The common perception on Capitol Hill is that China is not doing its part to support the international community's drive to halt Iran's emerging nuclear program. Not so, two senior administration officials said on Wednesday, as they praised China's action on Iran in a conference call with reporters on President Hu Jintao's visit to Washington.

The Chinese have stopped new investments in Iran's energy sector, improved their controls over weapons technology exports to Iran, and Chinese state-owned corporations are not backfilling business opportunities left open by other countries that are leaving Iran, the senior administration officials said. The officials also explained that the Iran issue has been at the top of the agenda on the U.S.-China relationship and that's partly why Beijing's behavior on Iran has improved.

"In all the meetings between the president and President Hu and our high-level interactions, there was no issue that occupied as much time and attention as Iran. It was absolutely at the top of the agenda in pretty much every meeting," one of the senior administration officials said, explaining that recent Chinese action vis-à-vis Iran "demonstrates positive results of that focus."

One of the top concerns in Congress right now about the U.S.-China relationship is that Beijing is not enforcing international arms sanctions against Iran and that Chinese companies have not stopped doing business with Iran's energy sector. Last week, two leading senators wrote to President Barack Obama warning that if the administration doesn't enforce U.S. sanctions law on Chinese companies, Congress will act.

"In fact, in the last seven months since the passage of the resolution I'm not aware of any new Chinese investments in the energy sector," another senior administration official said, apparently not counting ongoing deals between China and Iran to develop gas fields as "new". "That's an important development and it's an important signal to Iran."

"You do not see the kind of backfilling that might undercut the sanctions regime," the first official said.

Regarding exports of missile technology to Iran, one of the officials said that China "essentially adhere[s] to the guidelines of the Missile Technology Control Regime," which is meant to stop sensitive weapons transfers, despite the fact that China is not a member of that regime.

"China has done a great deal to improve its export control regime in order to try to block such exports," the official said. "There are gaps in China's enforcement. China's enforcement is still problematic... We don't see that as willful action by the Chinese government but as gaps in their system, which we urge them to correct."

In October, the Washington Post reported that U.S. officials had given the Chinese government a list of Chinese companies believed to be breaking international sanctions on arms transfers, including by giving them technology to help their missile and nuclear programs.

Both officials also touted Chinese support for U.N. Security Council resolution 1929, which one official described as "much stronger sanctions than anyone anticipated would pass, or that China would sign on to."

The senators don't agree that the Chinese government is willingly moving to end those abuses and in their letter, they cited numerous reports that China is supplying crucial materials to aid Iran's nuclear and missile programs and alleged that Beijing continues to give monetary and material support to Iran's energy sector, including the delivery of refined petroleum products, which does not violate U.N. sanctions but could provoke penalties under U.S. laws passed by Congress, including the Comprehensive Iran Sanctions Accountability and Divestment Act that Obama signed into law in July, 2010.

The senators specifically named the state-owned China National Petroleum Corporation (CNPC) and the China Petroleum and Chemical Corporation (SINOPEC) as firms that could be subject to U.S. penalties.

"We urge you to warn President Hu that the U.S. will be forced to sanction these companies if they do not quickly suspend their ties with Iran," the senators wrote.

Last October, the Government Accountability Office (GAO) released a new report that identified 16 companies as having sold petroleum products to Iran between Jan. 1, 2009, and June 30, 2010. Of those 16, the GAO reported that five have shown no signs of curtailing business with Iran. Three of those companies are based in China, one in Singapore, and one in the UAE.

But the joint statement issued on Wednesday by Obama and Hu made no mention of the U.S. sanctions law that could result in congressionally imposed penalties on Chinese companies. Here's the totality of what it said on Iran:

On the Iranian nuclear issue, the United States and China reiterated their commitment to seeking a comprehensive and long-term solution that would restore international confidence in the exclusively peaceful nature of Iran's nuclear program.  Both sides agreed that Iran has the right to peaceful uses of nuclear energy under the Non-Proliferation Treaty and that Iran should fulfill its due international obligations under that treaty.  Both sides called for full implementation of all relevant UN Security Council Resolutions. The United States and China welcomed and will actively participate in the P5+1 process with Iran, and stressed the importance of all parties - including Iran - committing to a constructive dialogue process.  

