US, Japan Seek Calm With China on Island Dispute - BusinessWeek

October 30, 2010, 4:32 PM EDT By Daniel Ten Kate and Nicole Gaouette

(Adds Clinton meeting with Dai in the sixth through 10th paragraphs.)

Oct. 31 (Bloomberg) -- The U.S. and Japan sought to ease tensions with China fueled by territorial disputes in waters off its coast that have hindered talks on currency and trade policies before a Group of 20 summit next month.

Japanese Prime Minister Naoto Kan told reporters he met for 10 minutes yesterday with Chinese Premier Wen Jiabao after a spat over a disputed island chain in the East China Sea scuttled more formal talks. Secretary of State Hillary Clinton offered to host a meeting to mediate between the two sides while repeating a U.S. obligation legally to defend Japan’s claims.

“We’ve encouraged both Japan and China to seek a peaceful resolution of any disagreement,” Clinton said in a speech in Hanoi yesterday, where she attended a regional summit with Wen, Kan and 15 other Asia-Pacific leaders. “It’s in all of our interests to have stable, peaceful relations” between China and Japan, she said.

The conflict has distracted Asian leaders as they prepare to iron out a global deal on currency policy for the G-20 meeting in Seoul. Clinton “made very clear we want the temperature to go down,” a U.S. official who briefed reporters on the condition of anonymity said after Clinton met Chinese Foreign Minister Yang Jiechi. “The stakes are so high.”

Return to Talks

Hours after her remarks in Hanoi and a meeting there with Japan’s Foreign Minister Yang Jiechi, Clinton landed on China’s Hainan Island for talks with State Councilor Dai Binguo, who outranks Yang.

In the course of a two-hour meeting, Clinton touched on tensions over the island chain, North Korea and the U.S.-China relationship. She encouraged Dai to get North Korea to return to talks about dismantling its nuclear program and reviving ties with South Korea, according to a U.S. official.

Clinton also told Dai that the U.S. expects China to ensure that North Korea in no way takes provocative steps during the G- 20 that South Korea will host next month.

In her talks with Dai, Clinton stressed the U.S. desire to see tensions between Japan and China ease. The two leaders also discussed a “roadmap” for the U.S.-China relationship, including steps that will lead to the resumption of military-to- military ties and a possible visit to China by Defense Secretary Robert Gates, the official said.

Disputed Islands

While the frequency and level of U.S.-China meetings have increased, Clinton also suggested that U.S. and Chinese officials meet informally more often, a proposal Dai agreed with.

Japan ruined the atmosphere for talks between Wen and Kan by giving “untrue” media statements, the state-run Xinhua News Agency cited Chinese Assistant Foreign Minister Hu Zhengyue as saying Oct. 29. China’s foreign ministry also expressed “deep dissatisfaction” with Clinton for saying the disputed islands, known as Senkaku in Japan and Diaoyu in China, fall within the Japan-U.S. security alliance, Xinhua said in a separate report.

Yang told Clinton yesterday that the U.S. should respect China’s sovereignty and not make any “irresponsible remarks,” Xinhua reported.

A sea collision between a Chinese fishing boat and Japanese Coast Guard vessels near the disputed islands last month soured relations and reportedly prompted Beijing to cut exports of rare-earth minerals. Wen pledged a steady supply of the minerals during an Oct. 28 meeting with Kan and South Korean President Lee Myung Bak. Both Yang and Dai repeated those vows to Clinton yesterday.

National Interest

The U.S., Japan and several countries in the Association of Southeast Asian Nations continued to push China to agree to a set of rules at sea at the three days of meetings in Hanoi. Clinton said yesterday she was “encouraged” that another round of working-level talks on a sea code involving Asean and China, which have been stalled since 2002, will take place in December.

“The United States has a national interest in the freedom of navigation and unimpeded lawful commerce,” Clinton told the summit. “When disputes arise over maritime territory, we are committed to resolving them peacefully based on customary international law.”

In July, Yang said Clinton’s assertion that the U.S. had a “national interest” in the South China Sea was “virtually an attack on China.” U.S. Defense Secretary Gates said Oct. 12 that China’s actions in the seas are “clearly on everybody’s mind” and fall within the sphere of maritime security.

A Rising China

The issue came up at the East Asia Summit, a forum of 16 nations that the U.S. and Russia joined for the first time yesterday. Rocky outcrops in the South China Sea that may contain oil and gas reserves are claimed in whole or in part by China, Vietnam, the Philippines, Malaysia, Brunei and Taiwan.

“The region fears being dominated by a rising China,” said Ernest Bower, an analyst at the Center for Strategic and International Studies in Washington. “The solution? Invite the Americans to join. This gives the rest of Asia the balance they want.”

China has aimed to keep its territorial disputes with Japan, Vietnam and the Philippines off the agenda at regional meetings, preferring one-on-one negotiations.

U.S. allies in the region include Japan, South Korea, the Philippines, Thailand and Australia. Washington has boosted its naval presence in Singapore and is increasing cooperation with the Indian navy in the Pacific Ocean, Clinton said on Oct. 28.

She denied that increased military ties with Asian countries were aimed at containing China, saying the U.S. supports the country’s growth. Last night she visited China’s Hainan Island, home to a naval base with quick access to the South China Sea.

--With assistance from Bomi Lim and Giang Nguyen in Hanoi. Editors: Sylvia Wier, Mark Rohner

To contact the reporter on this story: Daniel Ten Kate in Hanoi at dtenkate@bloomberg.net Nicole Gaouette on Hainan Island, China at ngaouette@bloomberg.net

To contact the editors responsible for this story: Bill Austin at billaustin@bloomberg.net; Paul Tighe at ptioghe@bloomberg.net

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