FILE - A Chinese Coast Guard vessel maneuvers to block a Philippine government supply ship with members of the media aboard at the disputed Second Thomas Shoal, part of the Spratly Islands, in the South China Sea.
FILE - A Chinese Coast Guard vessel maneuvers to block a Philippine government supply ship with members of the media aboard at the disputed Second Thomas Shoal, part of the Spratly Islands, in the South China Sea.

The United States and China recently concluded the 7th annual meeting of the U.S.-China Strategic & Economic Dialogue (S&ED), a year-round process in which senior officials from both countries address issues of bilateral and global concerns.

The Center for Strategic and International Studies (CSIS) on Thursday hosted the "The CSIS China Reality Check Series," a discussion with three U.S. officials involved in the process. Two Treasury officials, Robert Dohner, Deputy Assistant Secretary for Asia, and Christopher Adams, Senior Coordinator for China Affairs and the Strategic & Economic Dialogue were on hand, along with Susan Thornton, State Department U.S. Deputy Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs.

After outlining key objectives of this year's summit, which primarily focused on climate change and development, questions from audience members centered on Beijing's sagging stock markets, China's role in the South China Sea and recent allegations of china-based cyberhacking of U.S. federal agencies.

Chinese markets

Asked about the U.S. stance on China's recent markets volatility, Dohner said he couldn't discuss China's markets directly and referred to recent statements issued by U.S. Treasury Secretary Jack Lew.

Speaking Wednesday at the Brookings Institution think tank in Washington, Lew said that while China’s markets are not fully integrated in the global financial system, the recent sharp decline in Chinese stock values raises concerns about long-term growth in China.

"How do China’s policymakers respond to this and what does it mean in terms of the core condition of the economy?" Lew asked.

Lew also said Chinese officials have a “quite determined” commitment to a reform agenda, and that they have clearly set forth a plan to allow market forces to work in the economy.

"The question isn’t their commitment to the goal. The question is the pace at which they implement it and do they do it fast enough for it to be effective," he said. "I hope this is not something that slows down the pace of reform.

"So, that’s something we’ll continue to look at. We’ll monitor the situation directly. They’ve got a set of policies that they’ve outlined which, if they implement them, I think will make China’s economy much stronger in the future," Lew said.


Asked about recent congressional allegations that China-based hackers were responsible for stealing information from U.S. Office of Personnel Management (OPM), and whether there might be political backlash, Thornton reiterated the State Department position that the United States has not officially attributed the hack to Chinese actors.

"But that's not even really the issue, because there have already been a number of [cyber]-intrusions already attributed to Chinese hackers, and whether this one particular intrusion is going to be attributed to China, I don't think it's going to make that much of a difference," she said.

The Chinese government has strongly denied it is behind the cyber intrusion, and has blasted U.S. officials and media for speculating about the identity of the hackers.

South China Sea

Asked about China's stance that it has indisputable sovereignty to almost the entire 3.5-million-square-kilometer South China Sea, Thornton said the State Department is pressing China to find a diplomatic solution to the issues.

"We're asking China to engage in a diplomatic process with the other claimants," she said, citing the recently developed "code of conduct" developed by ASEAN. "We don't really have a prescription for what kind of diplomatic process it should be, but there are a number of vehicles out there to address this, and the code of conduct would be one.

"...But really, because of the Chinese behavior," she added, "they're the ones that are the proximate cause of the ratcheting up of tensions. We basically submit to them that it's basically up to them to come up with a way of ratcheting down the tensions."

China has long held that it is not disrupting freedom of navigation on the South China Sea, and has called on Washington to stay out of the matter.

Scott Kennedy, Deputy Director, Freeman Chair in China Studies, and Director, Project on Chinese Business and Political Economy at CSIS moderated.