UPDATE: A senior GOP Senate aide responds to the administration officials' comments with considerable skepticism:

"These senior Administration officials continue to obfuscate and misdirect. Chinese entities are clearly in violation of the Iran, North Korea, and Syria Nonproliferation Act (INKSNA) and the Comprehensive Iran Sanction, Accountability, and Divestment Act of 2010 (CISADA)," the aide said. "If the administration doesn't act soon, it faces the loss of its waiver authority and investigatory discretion on these matters."

Vice President Joseph Biden announced that he will travel to China this year, potentially setting up a corresponding visit to Washington by Chinese Vice President Xi Jinping, who is expected to succeed President Hu Jintao as China's leader in 2012.

"Please tell them I accept," Biden said regarding Xi's invite to Hu at the lunch he hosted on Wednesday with Secretary of State Hillary Clinton at the State Department. Biden then praised the U.S.-China relationship "as important as any in the world," and raised a glass. "I'd like to raise a toast to many more generations of friendship and peace."

Hu expressed "sincere appreciation" for Biden's remarks and toasted to the health of Biden, Dr. Jill Biden, Clinton, "and to the friendship of our two peoples." They then sat down with an assembled crowd of political figures and celebrities to a meal of roasted butternut squash soup, timbale of pear and sunchoke, sage toasts, fillet of Alaskan cod, horseradish dijon crème fraiche, lemon-scented rice, winter vegetable medley, gilded chocolate and plum delight, and balsamic ice cream.

Over 260 politicians, lawmakers, business leaders, musicians, and foreign policy wonks attended the lunch in the State Department's Benjamin Franklin Room. At the head table were Biden, Hu, Henry Kissinger, Barbra Streisand, Johnson & Johnson CEO William Weldon, Sen. John Kerry, Yale's Nancy Yao Maasbach, Vera Wang, Chinese Foreign Minister Yang Jiechi, Clinton, Chinese State Councilor Dai Bingguo, UPS CEO Scott Davis, Rockefeller Foundation President Judith Rodin, Sen. Richard Lugar, Yo-Yo Ma, Dr. Jill Biden and Chinese Vice Premier Wang Qishan.

Also spotted in the crowd by the press pooler was Defense Secretary Robert Gates, Homeland Security Secretary Janet Napolitano, Attorney General Eric Holder, Commerce Secretary Gary Locke, Energy Secretary Steven Chu, Agriculture Secretary Tom Vilsack, Colin Powell, Madeleine Albright, NBC's Ann Curry, James Brolin, figure skater Michelle Kwan, Terry McAuliffe, Quincy Jones, Kal Penn, Valerie Jarrett, Susan Sher, Tina Tchen, and Courtney O'Donnell.

After dessert, cellists Yo-Yo Ma and Joshua Roman performed three pieces: Dona Nobis Pacem (Traditional), Summer in the High Grassland (Zhao Jiping) and Allegro Prestissimo from Sonata No. 10 in G Major (Jean-Baptiste Barriere).

State Department officials ensured that the room was well-decorated for the lunch. The tables were covered with silk linens adorned with fabric plum blossoms and plums and featured a flower arrangement with green hydrangea, lavender sweet pea and peonies, a traditional Chinese floral symbol. Each menu card was cut in an intricate Chinese-style design, again featuring the plum and plum blossom.

"The design and décor of the Department of State luncheon celebrates the season of winter by incorporating traditional Chinese symbols with American culture," the State Department said in a statement.

After the dinner, the Bidens, Hu, Clinton, and Vilsack left to view a model of the Chinese traditional garden that will be built on 12 acres at Washington's National Arboretum.

Just as President Obama and Chinese President Hu Jintao were trumpeting the strength and importance of the U.S.-China relationship on the White House's South Lawn, a bipartisan group of lawmakers were harshly criticizing the Chinese government from the other end of Pennsylvania Avenue.

