Govt shutdown takes toll on ties with Beijing

Updated: 2013-10-17 00:36

By Chen Weihua (China Daily)

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With the partial US government shutdown entering its 16th day on Wednesday and a debt ceiling deadline due to arrive on Thursday, Republicans and Democrats continue their tug of war.

The stalemate in Washington has caused widespread concern globally and already taken its toll on China.

Some of China's most influential military thinkers and policymakers, including several generals, were due to visit the United States this week for a series of long-arranged meetings at the US Army War College, followed by private discussions at some of Washington's prominent think tanks.

But on Oct 9, the US army said it had to cancel the meetings because the funds to host the Chinese had dried up, Foreign Policy magazine reported.

"After the American democratic process provides the army with funding to conduct international activities, we look forward to rescheduling this exchange at both sides' earliest possible convenience," the army was quoted as saying.

Chinese media and Internet users have responded to the news with shock.

The headline: "US: No money to receive Chinese military delegation" appeared on numerous online sites, with some expressing bewilderment over the fact that the US military spent more than $1 trillion in Iraq and Afghanistan but had no money to receive Chinese officers.

The sudden postponement of the trip came as the military relationship between the two nations — long regarded as lagging behind other areas such as trade and culture — had been warming. Defense Minister Chang Wanquan visited the US in August, followed by a trip by Wu Shengli, commander in chief of the People's Liberation Army navy. During Wu's trip, three Chinese naval ships arrived in Hawaii for a joint search-and-rescue drill.

China has accepted an invitation from the US to take part for the first time in the Rim of the Pacific exercise — the world's largest naval drill — next year off Hawaii.

The Chinese military delegation that was to have arrived in the US this week was due to be led by Major General Yao Yunzhu of the Chinese Academy of Military Science.

Yao, 59, with a doctorate from the academy, was in the spotlight at the Shangri-La Dialogue in Singapore on June 1 when she challenged US Secretary of Defense Chuck Hagel to better explain the US military buildup across the Asia-Pacific region.

She also questioned how Hagel could assure China that this kind of increased military deployment is part of an effort to build a more positive relationship with Beijing.

While the postponement of the group's visit may not have a direct impact on bilateral military ties, the inability of NASA (the National Aeronautics and Space Administration) to correct its mistakes regarding Chinese scientists due to the government shutdown might have a lingering effect.

NASA barred several Chinese scientists from attending the Second Kepler Science Conference at its Ames Research Center in California, citing restrictions in a congressional regulation.

But after realizing the regulation was interpreted improperly, NASA officials said a correction was impossible, since approval had to be entered into a computer system at NASA headquarters in Washington, where most employees were then on furlough.

Scientists from China, the US and Europe have expressed outrage at NASA and some have threatened to boycott the conference.

Compared to the above two episodes, the possible US debt default on Thursday has caused far more anxiety in China. China is the largest foreign holder of US treasury bonds. A US Treasury Department report shows that China held $1.277 trillion US treasury bonds by the end of July, followed by Japan at $1.135 trillion. Meanwhile, China’s central bank reported on Sunday that the country’s foreign currency reserve reached $3.66 trillion by the end of September, up $160 billion compared to the end of June.

Many worry that a US debt default will pose an enormous threat to the mostly US dollar denominated assets.

Zhu Guangyao, China’s deputy finance minister, and Yi Gang, deputy governor of the People’s Bank of China, the central bank, both expressed concern last week over a possible US debt default.

IMF Managing Director Christine Lagarde issued a stern warning last week at the IMF/World Bank annual meeting that failure to lift the $16.7 trillion debt limit by Oct 17 will have fiscal consequences for the US and financial consequences for not only the US, but across the globe.

On Tuesday, Fitch Ratings sounded its warning by placing the US’ “AAA” credit rating under “rating watch negative”.

Compared with Chinese and global anxiety, Americans seem to be relatively cool. A Pew Center survey released on Tuesday found that only 51 percent of the public views a rise in the nation’s debt limit as “absolutely essential” in order to avoid an economic crisis, while 36 percent think the country can go past the deadline without major problems.

But a Gallup poll released on the same day shows that the US public confidence in the nation’s economy has continued to slide, reaching its lowest point this year.

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