(NY Times)
Updated: 2007-12-15 15:49

http://www.nytimes.com/2007/12/15/world/asia/15china.html?_r=1&oref=slogin

BEIJING -- In three days of talks on economic issues this week, a half-dozen Bush administration cabinet members and their aides sat in rows of tables facing their Chinese counterparts in an ornate conference room. The talk was polite, the atmosphere convivial and the pledges of cooperation profuse.

But it was also obvious to the American side that relations with China were going through a difficult phase, with discord sometimes crowding out the areas of agreement. The Chinese frequently threatened retaliation over actions that displeased them, in the political and military spheres as well as the economic.

Despite agreeing to open markets to American exports and services, in recent months China has imposed new curbs in other areas. Though the Bush administration was pleased with Beijing's cooperation in negotiations on North Korea's nuclear program, it has remained frustrated with Chinese policies on Iran.

"The wheels in the U.S.-China relationship are wobbly right now," said Michael J. Green, a professor of international relations at Georgetown and former Asia affairs director at the National Security Council under President Bush. "They're not coming off, but they're wobbly."

The strain of the relationship is all but certain to last through the presidential campaign, with both Democratic and Republican candidates accusing the Bush administration of being soft on China.

That criticism follows a recurring pattern. In 1992, Bill Clinton, then the governor of Arkansas, accused the first President Bush of "coddling" the Chinese. As president, Mr. Clinton became less confrontational. In the 2000 election George W. Bush, then governor of Texas, belittled the administration's efforts to treat China as a "strategic partner."

After the talks this week, Treasury Secretary Henry M. Paulson Jr., who led the administration team here, said that the United States had made significant progress in getting China to open its economy despite "backsliding" in many areas.

"Sure, it's two steps forward and maybe sometimes one and a half back, but there's progress," he said in an interview Thursday before returning to Washington. He acknowledged that the Chinese might be retaliating against actions by the United States, but he said this was not unusual.

Even as the Chinese agreed to cooperate on food safety, financial services and the like, they are issuing a flood of regulations that have had the effect of blocking imports in other areas.

As for retaliations, a legal challenge by the United States at the World Trade Organization to get China to crack down on the piracy of movies, music and software is apparently what led the Chinese this month to ban imports of the latest Hollywood movies.

Similarly, although there were accords this week on food safety, criticism in Washington of Chinese food safety practices have led China to halt imports of American beef, poultry and pork.

In the security area, there were pledges of harmony in October when Defense Secretary Robert M. Gates visited Beijing, but China reacted to the subsequent sale of missiles to Taiwan by canceling permission for a Thanksgiving shore leave in Hong Kong for sailors on the American aircraft carrier Kitty Hawk.

United States officials say that the Kitty Hawk episode may have been caused by the People's Liberation Army's acting independently of the Chinese leadership, which seemed to be embarrassed by it, said a senior administration official who requested anonymity because he was not authorized to speak publicly.

"They felt that the fact that the missile sales were not brought up during the Gates visit was a slap," the senior official said.

The administration is especially furious about Iran. While the latest National Intelligence Estimate found that Iran had suspended its efforts to develop nuclear weapons in 2003, the administration maintains that Iran's continuing enrichment program -- which Iran says is for peaceful purposes -- could be used to make such weapons in the future and thus should be blocked.

Secretary of State Condoleezza Rice has in the past won Chinese support for United Nations Security Council sanctions against Iran for pursuing uranium enrichment. But her aides say China has undermined the sanctions.

European governments and banks have drastically cut back on export credits, financial transactions and energy deals in Iran in the last year. But China has filled the gap, European and American officials say. Only this week the biggest Chinese refiner, Sinopec, signed a deal to develop the Yadavaran oil field in Iran.

Mr. Paulson said he was particularly upset about reports of the Sinopec deal, saying, "It flies in the face of the spirit of the U.N. sanctions that China supported."

The senior administration official in Washington said it was important to remember that China had cooperated in several areas of vital interest, including North Korea, Sudan and Myanmar.

Crucial to the Chinese-American relationship, the official said, is the relationship between President Bush and President Hu Jintao of China.

When Mr. Bush told Mr. Hu this year that he would be attending a ceremony in Congress for the Dalai Lama, the Chinese seemed to appreciate his straightforwardness.

"There's always a concern by China that we don't want them to succeed, that we want to keep them down," the official said. "But I've watched President Bush with the Chinese. He has really built this relationship up. Despite the problems, it's a very, very workable relationship."