"As China's newest emperor has just landed in Washington and is at the front lawn of the White House, the pressing issues which separate our countries need to be urgently addressed," Rep. Ileana Ros-Lehtinen (R-FL), the new head of the House Foreign Affairs Committee, said at the beginning of Wednesday's hearing on China. "When the Cold War ended over two decades ago, many in the West assumed that the threat from communism had been buried with the rubble of the Berlin Wall. However, while America slept, an authoritarian China was on the rise."

She said China is led by "cynical leaders" who have rejected political reform, allowed sanctions- busting weapons transfers to Iran, unfairly claimed ownership of international waters, suppressed human rights for its ethnic minority citizens, and jailed Nobel Peace Prize laureate Liu Xiaobo and his wife.

Former committee chairman Howard Berman (D-CA) took a somewhat more balanced tone, calling China "neither an ally nor an enemy," but also focused his opening remarks on China's failure to adhere to sanctions against Iran, its refusal to pressure North Korea to halt its nuclear program, and its lack of respect for human rights.

"There is ample evidence that Chinese entities continue to invest in Iran's energy sector. This helps Tehran avoid the full impact of sanctions and facilitates Iran's continued development of a nuclear weapons capability which threatens the U.S., our allies in the Middle East and China, which is dependent on stable sources of oil from the Middle East," Berman said. "We must intensify our efforts to ensure China's full participation in the multilateral sanctions regime against Iran."

On Tuesday, Berman joined Sens. Joe Lieberman (I-CT) and Mark Kirk (R-IL) to call on Chinese companies to halt their business with Iran's energy sector lest they be penalized under the recently-passed U.S. sanctions legislation signed into law by Obama last July.

The witnesses at the hearing were Larry Wortzel, commissioner on the U.S.-China Economic and Security Review Commission, Gordon Chang, a columnist at Forbes.com, Yang Jianli, the founder and president of the pro-democracy committee Initiatives for China who was previously imprisoned by the Chinese regime, and Robert Sutter, a professor of Asian studies at Georgetown University's School of Foreign Service.

Each witness was prepared to criticize a different aspect of Chinese behavior. Wortzel focused on the Chinese People's Liberation Army (PLA) and called for the U.S. to sell advance fighter planes to Taiwan.

"China's national interests are global and the PLA is becoming a force capable of acting beyond China's periphery. A more capable military accompanies a more assertive Chinese foreign policy. This can be seen in China's recent provocative activities concerning its disputed territorial claims in the south and east China seas and in its exclusive economic zone," he said.

Chang argued that China's trade surplus vis-à-vis the United States and its massive holdings of U.S. debt do not represent a strategic advantage for Beijing.

"China's trade dependence on us gives us enormous leverage because China's not a free trader. China has accumulated its surpluses because of real clear violations of its obligations under the World Trade Organization," he explained.

Yang covered China's human rights violations, including its jailing of Liu and its persecution of ethnic Uighurs and Tibetans.

"In addition to the official prison system, it is practically public knowledge that in China there exist hundreds of black jails established and run by local governments of various levels. These prisons take in numerous innocent petitioners arbitrarily," Yang alleged.

Rep. Dana Rohrabacher (R-CA), the chairman-designate of the House Foreign Affairs subcommittee on oversight and investigations, concluded the proceedings with some ole' fashioned China bashing, calling Hu a murderer of children.

"This is wrong. We should not be granting monstrous regimes that are engaged with massive human rights abuses -- and in this case the world's worst human rights abuser is being welcomed to our White House with respect," Rohrabacher said.

"The people of China are America's greatest allies -- the people of China who want democracy, the people of China who want to respect human rights, and are looking forward to a more humane system at peace with the world. Those are our allies. What do we do to them when we welcome their oppressor, their murderer, the one who's murdering their children here to the United States with such respect?"

As Chinese President Hu Jintao arrives in Washington, The Cable has learned that one of the Obama administration's top Asia hands is on his way out. Retired Marine Corps Gen. Wallace "Chip" Gregson will resign as the Pentagon's top Asia official in April, becoming the first top Obama Asia appointee to be confirmed to depart in 2011.

