the two countries have in economic cooperation. China now holds $1.18 trillion of U.S. government debt, ahead of the second-largest foreign creditor, Japan, with $1.1 trillion, data compiled by Bloomberg show.

“Both sides have been bending over backward to handle a sensitive case in a way designed to minimize the impact on the bilateral relationship,” said Stapleton Roy, the U.S. ambassador to China from 1991 to 1995.

Regardless of differences over issues that range from China’s support for Syria’s regime to U.S. pronouncements on the disputed and oil-rich South China Sea, “both sides believe it to be in the best interests of both countries to keep the U.S.- China relationship developing in a positive manner,” Roy said in a telephone interview yesterday.

Clinton’s Role

The crisis erupted days before Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner arrived in Beijing for two days of annual negotiations on economic and strategic issues. Both sides insulated those talks from the diplomatic crisis even as Clinton was in frequent contact with her diplomats about Chen, according to U.S. officials who briefed reporters on condition of anonymity.

“We cannot allow disagreements to derail our relationship or hold back our cooperation on a broad range of matters,” Clinton said yesterday, at the close of the annual Strategic and Economic Dialogue, which officials call the S&ED.

“You have to look at the trend lines, not just the headlines,” she said. “And that is especially true in the China-U.S. relationship. The trend is clear. Our countries are growing more interdependent and so we need to build a resilient relationship that allows both of us to thrive and meet our regional and global responsibilities without unhealthy competition, rivalry or conflict.”

The relatively quick resolution demonstrates the importance each country places on its relationship with the other, said Chris Johnson, a senior adviser at the Washington-based Center for Strategic and International Studies and a former China analyst at the Central Intelligence Agency.

Back From Brink

“Both sides looked over the edge yesterday and decided it was time to turn the wheel back from the cliff,” Johnson said in a telephone interview.

Even during the human-rights dispute, Chinese and U.S. negotiators managed to arrive at some significant agreements, including an increase in the level foreign stakeholders can own in securities firms, he said.

“That’s very helpful to the Goldman Sachs of the world,” Johnson said.

Chen, an iconic figure in China, was imprisoned for more than four years after representing villagers who opposed forced abortions and sterilizations. He was then held under house arrest without charges until he escaped in late April and made his way to Beijing. Embassy diplomats helped him evade Chinese security and reach the safety of the U.S. embassy.

‘Proper Channels’

The outline of the NYU arrangement emerged after Chen left the embassy and then changed his mind about a previous deal for him to remain in China and study law, saying he feared for his family’s safety.

New York University confirmed by e-mail yesterday that Chen was invited to become a visiting scholar. If Chen “wants to study abroad, he can, like any Chinese citizen, go through proper channels and relevant departments and procedures according to law,” Foreign Ministry spokesman Liu Weimin said, according to a statement issued yesterday.

Republicans blasted President Barack Obama for the administration’s handling of the issue, with Republican presidential candidate Mitt Romney calling Chen’s departure from the embassy “a dark day for freedom.” The prospect of Chen’s departure to the U.S. -- if China promptly follows though on its commitment -- may help limit any political damage to Obama, with Republican lawmakers threatening a probe of whether Chen was pressured to leave the embassy.

Chinese Follow-Through

“While China has reportedly agreed to let Chen leave, U.S. officials must not assume that Beijing will actually allow this to happen,” Representative Ileana Ros-Lehtinen, a Florida Republican and the chairwoman of the House Foreign Affairs Committee, said in a statement yesterday.

The U.S. expects Chinese authorities will “expeditiously process his applications,” State Department spokeswoman Victoria Nuland said in a statement yesterday. She said that Chen can be accompanied by his wife and two children.

State Department officials refused to discuss what guarantees, if any, they got from the Chinese. There has also been no discussion about whether Chinese authorities would permit Chen to return, said a U.S. official who briefed reporters on condition of anonymity because the diplomatic talks were confidential.

U.S. officials are in regular touch with Chen now, a second U.S. official said. Ambassador Gary Locke spoke with Chen for half an hour May 2, and Chen met with embassy personnel at the hospital, the official said. Chen is pleased with his hospital care, the official said.

Haircuts, Clothes

Chen’s children, who were being treated for fevers, were given haircuts and new clothes, the official said. The diplomats brought presents for his son as it was his birthday, and the hospital staff brought a cake, the official said.

Jeffrey Bader, the Obama administration’s former senior director for Asia at the National Security Council, said the resolution underscored the maturity and strength of the relationship.

“The fact that you can have an S&ED that was substantive and produced results -- at a time when this episode was occurring and was an enormous distraction -- testifies to the value of the mechanism of the SE&D and the state of the relationship,” Bader said in a telephone interview. Personal relationships built by Clinton and Geithner with Chinese officials also helped, he said.

Economic Ties

Chinese Vice Premier Li Keqiang told Geithner that the two nations should further strengthen macroeconomic policy coordination to promote economic growth, according to China’s Xinhua news agency.

Bilateral ties have been transformed over the 23 years since the Tiananmen protests, with the surge in China’s economic and political importance and the end of the Cold War between the U.S. and the former Soviet Union.

U.S. exports to China, now the third-largest destination abroad for American goods, have soared to $104 billion from $5.8 billion in 1989. The importance of the American market to China is reflected in China’s $295 billion trade surplus with with the U.S. last year, compared with a $6.2 billion surplus in 1989, according to U.S. Commerce Department data.

China surpassed Canada as the top buyer of U.S. farm goods in the fiscal year ended Sept. 30, with purchases totaling $19.9 billion, up almost $5 billion from the previous year. China’s imports accounted for about 14 percent of the $137.4 billion in U.S. agricultural goods shipped overseas, according to the U.S. Department of Agriculture. About 75 percent of China’s purchases were soybeans and cotton, the USDA said.

‘Difficult Things’

Beyond the economy, the expanding bilateral engagement includes issues from Iran, Syria and freedom of the seas to intellectual property rights, trade, investment, and cyber crime and espionage.

Bader said the agreements emerging on securities firms and state-owned enterprises “are all important issues that we’ve been raising and they go to the interdependence of the two economies,” Bader said.

“It shows we can do important business when there are difficult things at stake,” he said.

To contact Bloomberg News staff for this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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