Chinese Premier Wen Jiabao's visit marks another significant step in the marked improvement of relations between the United States and China that has taken place since cooperation between the two countries increased in the aftermath of the events of September 11th. Wen's visit follows on President George W. Bush's trip to China in February 2002, then-Chinese Vice President Hu Jintao's visit to Washington in May 2002, and a meeting between Chinese and U.S. presidents Hu and Bush during the Asia Pacific Economic Cooperation summit this past October. When President George W. Bush meets with Wen, the two will undoubtedly discuss: 1) the global war on terrorism; 2) North Korea; 3) the rising trade friction between Beijing and Washington; and 4) China's concerns with Taiwanese President Chen Shui-bian's campaign to hold a national referendum on cross-Strait issues and to pass a new constitution--moves viewed by Beijing as provocative. Although there is general agreement that, as of late, Sino-U.S. relations are the best they have been in many years, several of these issues, and the Taiwan matter in particular, could derail this positive trend.

It is unlikely that this meeting will result in any drastic changes in either country's policies. Nonetheless, it will provide a valuable opportunity for the two leaders to clarify their respective positions and hopefully bridge some of the differences that exist on the above issues. At the very least, it is hoped that Bush and Wen's discussion will establish the basis for a more personal relationship, allowing them to move forward on efforts to cooperate. This is key in the context of an increasingly interdependent and complex U.S.-China relationship.

The War Against Terror: Since both China and the United States are much in agreement on the need to combat terrorism, Bush and Wen will likely underscore their cooperation and commitment in the global war on terror. China continues to provide significant assistance to the United States in a variety of areas related to counter-terrorism.

North Korea: Regarding North Korea's continued efforts to build nuclear weapons, Wen will likely urge American flexibility so that the second round of six-party talks (involving North and South Korea, Russia, Japan, China and the United States) can proceed. At issue is China's concern that language embodied in an advanced "framework" for the talks will not include enough incentives for North Korea to discontinue its nuclear program. Beijing is also concerned that U.S. insistence on an intrusive verification procedure to ensure the termination of Pyongyang's nuclear weapons program will prevent North Korea from joining the talks. From the U.S. side, Bush will undoubtedly continue to ask China to use its leverage to bring the North to the negotiating table. While many will argue that Beijing's influence over Pyongyang is crucial to resolving the current crisis, Bush should also go into this meeting with realistic expectations of what China can accomplish. China has become increasingly frustrated with the recalcitrant North Korean regime, and its influence over its northern neighbor might well be limited.

Economic Relations: Trade pressures between the United States and China have been on a crescendo for many months. Calls by the members of the executive and legislative branches of the American government for China to revalue and float its currency began almost half a year ago. The rhetoric became particularly nasty as politicians, aiming for ways to cure the "jobless recovery," started to place the blame for American job losses in the manufacturing sector on China's artificially depressed currency. One bill, S. 1586, threatened to impose a blanket duty of 27.5% on all Chinese goods imported into the United States in retaliation for China's pegged currency. In the end, the U.S. Department of Treasury found that China was not manipulating its currency to the degree that warranted American retaliation.

However, just as one trade crisis was temporarily laid to rest, the United States announced curbs to imports of three textile products from China: dressing gowns, brassieres, and knitted fabrics. The textile provisions state that unless China introduced its own export restraints, Washington would impose quotas that would allow for only 7.5% growth over the next year on these three products, causing a row. Several days later, the United States announced provisional duties on Chinese television exports, but which would not be finalized until a ruling by the U.S. International Trade Commission, expected May 2004. Wen's visit may involve discussion on ways to reach a mutually agreeable solution on China's textile exports to the United States, but the larger, more significant issue of China's poor compliance with numerous aspects of its commitments under the World Trade Organization ought to take precedence. Bush should inform Wen that trade disputes with the United States will increase if China does not adequately address its problems with WTO compliance, particularly in the areas of intellectual property protection as well as insurance and financial services.

Taiwan: The most contentious issue to be discussed will be that of Taiwan. Tensions across the Taiwan Strait have been rising in recent months as Taiwan's presidential campaign heats up and the incumbent president, Chen Shui-bian, presses to hold island-wide referenda on constitutional and sovereignty-related issues.

Specifically, Chen is apparently trying to re-define the status of Taiwan's sovereignty through the passage of a new constitution that is enacted by referendum. Over the Thanksgiving holiday, the Legislative Yuan, Taiwan's parliament, passed a much watered-down version of referenda legislation put forth by Chen. Taking advantage of their numerical majority in the Legislative Yuan, the opposition party created a bill which makes it extremely hard for the president to call for referenda on Taiwan's constitution. Yet Chen has indicated that he might continue to press for a plebiscite on a new constitution if he is reelected. Chen also insisted that he intends to hold a "national defense" referendum concurrently with the March 20 presidential election in 2004, citing Article 17 of the bill that allows him to do so when Taiwan is faced with an external security threat. Although Chen indicated on December 5 that this referendum will not involve a question of independence, it could nonetheless establish a precedent for popular approval of sovereignty-related issues that greatly concerns both Beijing and Washington.

Wen is expected to ask Bush to use American influence in restraining Taipei. Specifically, he might press the president to publicly state that he "opposes" Taiwanese independence and the holding, by Chen, of a national referendum on sovereignty issues. To date, official Washington policy has been to declare publicly that it "does not support" Taiwanese independence, while Bush has reportedly stated that he is "opposed to" Taiwanese independence in private meetings with Chinese leaders. Also, a State Department official recently indicated that Washington would be opposed to any referendum that alters Taiwan's current status. Wen will probably want Bush to affirm these positions personally and publicly, thus giving them greater force.

The potential dangers presented by developments on Taiwan indicate that Bush should do more than simply reiterate Washington's One China policy and support for a peaceful resolution of the solution. At a minimum, he should offer a clear, unequivocal reiteration of what administration officials have previously stated, that Washington is opposed to any unilateral change in the current status quo on both sides of the Taiwan Strait. This would include the use of force by China against Taiwan, or an attempt by Taipei to change its status. While also reminding Wen that Chinese threats of military force against Taiwan are counterproductive and harmful to Beijing's international image, Bush should tell the Chinese premier that America will continue to discourage Taiwan from engaging in unnecessary destabilizing political activities.

In the end, since both leaders have an interest in making Wen's visit a success, China and the United States will likely highlight their agreements while downplaying their differences. The key objective of the Bush-Wen meeting is that it will serve as a means to lay a firmer foundation for continued cooperation between the two countries.