Gregson has been serving since May 2009 as the assistant secretary of defense for Asian and Pacific security affairs, part of the Office of the Undersecretary of Defense for Policy, run by Michele Flournoy. Gregson told his staff last week that he will leave the Pentagon on or about April 1. His departure will begin the game of musical chairs coming to President Obama's Asia policy team.

Following a reorganization of the Pentagon's policy shop in 2009, Gregson's office was given a portfolio that includes China, Japan, North and South Korea, India, Afghanistan, and Pakistan. Gregson, who focused mostly on the Northeast Asia parts of that portfolio was known as a knowledgeable and competent official who nonetheless played a more subdued role in diplomacy than his State Department counterpart, Assistant Secretary of State Kurt Campbell.

"After Barack Obama's election in November 2008, Secretary of Defense Robert Gates reportedly gave the Pentagon's transition team one bit of advice: 'Send adults, please.'  Chip Gregson was one of those adults, if by that we mean balanced, serious, professionalism," said Patrick Cronin, senior director of the Asia Pacific Security Program and the Center for a New American Security. "He also had a long-term strategic vision for how to protect U.S. interests in the Asia-Pacific region, and his successors will be working on some of his ideas for years to come."

Privately, administration sources told The Cable that Gregson ultimately could not keep could not keep pace with the ambitious political agenda set by the State Department, which is seen as the locus of administration power in much of Asia. He is said by these sources to have fallen somewhat out of favor with Flournoy and she is rumored to be behind the drive to replace him with someone who could be more effective.

"Chip is an awfully good guy in a rough and tumble political world," one insider source said.

Gregson's office did not immediate respond to a request for information on what he will do next, and there's no word on who his possible replacement might be. Gregson's principal deputy is Derek Mitchell and his other deputies are Michael Schiffer, Robert Scher, and David Sedney, any of whom could be viable candidates for the job.

The leaders of the Senate Taiwan Caucus, a bipartisan group of senators in favor of strong U.S. support for the island's security needs, are preparing to send a letter to President Obama urging him to make clear to Chinese President Hu Jintao during next week's summit that the United States will continue to sell weapons to Taipei, despite Beijing's complaints.

The issue of U.S. arms sales to Taiwan, which led Beijing to cut off U.S.-China military-to-military ties in February 2010, is sure to come up next week due to reports that another U.S. weapons package to Taiwan may be in the works.

"As you prepare for the arrival of President Hu Jintao of the People's Republic of China (PRC), we urge you to remain mindful of the vital security interests of Taiwan. Taiwan is a strong democracy, a close trading partner, and an historic ally of the United States," reads the letter, led by caucus co-chairs Robert Menendez (D-NJ) and James Inhofe (R-OK).

"As faithful friends of Taiwan in the U.S. Senate, we ask that during President Hu's visit, you emphasize that the United States' position on Taiwan remains clear: the United States will support Taiwan's security, and continue to provide Taiwan with defensive arms."

A note circulated to Senate offices on Thursday said that the goal is to get all 100 senators to sign the letter. Hu has a meeting with congressional leaders in both parties scheduled for Jan. 20.

In Congress, caucuses are often loose groups of members who have decided they generally want to appear active on an issue they agree is important. The Congressional Taiwan Caucus was established in 2002 and has 141 members. The Senate Taiwan Caucus began in 2003 and has 24 members. The Senate group's most recent press release was put out in 2004.

But although the Taiwan caucus has been silent for years, it isn't missing the opportunity of Hu's final visit to Washington before stepping down as China's leader to signal congressional support for Taiwan. Menendez is the third-ranking Democrat on the Senate Foreign Relations Committee and Inhofe is the second-ranking Republican on the Senate Armed Services Committee.

"The PRC has engaged in a large scale military build-up over the past few years and has not abandoned the threat of force, with an estimated 1,000 active missiles pointed directly at Taiwan," the letter stated. "For these reasons, it is of utmost importance that President Hu understands the United States' unwavering commitment to providing Taiwan with the tools necessary for its self-defense."

