China and the U.S. emerged from their face to face meetings at the Strategic and Economic Dialogue having agreed on a variety of measures and with promises of future cooperation essentially placing bandages over the wounds that had developed in the relationship over issues such as the territorial disputes in the South China Sea. Some actions this month showed signs of potentially healing the relationship such as the cooperation in concluding the Iranian nuclear deal, and at other times the bandages seemed to provide little relief such as in the realm of cyber security. A new issue has emerged as the Chinese stock market is losing value at a rapid pace and the Chinese government felt compelled to step in to stop the bleeding. Continuing to treat these wounds as well as avoiding self-inflicted injury will be key as President Xi Jinping’s state visit to the U.S. approaches. The following summarizes key issue areas emphasized by the U.S. and China during July 2015.

Iranian Nuclear Deal

Other than the presidential primaries, no issue has been talked about more in the United States than the nuclear deal struck with Iran. Both the Chinese and U.S. governments stated that achieving this deal would be vital to the international nuclear non-proliferation regime, as well as national security. The agreement allows for Iran to produce power via a nuclear source but removes the Iranian government’s ability to produce material suitable for use in a nuclear weapon. The deal also allows for inspectors to be able to enter Iran in order to inspect the country’s nuclear facility with only very short notice. In return for their cooperation at the negotiating tables, the UN sanctions currently in place around Iran will be lifted, however, should the agreement be violated then the U.S. and the UN will be able to bring back the sanctions. Although the Obama administration and the Chinese government both agree that this deal is vital to regional security, not all states agree. Israel in particular is unhappy thus causing issues in U.S. domestic politics. Although the deal has caused quite a firestorm in the U.S., China has remained relatively silent and is simply urging both parties to hold up their ends of the bargain.

Japan and Escalating Regional Tension

With the 70th anniversary of the end of World War II approaching, China has escalated its criticism of Japan on several key issues including the proposed new security bill, Japan’s position on the dispute in the South China Sea, and remaining historical grievances. China’s press echoed the sentiments of the Ministry of Foreign Affairs, that the Abe administration’s attempts to pass a bill that introduce elements of collective self-defense would push Japan toward a military stance of “active attack,” which constitutes a threat to regional security. The press also criticized the Mitsubishi Corporation’s apology to U.S. POWs, calling for Mitsubishi and other firms to apologize to other victims of WWII era forced labor policies and other wartime era wrongdoing. China continued to oppose Japan’s involvement and stance on the South China Sea and East China Sea disputes, with the Ministry of Foreign Affairs calling Japan’s accusations against China “groundless.” Meanwhile, the U.S. has refrained from officially commenting on Japan’s security bill, while reaffirming the importance of the U.S.-Japan military alliance.

Feud Developing over Cyber Crime

The U.S. considers cyber security to be a top priority in its relations with China. The U.S. Office of Personnel Management, OPM, announced a personal data breach and that the hack affects 21 million Americans. Washington is not yet confident whether or not the OPM breach was backed by Chinese government, was conducted by private Chinese citizens, or even originated in China at all as the FBI continues to investigate. For its part, Chinese spokesperson Hua Chunying called the accusations made in the U.S. “groundless” and called for continuing efforts to setup a “code of conduct in cyberspace and jointly safeguard peace, security, openness and cooperation of the cyber space through enhanced dialogue and cooperation in the spirit of mutual respect.”

Managing the Stock Market Crisis

The Chinese stock market had lost 30 percent of its value by July 9, 2015, and the Chinese government decided to step in and take action to prevent further losses. The Chinese media paid special attention to justifying the government’s moves by noting that the intervention in the market was “good for the world.” The U.S. government urged the Chinese government to continue its process of moving towards a more market-oriented economy and decided to add to China’s misery by touting its victory in a WTO case that accused China of illegally high duties on imported high-tech steel.

Differing Approaches to North Korea

President Obama extended sanctions against North Korea for another year, stressing that North Korea’s nuclear development, policy, and actions are a special threat to the national security of the U.S. In addition, the U.S. pointed out human rights abuse in North Korea saying, “we continue to try to shine a light on the problem.” The U.S. also stated that the Iran nuclear deal that was recently concluded proves there is a possibility of negotiating with North Korea. On the other hand, China stated the U.S. should try to improve relations with North Korea, and this will help restore the Six-Party talks and quickly settle the North Korea nuclear problem. Also, China noted that the China-DPRK friendship “will leave an indelible mark on history” while noting the anniversary of the armistice that halted the Korean War.

Time Period: July 1 ~ July 31

1. U.S. – China Bilateral Relations: U.S. Looks Towards Upcoming State Visit by President Xi Jinping; China Warns U.S. Against Continued Exaggerations of the China Threat, Disapproves of U.S. Engagement with the Dalai Lama

2. Economic Relations: U.S. Touts Victories at the WTO, Urges China to Make Reforms to its Stock Market; China Emphasizes the Need for Government Intervention in Stock Market Crisis, Talks Up AIIB and BRICS NDB

3. Military and Security Relations: U.S. Hints at Involvement of China in OPM Hack; China Denies These Rumors Promotes Enlargement and Cooperation Achieved Through Shanghai Cooperation Organization

4. Human Rights and Humanitarian Issues: U.S. Continues to Point Out Human Rights Abuses in China Including Detained Family Members of a Reporter with U.S. Citizenship; China Insists Uyghurs Returned to China by Thailand are Illegal Immigrants

5. Climate Change and Environmental Issues: Both U.S. and China Take Measures to Curb Carbon Emissions

6. Asia-Pacific Issues: The U.S. Welcomes General Secretary of Vietnam’s Communist Party to Washington, Remains Ambiguous on Japan’s Security Bill; China Strongly Criticizes Japan’s New Security Bill, Defense White Paper, and Inadequate Apologies

7. Korean Peninsula: U.S. Renews Sanctions on North Korea, Still Waiting for North Korea to Come to the Table; China Holds Track 1.5 Dialogue with South Korea

8. Middle East and Africa: U.S. Focuses on Selling Iranian Nuclear Deal to Domestic Audience and Allies; China Applauds Iranian Nuclear Deal and Urges Western Powers to Hold Up Their End of the Bargain

9. Sovereignty and Territorial Disputes: U.S. Continues to the Easing of Tensions in the South China Sea; China Refuses Filipino Calls for Arbitration over South China Sea Dispute and Ignores Japanese Demands that it Halt Oil Exploration Efforts