DAVID GREENE, HOST:
The world's most nuanced relationship might be the one between the United States and China - not enemies, not exactly friends, but deeply, deeply involved. An each year, the U.S. secretaries of state and treasury meet with their Chinese counterparts for what's called the Strategic and Economic Dialogue. This year's meeting began today in Beijing. And we're joined in the studio by Bill Bishop. He's a longtime China-watcher and investor, and he writes the newsletter "Sinocism." Mr. Bishop, good morning.
BILL BISHOP: Good morning. Thanks for having me.
GREENE: Well, thanks for coming in. Help our listeners understand why these talks are important.
BISHOP: While, it's cliched but true that the U.S.-China relationship is probably the most important relationship in the world. The S&ED started 10 years ago as a mechanism to focus all the different issues in the relationship...
GREENE: That's the acronym for these talks we're talking about. OK.
BISHOP: Yes, that's the acronym for these talks. That was under Hank Paulson and the George Bush administration, and they've continued through. And this is the 10th year of them.
GREENE: And, I mean, do serious things usually come out of them? Does the relationship change in some way?
BISHOP: It's a way to add balance to the relationship and keep the various aspects of the bureaucracy talking because there are lots of contentious issues - increasing numbers of contentious issues And this is a way to focus the discussion - at least how the bureaucracies engage so that each side knows where they are and there's avenues for dialogue. In terms of what comes out substantive, harder and harder to see substantive things coming out.
GREENE: So this is largely about keeping those lines of communication going.
BISHOP: At this point, yes.
GREENE: Well, let me ask you about a few specifics here. Before these talks, Secretary of State John Kerry warned China not to declare limits on airspace over the South China Sea. What - well, this is part of a territorial - territorial dispute, right? What's happening there?
BISHOP: So this is one of the most contentious issues in the U.S.-China relationship. In the South China Sea, you have various claimants to islands. The most contentious ones are on what are called the Spratlys. And China has been reclaiming islands or reefs or rocks. And now, the next step people see are two things - one, they're going to take - potentially take one more island called Scarborough Shoals off the Philippines. And another is they would set up this zone that would require any airplanes that enter that airspace to declare who they are. So Secretary Kerry issued a statement. Secretary Of Defense Carter also basically said, if China does anything with Scarborough Scholes, that's effectively a red line. So the U.S., actually, in the last couple of weeks has raised the stakes and basically drawn a line in the sand, so to speak, to China that you better not do these things.
GREENE: Another thing to watch for - I know U.S. Treasury Secretary Jack Lew criticized China for dumping low-priced steel and aluminum into world markets. I presume this is something that could affect U.S. steel companies if global prices go down. I mean, is that something they might be able to work out?
BISHOP: Well, it already affects U.S. companies. The U.S. government actually initiated a trade action recently about steel. It's one of the top issues in the current discussions because the overcapacity in steel and other sectors really ties into the broader issue of how China is progressing economic reform. And that's something the U.S. is very focused on because if reform happens, that, theoretically, is better for both the Chinese economy and the global economy.
GREENE: Oh, so this is sort of putting pressure on the Chinese to carry on with these reforms and not take an easy route like dumping the stuff.
BISHOP: Yes. And as with the WTO a couple decades ago, there are folks inside the Chinese government who aren't necessarily against this pressure because it helps them push internally for reform.
GREENE: OK. We've been talking to Bill Bishop, who writes the newsletter "Sinocism," about the ongoing talks between the United States and China that began today in Beijing. Mr. Bishop, thanks a lot.
BISHOP: Thank you. Transcript provided by NPR, Copyright NPR.