Next week, Chinese President Hu Jintao will come to Washington for what will likely be his last official visit to the United States before handing over the reins of the Chinese Communist Party to his handpicked successor, Xi Jinping. The trip represents an effort by both sides to project a healthy U.S.-China relationship and to allow Hu to polish up his legacy.

The Hu-Obama summit, to be held on Jan. 19 at the White House, culminates months of preparatory work by a host of senior officials from throughout the U.S. government. Recognizing that U.S.-China relations have been increasingly strained since China cut off military-to-military ties last February, both sides are seeking a visit that highlights what's positive in the relationship and sets the stage for a warming of ties in the summit's wake.

The preparations began in earnest last September, when then Deputy National Security Advisor Tom Donilon and then National Economic Council Chairman Larry Summers traveled to Beijing. U.S. defense officials met with their Chinese counterparts in December for "defense consultative talks," a precursor to the resumption of military-to-military ties. In late December, Deputy Secretary of State Jim Steinberg and NSC Senior Director for Asia Jeffrey Bader traveled to Beijing as well.

Defense Secretary Robert Gates just returned from China, where he formally resumed high-level interactions with the Chinese People's Liberation Army, although his visit was overshadowed by the PLA's decision to test-fly its new stealth fighter plane. Assistant Secretary of State Kurt Campbell is on his way back from Beijing now, where he was working on the joint statement to be issued by Hu and Obama after their meeting.

"I think most administration officials would acknowledge that 2010 was a bit of a disappointment in U.S.-China relations… And we go into this summit now with both sides eager to add a little more stability to the relationship," said Michael J. Green, NSC senior director for Asia during the Bush administration. "And ultimately, the summit is not going to be able to fix the structural problem in U.S.-China relations and in Chinese politics, and particularly, the fact that Hu Jintao is essentially a lame duck."

The visit is designed to enable Hu to show that he has been a good and responsible steward of the U.S.-China relationship, said Bonnie Glaser, senior fellow at the Center for Strategic and International Studies (CSIS).

On the 19th, Hu will be welcomed with a ceremony on the South Lawn of the White House before sitting down for lunch with Vice President Joseph Biden. That evening, he will be honored with a full state dinner. The following day Hu will meet with congressional leaders from both parties and then give a speech to a group of think tank and nongovernmental organization representatives before heading off to Chicago.

In Chicago, Hu will make a speech on economic policy, visit an auto-parts factory where there is Chinese investment, and visit a school that teaches Chinese.

"The Chinese are looking mostly for symbols, optics, face, in the Chinese context. The protocol is very, very important to the Chinese," Glaser said. "They did not get a state visit for Hu Jintao in 2006. They got sort of a mixed visit. He got the White House lawn ceremony, but he did not get the state dinner. Instead, he had a lunch. This time, China is getting, I think, everything that it wants in terms of the symbols of a visit."

There's no final decision yet on what the joint statement will say. The White House will be looking to avoid problematic language, such as the line promising cooperation in South Asia in the last U.S.-China communiqué, which ruffled feathers in New Delhi.

"The November 2009 joint statement was, as Deng Xiaoping said about Mao, was 70 percent good, 30 percent bad," Green explained. "It had a lot of good stuff in it, but the language about India, the language about core interests, didn't succeed in reassuring the Chinese public or building a kind of understanding about continued military-to-military relations and the other things the White House wanted. And on the other hand, it provoked a lot of controversy."

Hu is also bringing four Chinese CEOs in tow, including the head of computer giant Lenovo, the head of a major auto-parts company, and the head of the Chinese Investment Corporation. But don't expect major news on the issues of the U.S.-China trade deficit or on China's currency, which the United States claims is undervalued, analysts say.

"President Hu, I know, will try to showcase the beginning of what everybody outside the Beltway hopes is a wave of Chinese investment into this country, and I think there are some suggestions that there may be hope in that direction," said Charles Freeman Jr. of CSIS. "But I'm not sure that some of the messaging there is going to be effective enough to overcome a lot of the negativity surrounding currency and some of the market access questions."

