US, China hold annual strategic dialogue

WASHINGTON — A month after the U.S. and Chinese presidents held an unconventional summit at a California resort, their top officials convene in more staid surroundings in Washington Wednesday to hash over a slew of security and economic issues that reflect growing ties but also deep-seated differences between the world powers.

The fifth edition of the annual Strategic and Economic Dialogue takes place in less fraught circumstances than last year's in Beijing, which was overshadowed by the escape of dissident lawyer Chen Guangcheng from house arrest to the U.S. Embassy.

But there's still plenty to argue about. The Cabinet-level officials taking part in the two days of talks at the State Department and Treasury will address the growing U.S. anxiety over cyber-theft, the nuclear program of China's ally North Korea and barriers to U.S. trade and investment in China. They will also discuss cooperation on tackling climate change.

Vice President Joe Biden will open the dialogue, and Secretary of State John Kerry — who returned to Washington Tuesday from his wife's bedside in Boston after she was hospitalized — and Treasury Secretary Jacob Lew are due to lead the U.S. side that includes more than one dozen government agency heads. A similarly heavyweight Chinese delegation is led by Vice Premier Wang Yang and State Councilor Yang Jiechi.

When President Barack Obama and President Xi Jinping met at the Sunnylands resort in June they sought a more collaborative relationship between the powers whose strategic rivalry belies deep economic inter-dependence. Xi, who after a once-in-a-decade leadership transition in China, recently took the helm of the one-party state, has long spoken of establishing a new type of relationship that would avoid conflict between the established power, America, and the rising power, China.

But translating the grand vision into action, and reconciling the fundamental political differences between them, isn't easy. The summit was short on concrete outcomes, and although Xi did express common cause with Obama in his opposition to North Korea's nuclear weapons program that has yet to translate into effective pressure on Pyongyang.

When the U.S.-China dialogue was first staged, the emphasis was on economy and trade. It has since morphed into a sprawling discussion of bilateral and strategic issues that some have criticized as making the dialogue too large and unwieldy. Officials will grapple with a wide variety of topics, among them Iran's nuclear program, the civil war in Syria and human rights in China itself.

Washington's old bug-bear in its relations with China — the low value of China's currency and its impact on the skewed trade balance — has eased as the yuan has appreciated in value against the dollar. These days, the Obama administration is putting the most emphasis on cyber theft of intellectual property and trade secrets, and says resolving that will be key to the future of the relationship. That was the subject of working-level talks on Monday, and on Tuesday, civilian and military officials discussed maritime security, missile defense and nuclear policy.

While stressing the cyber issue, Washington has been put on the defensive by the revelations about U.S. surveillance by NSA leaker Edward Snowden, whom the U.S. had wanted extradited from the semiautonomous Chinese territory of Hong Kong before he flew to Russia. Among Snowden's allegations was that the U.S. hacked targets in China including the nation's cellphone companies and two universities.

Cheng Li, a China expert at the Brookings Institution, said extraditing Snowden from Hong Kong would have been deeply unpopular among the Chinese public and could have triggered street protests, and U.S. policymakers likely realize it. He said he did not expect the Snowden case to weigh on this week's dialogue.

There appears little room for compromise on the thorniest security concerns that hamper U.S.-China ties, such as China's attitude toward territorial disputes in the South and East China Seas where its assertive actions have unnerved its neighbors, including U.S. allies. However, in areas such as energy security and climate change there's more hope of progress, including cooperation on reducing emissions.

On the economic front, U.S. businesses and lawmakers want the Obama administration to push China harder to reduce barriers to American trade and investment, roll back subsidies for Chinese state-owned enterprises and make progress on negotiations for a bilateral investment treaty. For its part, China is concerned about security screening of its companies as they increasingly look to invest in the U.S.

The Center for Strategic International Studies think tank said the Chinese side will have little room for maneuver as the dialogue comes ahead of a key October meeting of the ruling party's central committee where Xi's economic reform plans will be rolled out, but Beijing will likely want to show some incremental progress on Washington's trade and investment concerns, including protection of intellectual property.