Military Maneuvers

With the world economy forecasted to be more and more dependent on the dynamic between the United States and China in the future, it is in nearly everyone's interests to see Sino-Japanese relations on a long-term stable footing. Recent months have seen renewed tensions between Washington and Beijing over the People's Republic's valuations of the RMB, with the US Congress currently considering a bill to allow for economic sanctions against countries that undervalue their currencies. In addition, last month, relations were soured by the publication of a Pentagon report expressing concern over China's military capabilities and intentions. Unsurprisingly considering its efforts to cultivate an image of the PRC as a responsible political player on the international stage, Beijing was quick to denounce America's findings. This led to a startling counter-accusation by some Chinese academics that the US was over-exaggerating the Chinese threat to provide an excuse for enhancing its own military and cyber technologies.

In the last few weeks, Washington will have been eyeing the deterioration of China's relations with Japan with some concern, especially as it has close links with Tokyo (it is not unknown for the Chinese to jump the gun with respect to American loyalties and support). The fallout in Asia over the Diaoyu Islands affair will impact on the worldwide economic and diplomatic scene, and much of this is yet to be seen.

The Premier & The President

Chinese Premier Wen Jiabao's presence at the United Nations in New York this week has allowed him to meet with several country's leaders individually to discuss matters of common interest. Conversely, amid rising tensions with Japan, China publicly stated its refusal to meet with the Japanese delegation, deeming it "not the time" for such interaction. Of course, Wen's principle sideline engagement was always going to be a session with President Barack Obama- an event which took place at the UN's headquarters on Thursday.

Sino-American relations are generally on a level footing at the moment, although incidents like the Pentagon's publication of its annual report on the PRC's military capabilities still have the potential to prompt displeasure from Beijing. Many observers looked ahead to the meeting with interest, as recent weeks has seen renewed concern over China's under-valuation of the Yuan- a policy that America believes is a threat to its economic health. Indeed, as the BBC has reported, the US contends that Chinese moves to keep the RMB weak is aimed at giving its exports a price advantage in the marketplace. This in turn directly impacts on American jobs.