The White House also wants to restart dialogue with China on human rights and the rule of law, but those efforts are complicated by China's recent clampdown.

"They're not sure they have it, and in any case, Liu Xiaobo and numerous other prominent dissidents are obviously in jail," said Green. "And this is the first time an American president has had -- I think -- has had a state visit with a head of state who is imprisoning a Nobel Peace Prize laureate."

Still, any disagreement on human rights is unlikely to derail the summit. "The goal is to have the U.S. and China narrow the bandwidth of disagreement … to put the relationship in a place where we can actually work on these issues," said Douglas Paal of the Carnegie Endowment for International Peace.

And what about the flight of the J-20, which according to some reports came as a surprise to Hu when Gates raised it with him? Does this mean the PLA has gone rogue, as suggested this week by Time's Fareed Zakaria?

"It's quite possible that Hu Jintao did not know this flight was going to occur at this time, but the bottom line is that we don't know for sure how the civilian and military leadership interacted regarding this decision," said Carnegie's Michael Swaine, a specialist on the Chinese military.

Other China experts downplayed the reported break between Hu and the PLA as overblown.

"It's not very likely that this test could have occurred without Hu knowing about it in advance," said Zheng Wang, a Chinese scholar and senior fellow at the U.S. Institute of Peace. "He may have simply been surprised that the news of the flight test was publicized so fast that it was able to come up during Gates's meeting with him."

Defense Secretary Robert Gates will travel to China and Japan this week in what will be the most public demonstration of the resumption of the U.S.-China military to military relationship since Beijing suspended cooperation early in 2010. However, the future of military cooperation between the two world powers is far from determined.

The Gates trip follows a series of discussions between U.S. and Chinese defense officials last month on how to improve ties between the Pacific's two most important military powers. The Chinese cut off military relations in February 2010 to protest U.S. arms sales to Taiwan, but the Obama administration has held firm in its stance that military cooperation is mutually beneficial to both countries, and therefore should not be used as leverage over Washington by Beijing .

The question remains whether the People's Liberation Army (PLA) is genuinely interested in deepening its connections to the Defense Department or whether the resumption of talks is a way for Beijing to remove the issue from the agenda of the upcoming summit between President Barack Obama and Chinese President Hu Jintao later this month in Washington.

"The PLA is significantly less interested in this relationship than the political leadership of China." Gates said in June after being denied entry into China during a visit to Singapore for the IISS Shangri-La Dialogue.

Senior defense officials in Washington view the trip as a positive step but note that Gates' meetings are only the start of the effort to build better military ties with China.

"With Secretary Gates' trip, I think we can agree that the military-to-military relationship has been restored," said Deputy Assistant Secretary of Defense Michael Schiffer at a Thursday event hosted by the International Institute for Strategic Studies. "This trip represents a step forward, an important one we think."

But there are already a number of signs that the PLA is still skeptical of working with the Pentagon, even as they welcome Gates.

For example, Gates has no plans to visit any PLA facilities that haven't previously been seen by U.S. officials. Such visits are often a sign that the PLA is extending an olive branch, as they did in 2005 when they allowed Defense Secretary Donald Rumsfeld to visit the PLA's 2nd Artillery headquarters.

(UPDATE: A senior U.S. government official said that Gates will in fact visit the 2nd Artillery HQ to talk strategic issues.)

Also, in advance of the trip, the Chinese have rolled out the J20, their new advanced fighter plane, which is designed to counter (and kind of looks like) the U.S. Air Force's F-22. That's the plane that Gates fought successfully to end production of last year. Last week, U.S. Pacific Command head Adm. Robert Willard told the Japanese daily Asahi Shimbun that the PLA has also reached initial operating capability for its new "carrier killer" anti-ship cruise missile.

"Across a broad array of weapons systems, they are making progress,'' U.S. Navy Vice Adm. David Dorsett told reporters on Wednesday. While the development of the new stealth fighter was anticipated, he said that "the speed at which they are making progress . . . we underestimated.''

