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Cyber-security talks could help to mend strained US-China relations


​Last week saw trade relations between the US and China placed under further strain, with several senior American officials expressing concerns over perceived restrictions surrounding foreign businesses, as well as the effects of increasingly complicated regulations for foreign firms.

The recent introduction of a new law that intends to bring the operations of any non-governmental organisation under the remit of the Ministry of Public Security is set to give authorities more of a say in their finances and their work.

But if the strain placed on trade relations between the two countries was considered to have taken another turn for the worse with these latest measures, fears may have been eased one week on by the news that both countries have seemingly agreed to bridge differences in approaching the issue of cyber security.

While there may have been a perception that Beijing is doing its best to make things as hard as possible for American business and investment, officials have seemingly accepted that something needs to be done in order to address the growing problem of hackers, which have allegedly cost US companies tens of billions of dollars.

Both sides wanting change

But despite the US being the more vocal about the effects of cyber crime, concerns over the issue have been shared on both sides, which recently sat down for two-day talks in western Beijing.

At the top of those talks is the agreement forged during Chinese President Xi Jinping's visit to the White House in September, which aimed to ensure that both governments would step up their attempts to confront criminal activities.

Washington viewed the move as a huge step forward for diplomatic relations between the two countries, although there is little evidence to suggest it has led to a discernible fall in cyber hacks against US companies.

When discussing the latest talks, the U.S. ambassador to China, Max Baucus, said: "We're here today to ensure implementation of agreements made by the two presidents, commitments that illustrate that we can work through areas of differences to reach areas of cooperation."

The enthusiasm to tackle the issue is mirrored by China, with the country's minister of Public Security Guo Shengkun stressing that the country is keen to "bring the discussions from policies on paper to actual implementation."

"Both sides will continue to cooperate on cyber cases," Guo said. "I believe the leadership on both sides places emphasis on the issue and values participation. Xi Jinping has personally been involved."

According to the Daily Mail, there is an ambition to ensure that progress on the talks is made in time for the final half year of US president Barack Obama's presidency.

It marks something of a turnaround for the US, which through the US-China Economic and Security Review Commission, had previously been critical of China, adding that the American response to the threat of cyber crime had largely fallen short, even going so far as to imply that China had actually infiltrated a number of US government computer networks.

Strange relationship

Some analysts may be quick to suggest that this latest round of talks between the two nations is evidence of a strengthened relationship.

But the facts mean that the real story is a little more complicated. While this latest round of talks have undoubtedly yielded some common ground between the two nations, there is a strange sense of limbo where both nations are neither enemies nor friends.

Monthly figures suggest China is still the biggest trading partner of the US, while around four million flights help to connect the two nations every year.

Even on a military level, tensions and difficulties have been put to one side in favour of greater engagement and dialogue, while there is also an ever-increasing partnership in the bid to fight climate change.

However, when it comes to business, there is a real feeling that both countries remain strong rivals, feeding into the rhetoric of US politicians, including presidential candidate Donald Trump, who has long been critical of China's alleged negative impact on American business.

China not a closed door

The criticism surrounding China's legislation towards foreign companies has rightly or wrongly projected a perception in some quarters that China is not entirely hospitable to foreign business or investment.

However, again the picture is more complicated upon closer inspection, particularly for investors in the commodity sector, with Beijing recently pledging to take a major step forward in liberalising its commodity futures market to allow outside investment, while also aiding financial institutions looking to deal with contracts predicting prices for crude oil, iron ore and rubber.

A global futures market is seen as being crucial in helping to boost China’s supply-side reforms, allowing it to find reasonable and market-based prices.

According to the South China Morning Post Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission (CSRC) said commercial banks would subsequently be encouraged to better service high-value clients by trading in commodity futures, which are largely seen as the best way to hedge risks and allocate assets.

Mr Fang has so far declined to place a timetable on the reforms.