New direction for US diplomacy

U.S. President Barack Obama recently said in his 2013 State of the Union address that he will focus on the economy in the next four years. Previously, new U.S. Secretary of State John Kerry said, "Diplomatic policy is economic policy," signaling a new direction for U.S. diplomacy.

Playing economy card

Obama is still forming his second-term cabinet, and a list of just elected and nominated cabinet members shows that key positions in the administration will be held by pragmatists in the next four years. The United States will continue to cooperate with China but at the same time contains it.

Rules card

"On things like intellectual property, market access, and currency, there are still significant challenges ahead with China."

Obama outlined his policy priorities in the next four years in his first State of the Union address after re-election on Feb. 12. The speech is largely focused on the U.S. domestic economy, budget deficit, and gun violence, with only a small part about foreign relations. It is worth noting that Obama just made a passing mention of China when talking about clean energy, forming a sharp contrast to his remarks last year. It is obvious that the U.S. president has softened his stance on China.

However, Nicholas R. Lardy, a China expert at the Peterson Institute for International Economics, believes that the Obama administration will continue its "hedge" strategy toward China. On the one hand, it will carry out high-level exchanges and cooperation with China. On the other hand, it will continue to act tough on China that "does not follow its economic and trade rules."

This can be proved by the statement of the new U.S. secretary of state. Kerry expounded his pragmatic ideas on international affairs at the confirmation hearing for the post of secretary of state held by the U.S. Senate Committee on Foreign Relations on Jan. 24. When asked how to press China on economic and trade issues, Kerry stressed it is critical to strengthen ties with China.

"We need to establish rules of the road that work for everybody," he said. "On things like intellectual property, market access, and currency, there are still significant challenges ahead with China." In other words, the United States will continue to press China on these issues.

Trade card

The degree of U.S. trade enforcement against China depends on the condition of U.S. economy.

David J. Leiter, president of ML Strategies, a government relations consulting group, said that the Obama administration will continue to pay great attention to trade issues, and its efforts in this regard will be focused on China, the Trans-Pacific Partnership (TPP) negotiations, and resumption of free trade talks with the European Union. He added that Obama will seek to boost ties with China as well as other emerging market countries such as India and Brazil by bringing forward balanced trade proposals.

Leiter believes that trade tensions between China and the United States may continue in 2013, and will be centered on tariffs, barriers to services trade, intellectual property protection, investment restrictions, China's state-owned enterprises, restrictions on exports of certain raw materials, and the yuan's exchange rate.

It has been proved over the past several decades that cooperation and development are the themes of China-U.S. trade relations, and friction will not change the fundamentals of China-U.S. cooperation.