U.S.-China Officials Try to Defuse Chen Case Before Talks

U.S. and Chinese officials are racing to resolve the case of a fugitive human rights activist, and ensure it doesn’t derail annual talks between top policy makers later this week.

Assistant Secretary of State Kurt Campbell arrived in Beijing yesterday, earlier than planned, to prepare for the gathering, two U.S. officials said yesterday on condition of anonymity because of the sensitivity of the matter. Secretary of State Hillary Clinton and Treasury Secretary Timothy F. Geithner are still scheduled to meet counterparts in Beijing May 3-4 amid reports the U.S. is protecting blind activist Chen Guangcheng, according to the officials, who declined further comment.

The case may be one of the toughest challenges yet for President Barack Obama on managing relations with China, with Republican challenger Mitt Romney charging the administration with failing to fight hard enough for U.S. interests. Abandoning the talks would risk deepening tensions between the world’s two largest economies at a time when global growth is already overcast by Europe’s debt crisis.

Obama refused to comment on the case when asked about it today at a White House news conference.

“I’m aware of the press reports on the situation in China, but I’m not going to make a statement on the issue,” Obama said. “What I would like to emphasize is that every time we meet with China, the issue of human rights comes up.”

Balancing Concerns

Deputy National Security Adviser John Brennan said yesterday that the administration is “working very closely with the individuals involved.” Obama is working to balance diplomatic concerns with a “commitment to human rights, making sure that the people throughout the world have the ability to express themselves freely,” he said on the Fox News Sunday television program.

Beyond keeping this week’s talks on track is the importance of keeping the broader relationship intact, given a widening in bilateral engagement on issues from Iran, Syria and freedom of the seas to intellectual property rights, trade, investment, and cyber crime and espionage, according to the two officials.

Chen, who is blind, last week escaped house arrest in Shandong province, where he’d been held since release from prison in September 2010, Midland, Texas-based ChinaAid, a U.S.- based human rights group, reported. He’s now under U.S. protection in Beijing, ChinaAid’s founder Bob Fu said in an e- mail April 27, citing people close to the situation.

China Decision

Chen and his family may ultimately be allowed to travel to the U.S., the Associated Press reported Fu as saying. Fu predicted a decision will be made by China’s leaders as soon as within a couple of days, the AP said.

The annual Clinton-Geithner talks, which “substantively, probably would have been inconsequential, suddenly become the most important test for Sino-U.S. relations for the Obama administration thus far in its tenure,” said Chris Johnson, a former senior China analyst at the Central Intelligence Agency who is now an adviser at the Center for Strategic and International Studies in Washington.

Republican reaction to the Chen episode has been muted so far.

“My hope is that U.S. officials will take every measure to ensure that Chen and his family members are protected from further persecution,” Romney, a former Massachusetts governor running to unseat Obama in the November presidential election, said in a statement yesterday. The U.S. “must play a strong role in urging reform in China and supporting those fighting for the freedoms we enjoy,” he said.

Tiananmen Case

The Chen case may be an echo of an incident with dissident Fang Lizhi, who was housed in the U.S. embassy in Beijing for 13 months in the wake of the 1989 Tiananmen Square protests, when the Communist Party clashed with pro-democracy students. He left the country for the U.S. after his stay at the embassy, and died earlier this month in Tucson, Arizona, at the age of 76.

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.

“In 1989, China was in the international doghouse and nobody in the U.S. political system could do other than protect a dissident in our embassy,” said Douglas Paal, a former Asia Director at the National Security Council under Presidents Ronald Reagan and George H.W. Bush. “This time, the human rights situation is not great in China, but we have a China that is much stronger economically, politically and internationally, and is ready to assert its interests against the U.S.,” said Paal, now vice president for studies at the Carnegie Endowment for International Peace in Washington.

Trade Ties

The U.S. had a $295 billion trade deficit with China last year, compared with a $6.2 billion deficit in 1989, according to U.S. Commerce Department data. American exports to the nation, now the third-largest destination abroad for American goods, have soared to $104 billion, from $5.8 billion. Machinery, farm products, aircraft and medical instruments are the top export categories, according to data compiled by Bloomberg.

Boeing Co. (BA) last week reached an agreement to sell 20 long- range 777 jetliners, the Chicago-based plane-maker’s most profitable model, to China Eastern Airlines Corp. (670), in a deal with a list value of about $6 billion.

Treasuries Holdings

China also now holds $1.18 trillion of U.S. government debt, ahead of the second-largest foreign creditor, Japan, with $1.1 trillion, up from $71.4 billion in March 2000, data compiled by Bloomberg show.

Holding so much debt hasn’t given China any real leverage over the U.S., according to Michael J. Green, a former NSC senior director for Asia under President George W. Bush. If China tried to unload American debt, it would cause as much harm to itself as it would to the U.S., he said.

“There is room in the system for Clinton to push hard on this -- there won’t be any hesitation because the Chinese hold Treasury bonds,” said Green, now an associate professor of international affairs at Georgetown University. Meantime, patchy legal protections and open thefts of intellectual property rank among U.S. business concerns in the nation.

China’s clout has ascended since 1989, and the U.S. and others continue turning to China to restrain North Korea’s military impulses, including another possible nuclear weapons test.

Along with Russia, China used veto power in the United Nations Security Council to stymie the Obama administration’s pushes for tougher international action to block Iran’s suspected nuclear weapons program and force Syrian leader Bashar al-Assad to halt the violence against his opponents.

Pivot to Asia

Clinton has proclaimed a U.S. foreign policy shift toward East Asia, in part to counter Chinese territorial claims on oil- rich areas in the South China Sea also claimed by Vietnam, the Philippines and Brunei. The latest confrontation, between Chinese and Philippine naval vessels is continuing near what the Chinese call Huangyan Island and Filipinos call the Scarborough Shoal.

China is using its growing economic muscle to increase its influence as far afield as the new nation of South Sudan, where it announced on April 28 it will provide $8 billion in loans, and where the U.S. and other countries are trying to head off a renewed war.

Domestic Politics

Both the China and America are preoccupied with domestic politics this year, said Bonnie Glaser of the Center for Strategic and International Studies in Washington. The year will see presidential and congressional elections in the U.S. and a shift in the leadership of China’s Communist Party to the fifth generation since Mao Zedong led the country’s 1949 communist revolution.

“The trade relationship is much deeper, and we have a huge number of dialogue mechanisms now that we didn’t have in the past,” she said. “That doesn’t mean the Chinese will be willing to use them.”

In addition, she said, the scandal surrounding ousted Communist Party Politburo member Bo Xilai and his family, and the Obama administration’s April 27 mention of selling new Lockheed Martin Corp. (LMT) F-16 jet fighters to Taiwan, may have made the Chinese more reluctant to let a leading critic go free or to aid the U.S. in Syria or Iran if doing so would appear to be yielding to American pressure.

It’s unlikely the Chinese will concede anything to the U.S., Green said. “They’ll come and they’ll state their positions and they’ll all talk past one another,” he said. “Nobody in the Politburo wants to take on human rights. The leadership is quite insecure now.”

If the Chinese “can find a face-saving solution that works, that may be of interest to them because, just like the Bo Xilai scandal, they keep wanting to just move on and refocus on the succession,” Johnson said.

To contact Bloomberg News staff for this story: Bloomberg News in Beijing at emailtv@bloomberg.net

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

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