So how do we measure if Gates' China trip is a success? The longstanding goals of the Pentagon, in addition to increasing lines of communication, are to press China for more transparency in its military spending and strategic thinking, and to further institutionalize cooperation on maritime security, anti-piracy, and counter-proliferation efforts. But the Pentagon is being clear that it doesn't expect any major steps forward during this visit.

"This is an incremental process. All too often the military-to-military relationship falls victim to people who have very high expectations," said Schiffer. "I would much rather have us make some progress that is tangible... than to put ourselves at risk by having unrealistic expectations."

Several senior Obama administration Asia officials are set to either leave government or move to new jobs within the bureaucracy in the coming months, as the White House tries to hit the reset button on U.S.-China relations.

As part of a cautious warming of U.S.-China relations in the early days of President Barack Obama's term, his administration elected to postpone arms sales to Taiwan and a visit by the Dalai Lama in 2009. Beijing was pleased, but that evaporated when the arms sales went through in January 2010 and the visit went ahead in February 2010. That month, China responded by breaking off U.S.-China military-to-military relations.

China's aggressive stance on a range of issues, such as its claimed of sovereignty over the South China Sea, as well as Beijing's de facto defense of North Korean bad behavior, contributed to a worsening of ties. China was also seen to have worked against U.S. goals at the Copenhagen climate change summit in 2010, resisted efforts to place strong new sanctions on Iran at the U.N. Security Council, and declined to heed U.S. calls for a significant revaluation of its undervalued currency.

The Obama administration changed its stance toward China to a more competitive posture in response, codifying this policy shift during Defense Secretary Robert Gates' trip to Southeast Asia last May and Secretary of State Hillary Clinton's trip to Vietnam in August. Recognizing China's increasingly aggressive diplomatic stance, the administration decided to set clearer red lines and step up its collaboration with regional allies to address their concerns about increased Chinese influence.

The United States has also joined regional organizations, such as the East Asia Summit, which signaled increased U.S. attention to the region. It has also successfully shored up its ties with South Korea and Vietnam after lull in those relationships during the Bush administration. Relations with Japan have not gone as well, but Japanese politics have been in upheaval pretty much since Obama took office.

The two top Obama administration officials responsible for driving this policy have been NSC Senior Director for Asia Jeffrey Bader and Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell. Although Campbell is generally seen as more hawkish on China than Bader, the two close friends have worked together from day one.

But sometime after Chinese President Hu Jintao's visit to Washington this month, Bader will leave his post at the NSC, several administration insiders confirmed to The Cable. The exact date of Bader's departure is not set, and could still be weeks or months from now. Bader, who has been working on China since the 1970s (and was once an assistant to Assistant Secretary of State for Asia Richard Holbrooke), is rumored to be looking for the exit due to the understandable fatigue caused by working a job that has basically required a 24/7 commitment for almost two years.

The leading candidate to replace Bader, according to several administration sources, is the NSC's Daniel Russel, one of the directors who currently works under Bader. Russell is a Japan hand, having served as the head of State's Japan Desk after being consul general in the Japanese cities of Osaka and Kobe. Russell's selection might give Japan watchers hope that the White House would reinvigorate the stagnant U.S.-Japan relationship, but the likelihood is that China will continue to dominate the administration's Asia agenda going forward.

The other contenders for Bader's post are Derek Mitchell, principal deputy assistant secretary of defense for Asia and Pacific security affairs, Michael Schiffer, another DAS-D who works with Mitchell, and Frank Jannuzi, policy director for East Asia and Pacific Affairs at the Senate Foreign Relations Committee.

Mitchell, a top Asia hand who worked with Campbell at the Center for Strategic and International Studies, is said to be looking to move because the PDAS position he holds is more focused on management than policy. Schiffer, who spent 9 years on the staff of Sen. Dianne Feinstein (D-CA), has been intimately involved in a variety of issues related to Asia policy and would be able to move into the post seamlessly, Asia hands said. Jannuzi, who was a top Obama campaign foreign policy advisor, is close to the Biden team and could also be a good fit with the current Biden-heavy leadership at the NSC.

