Beijing and Taipei made little progress in cross-Strait relations this quarter. Typhoon Morakot and other extraneous factors combined to frustrate progress but did not change the positive momentum. Preparations are underway for talks on an Economic Cooperation Framework Agreement (ECFA) and the fourth round of SEF-ARATS talks later this year. Cross-Strait trade is beginning to recover from the precipitous decline caused by the great recession and the first mainland investments in Taiwan, although small, have been approved. There were no significant developments on security issues. Progress in better relations should resume in the months ahead.
North Korea's missile tests in early July marked an apparent peak in its provocative behavior as Pyongyang shifted to a “charm offensive” strategy toward the international community from August. Pyongyang's turn toward diplomacy has shifted attention to a series of meetings between North Korea and the international community, including Kim Jong-il's talks with former U.S. President Bill Clinton and Hyundai Chairperson Hyun Jung-Eun in August, China's State Councilor Dai Bingguo in September, and finally Premier Wen Jiabao in early October. Kim Jong-il's encouraging statement regarding prospects for renewed multilateral and bilateral dialogue during Dai's visit and his further statement during Wen's visit that “the DPRK is willing to attend multilateral talks, including the Six-Party Talks, based on the progress in the DPRK-U.S. talks” has set the stage for new engagement with North Korea by the U.S. and the international community. It remains to be seen if this engagement will lead to tangible North Korean actions in the direction of denuclearization.
After months of anticipation, Prime Minister Aso Taro dissolved the Diet on July 21 and scheduled elections for the Lower House. On Aug. 30, Aso's Liberal Democratic Party suffered a crushing defeat at the hands of the Democratic Party of Japan and DPJ President Hatoyama Yukio became prime minister on Sept. 16. With Japan focused on the historic shift of power for most of the quarter, politics took primacy over diplomacy. In this environment, Japan-China relations continued to tread water, waiting for the arrival of a new government in Tokyo. Perhaps the good news is that there were no major dilemmas or disruptions and the new Japanese leadership had early opportunities to establish a relationship with their Chinese counterparts.
Perhaps more than any time in the past 10 years, the third quarter highlighted both the potential and the problems of this bilateral relationship. On the one hand, the two militaries successfully conducted their joint antiterrorism exercise, Mirnaya Missiya (Peace Mission) 2009, in China's Jilin Province. On the other hand, the closing of Moscow's huge Cherkizovsky market on June 29 uprooted tens of thousands of Chinese citizens doing business in Russia, while $2 billion in goods were confiscated as “illegal” and “contraband.” On the eve of the 60th anniversary of bilateral ties, Moscow and Beijing seemed to be stretching both the cooperative and conflictual limits of their strategic partnership.
Major developments in Sino-U.S. relations took place on the economic, military, and political fronts this quarter. The fourth U.S.-China Strategic Economic Dialogue was held in Annapolis, Maryland, June 17-18, yielding a 10-year energy and environment cooperation framework. A telephone link was installed between the U.S. Department of Defense and China's Ministry of Defense and talks were launched on nuclear policy and strategy. The U.S. and China held a round of their bilateral dialogue on human rights after a hiatus of six years and vice-foreign minister level talks on security issues were held for the first time in four years. The U.S. provided assistance to China to ensure the security of the 2008 Olympic Games in Beijing. A massive 7.9 magnitude earthquake rocked China's southwestern Sichuan Province and the U.S., along with the rest of the international community, provided aid. Secretary of State Rice visited the quake-hit area and held talks in Beijing focused on North Korea.