Bush Burnishes China Card for Obama, McCain in Taiwan's Shadow

By Michael Forsythe and Dune Lawrence

Aug. 4 (Bloomberg) -- When Barack Obama or John McCain takes over the presidency in January, he will inherit a stable U.S.-China relationship. Part of the credit will belong to someone who gets few kudos for his foreign-policy initiatives: George W. Bush.

The president, who travels to China for the fourth and last time of his presidency this week to attend the Olympic Games in Beijing, ``leaves a relationship that is basically in good shape,'' says Kenneth Lieberthal, who was director for Asia on the White House National Security Council during Bill Clinton's presidency.

Since taking office 7 1/2 years ago, Bush has personally eased tensions over Taiwan. Henry Paulson, his Treasury secretary, stopped Congress from escalating trade disputes; Robert Zoellick, his former No. 2 diplomat, invited China to play a bigger role internationally. Meanwhile, the administration enlisted China's support to fight terrorism and persuade North Korea to begin dismantling its nuclear program.

China's leaders ``will miss him after he steps down,'' says Shen Dingli, director of the Center for American Studies at Fudan University in Shanghai.

Bush will bequeath his successor a base to work from in dealing with a country that owns more than $500 billion in Treasuries, is the top source of U.S. imports and is on track to become the world's second-biggest economy in a decade.

Explosive Issues

To be sure, Bush, 62, will hand some potentially explosive issues to the new president as well. Both Democrats and Republicans have criticized him for not putting enough pressure on China to improve its human-rights record. The U.S. trade deficit with China -- a record $256 billion last year -- may increase calls in Congress to impose tariffs. And the U.S. will have to goad China into doing more to combat global warming.

When he took office in 2001, Bush signaled he was ready to take a hard line, labeling China a ``strategic competitor'' in contrast to the Clinton presidency's description of a ``strategic partnership.'' He also vowed to defend Taiwan if it were threatened. In April that year, China held the crew of a U.S. spy plane for 11 days on its southern Hainan island after a midair collision with a Chinese fighter jet forced the aircraft to make an emergency landing.

The Sept. 11 terrorist attacks forced Bush to engage China more closely. The U.S. needed Chinese influence with Pakistan to help push that country to cooperate in rooting out al-Qaeda from Afghanistan and overthrowing the Taliban government there. In 2002 the U.S. declared a separatist group in China's Xinjiang region to be terrorists, a move China supported.

Minimizing Tensions

Once engaged in Afghanistan and then Iraq, the administration worked to minimize tensions elsewhere, including in the Taiwan Strait and North Korea.

Sept. 11 was ``a turning point,'' says Yan Xuetong, director of the Institute of International Studies at Tsinghua University in Beijing. Bush learned ``to deal with China.''

Bush brought then-Chinese President Jiang Zemin to his Texas ranch in October 2002, where they discussed Iraq and North Korea. He later called Jiang to request help in defusing the Korean crisis.

By April 2003, the U.S. and China were holding discussions with North Korea in Beijing, and China helped persuade Pyongyang to participate in the so-called six-party talks, also including Japan, Russia and South Korea. When Kim Jong Il's regime conducted a nuclear test in October 2006, China stepped up the pressure.

Personal Diplomacy

In December 2003 Bush altered U.S. policy toward Taiwan, telling Chinese Premier Wen Jiabao at an Oval Office meeting the U.S. was opposed to Taiwan's planned referendum on its independence and to ``any unilateral decision by either China or Taiwan to change the status quo.''

A president doesn't normally announce changes in Taiwan policy personally, ``and certainly doesn't articulate it with the Chinese premier sitting next to him in the Oval Office,'' Lieberthal says.

The policy change came over the opposition of some in the Bush administration. It was ``a policy based on fear,'' says John Bolton, who headed the State Department's arms-control efforts and later served as ambassador to the United Nations. ``It is a fear that if we upset China it will do bad things with respect to the six-party talks.''

Taiwan Arms Sales

The closer ties with China are coinciding with a slowdown in arms sales to Taiwan. In May, Deputy Secretary of State John Negroponte said the U.S. wouldn't sell new F-16 fighter jets to Taiwan, rejecting a request by newly elected President Ma Ying- jeou. Admiral Timothy Keating, head of the U.S. Pacific Command, told a forum in Taiwan last month there's ``no pressing, compelling need'' for arms sales to Taiwan.

That remark prompted speculation that the U.S. has frozen arms sales, something the Bush administration denies.

``I don't think the government has come out and said it is a freeze, but if it looks like a duck and walks like a duck,'' it may be one, says Taylor Fravel, a political science professor at the Massachusetts Institute of Technology.

The administration's engagement with China has had reverberations beyond Asia. In a September 2005 speech in New York, Zoellick urged China to be a ``responsible stakeholder'' globally. That challenged China and flattered its sense of stepping into the role of world power.

Zoellick's speech suggested that ``China is an insider now,'' says Huang Jing, a senior research fellow at the National University of Singapore's East Asian Institute.

Zoellick, who left the administration in 2006 and now heads the World Bank, and Treasury's Paulson expanded communication between the governments through initiatives such as the Strategic Economic Dialogue.

Damage Control

That can help limit the damage of gaffes, such as when a Falun Gong activist disrupted a welcoming ceremony during President Hu Jintao's April 2006 visit to Washington. At that ceremony, an announcer said the band would play the anthem of the Republic of China -- the official name of Taiwan.

The communication can also smooth over more serious incidents.

Bush invoked the increased exchanges and ``good personal relations'' with Chinese leaders as one of his main legacies, in a July 30 interview with Asian journalists in Washington. Regular talks have helped create mutual trust, in contrast to the tense standoff over the spy plane in 2001, Bush says.

``Frankly, it took a while to get phone calls returned and we were just trying to get information,'' Bush says of the incident. If ``that happened now, there would be a much more immediate response because there's more trust.''

Fending Off Tariffs

Paulson, who logged four trips a year to China as head of Goldman Sachs Group Inc., fended off congressional calls for punitive legislation against Chinese exports.

The Treasury also declined to label China a currency manipulator amid anger in Washington over Chinese reluctance to let the yuan rise faster. The currency has gained 21 percent against the dollar in three years.

Those actions leave some lawmakers arguing that Bush's policy is a failure.

``His corporate backers and interests, time and time again, trump our communities' interests, trump our workers' interests, trump our small manufacturers' interests,'' says Senator Sherrod Brown, an Ohio Democrat. ``Except for the Iraq War, there's no bigger failure of the Bush administration than his China policy.''

Dissidents

Senator Sam Brownback, a Kansas Republican, says Bush hasn't pressed China hard enough to improve its treatment of political dissidents and expand religious freedom.

``I don't think the president ought to go to the opening of the Olympics,'' Brownback says. ``I think we should push them more aggressively.''

Dennis Wilder, the senior director for Asian affairs on the White House National Security Council, says attending the Olympics will build goodwill and increase U.S. leverage.

``People want us to have influence on the Chinese government,'' Wilder told reporters at the White House. ``If you don't have a good working relationship with the Chinese government, how do you do that?''

To contact the reporters on this story: Mike Forsythe in Washington at mforsythe@bloomberg.net; Dune Lawrence in Beijing at dlawrence6@bloomberg.net