Why China And The U.S. Are Suddenly So Cozy

Wen Jiabao could not have asked for a better welcome on his first official visit to Washington since becoming Chinese Premier nine months ago. Not only was he honored with a 19-gun salute on the White House lawn and a banquet hosted by Secretary of State Colin Powell, but Wen gained the assurances he was seeking that Washington would oppose any breakaway moves by Taiwan and its pro-independence President, Chen Shui-bian. "We reached consensus on many issues," Wen declared after meeting President George W. Bush.

The warm tone reflects just how far U.S.-Chinese relations have come since the tense early days of the Bush Administration. And it's a sign that China's relatively youthful new leaders, Wen and President Hu Jintao, both 61, are steering a more sophisticated and less ideological foreign policy course than their predecessors. True, frictions remain, particularly on economic issues such as America's huge trade deficit with China and the value of the Chinese yuan. But on the trade imbalance, Wen was conciliatory, saying in Washington that China "takes the problem seriously." Says Andy Rothman, China strategist at the Shanghai office of investment bank CLSA Asia-Pacific Markets: "The new leaders are a lot more pragmatic and guided by economics rather than politics."

Wen and Hu are accelerating a trend toward greater pragmatism that began gradually under former President Jiang Zemin and Premier Zhu Rongji. The new leaders came of age after China's fight against the Japanese and after the Communist Revolution -- two events that shaped the ideology of older leaders. And they are surrounding themselves with younger advisers, some with Western educations. "They represent new blood and an optimistic new face for China," says John Holden, president of the National Committee on United States-China Relations, a New York think tank.

MUTED RESPONSE. The new Chinese leaders also have a more sophisticated grasp of the populist pressures that can arise in an American election year. That explains the muted response to U.S. trade quotas recently threatened against Chinese bras, knitted fabric, and night gowns -- a tiny portion of China's $120 billion trade surplus with the U.S. Indeed, Beijing's decision to order 30 Boeing Co. (BA ) planes and continue trade missions to the U.S. underscores its determination to avoid a trade war. Similarly, China is attempting to defuse pressures to revalue its currency by ending export-tax rebates and welcoming to Beijing a U.S. official dedicated to dealing with financial issues. Such pragmatism is paying off. On Wen's first day in the U.S., Treasury Secretary John Snow hinted that Washington might back off on the revaluation issue, saying that "it would probably be a mistake" for Beijing to loosen its currency too fast.

Of course, new strains could yet arise between Washington and Beijing. Taiwan will remain a dangerous irritant as Chen intensifies his separatist rhetoric in advance of its presidential elections in March. And U.S. business lobbies and labor activists will keep complaining about China's trade surplus. Even so, Chinese-U.S. relations seem to be on a firmer footing than ever. It's a good bet that Wen and Hu will stick to their moderate foreign policy as long as they can.

By Dexter Roberts in Beijing

Edited by Rose Brady

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