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Economic Issues, Iran Top Washington-Beijing Agenda

Analysts say U.S.-China relations will be a key component of President Bush's policy in his second term.

U.S. administration officials and China experts agree relations between Washington and Beijing are good.

Analysts say the two issues that will dominate Chinese-American relations in President Bush's second term will be how to curtail North Korea's nuclear weapons program and Taiwan.

But David Lampton, China Scholar at the Johns Hopkins School of Advanced International Studies, says other issues come to mind.

"There have been almost for decades now, intellectual property rights, counterfeit of U.S. trademarks and intellectual property violations of all sorts," he said. "That's an ongoing problem. In the human rights area, of course, there are ongoing problems with the nature of due process in China, so those issues persist."

Analysts point to two other matters that affect relations between the two countries: China's growing alliance with Iran and economic questions.

James Lilley, former U.S. ambassador to Beijing, says economic issues have always been high on the agenda of U.S.-China talks.

"Trade is always a problem with China," he noted. "They have a very large trade surplus with us, probably too large, and I think we have to talk to them about adjusting their exchange rate and perhaps opening their market more, rather than thinking about closing ours."

For Leon Fuerth, former national security adviser to Vice President Al Gore, trade and financial imbalances between Washington and Beijing are a source of concern.

"China, along with Japan, holds most of the debt that it now takes to keep the United States running," he explained. "So there is almost a relationship of mutual vulnerability building up between these two economies on a very large scale. We're connected now at the wallet and I think that that connection will be present in everybody's mind, both in Washington and Beijing, as they look at how to manage U.S.-China relations."

Analysts say another area of concern is China's growing cooperation with Iran. David Lampton from Johns Hopkins says that relationship is also driven by economic needs.

"China is absolutely desperate, given its high growth rate, for energy," he added. "Iran has very large reserves of natural gas and oil and China has recently talked to Iran and I believe concluded an agreement in the natural gas area with Iran that's important in sustaining China's growth. That's one area. Secondly, Iran is obviously a major country in central Asia and China has 19 million Muslims itself and is very concerned to have as good relations as it can with what you may call the revolutionary Muslim countries of central Asia and the Middle East, so those countries don't have an incentive to mobilize China's 19 million Muslims in a way that would be detrimental to China's government. So it wants to have relations with Iran, positive relations to avoid trouble, and it also has this energy interest."

Former U.S. Ambassador to Beijing James Lilley says while energy issues are bringing the two countries together, there are other considerations as well.

"There is, unfortunately, a conventional military component in there, where the Chinese are selling the Iranians arms," added Mr. Lilley. "We hope they aren't weapons of mass destruction, but we're not 100 percent sure. So I think there is a force driving them together, the whole business of U.S. hegemonism in central Asia, they are both concerned about that. They are both concerned about the expansion of NATO and they want to sort of chart an independent course. We have to watch it closely, but you have to realize a couple of things: First of all, Japan buys more oil from Iran than China does. Second of all, if China buys oil from Iran, they have to ship it by sea, there are no overland pipelines. Ergo, they have to ship it through our navy; therefore, we do have leverage, if you choose to use it at some point."

Analysts say the increasing cooperation between Tehran and Beijing could also undermine Washington's efforts to put pressure on Iran to end its attempts to produce nuclear weapons. These experts say China could play a key role if the Iran nuclear issue is debated at the United Nations Security Council - as one of the five permanent Security Council members, Beijing has a veto power and could use it.