Meanwhile, back at State, there are other moves in the works. Campbell's principal deputy Joe Donovan is being considered for a number of different ambassadorships, including as the next envoy to South Korea. He would replace longtime foreign service officer Kathleen Stephens. If the White House decides to give that post to a political appointee (traditionally, Seoul has gone to a career diplomat), then Donovan would probably be offered the ambassadorship of Cambodia, multiple administration sources confirmed.

The White House announced last month that David Shear, another deputy in Campbell's EAP bureau, will be appointed ambassador to Vietnam. So that leaves two open DAS slots at EAP for Campbell to fill. The principal deputy must be a career bureaucrat, but the question remains whether Campbell will return to the tradition of having one political appointee as a deputy when he fills Shear's slot.

Deputy Secretary of State Jim Steinberg has been rumored to be leaving State for a long time now, but still remains at his post and is very active on Asia policy. Our sources report that Steinberg had originally told the White House he would only stay for two years, but has not yet found the right job to justify him leaving State.

Back at the Pentagon, changes are expected sooner rather than later at the Asia Pacific office run by Assistant Secretary Chip Gregson.  A shuffle in the leadership of that office would not come as a surprise to anyone, but many say that decision is on hold until there's some clarity as to when Gates will leave -- and who will replace him.

Besides Campbell, one of the only senior Obama administration Asia officials not thought to be leaving imminently is U.S. Ambassador to China Jon Huntsman. Despite some reports that he is eyeing a presidential run, administration officials said they haven't seen signs that he is planning to leave Beijing any time soon, and praised his work on U.S.-China relations. More on that tomorrow...

As the sham Nov. 7 Burmese elections near, Sen. Jim Webb (D-VA), the chair of the Senate Foreign Relations East Asia Subcommittee, is calling for the Obama administration to be more active in Burma and engage the country's military junta -- in order to prevent China from making Burma its client state.

Despite all the numerous failings of the Burmese junta and the limited results from the Obama administration's early outreach, the United States should keep on engaging the Burmese government -- even after what most expect will be severely flawed elections rife with human rights abuses, said Webb.

"We are in a situation where if we do not push some sort of constructive engagement, Burma is going to basically become a province of China," Webb said Wednesday morning at a breakfast meeting with Washington defense reporters.

"It does us no good to be out of there."

Webb, a former Navy Secretary with decades of experience in Southeast Asia, has been a thorn in the side of the State Department's Burma policy ever since the Obama team came to power. Before the State Department issued its new Burma policy, Webb was already at odds with Assistant Secretary of State Kurt Campbell about how strongly to engage the military dictatorship ahead of the upcoming elections.

Webb supported the administration's new Burma policy, which purported to mix engagement with pressure on the Junta to hold free and fair elections. But now, with Campbell admitting that the November elections will not be free or fair and with no real progress made on the engagement front, Webb is calling for a new push.

"The administration adopted a policy of smarter engagement with Burma…  [but] I don't think the administration took advantage of the opportunities presented to it," he said.

Webb said there was a "big division" inside the State Department over whether to pursue more intensive engagement with Burma and that Secretary of State Hillary Clinton was inclined to try but ultimately yielded to pressure.

When asked how the U.S. could increase engagement with a regime behaving so badly, Webb criticized what he sees as a double standard in the administration's approach toward human rights -- and pointed to Beijing.

"When was the last time China had an election? How many political prisoners are there in China? Does anybody know? What's the consistency here?"

Webb visited Burma in 2009 and is the highest-ranking U.S. official to meet with Gen. Than Shwe, Burma's leader. But Webb cancelled a planned 2010 trip at the last minute due to rumors that revelations about Burma's nuclear ambitions were about to come to light.

After the elections, the administration should take another run at dealing with the Junta, even if they don't release Nobel Peace Prize winner Aung San Suu Kyi, he said.

"We all respect Aung San Suu Kyi and the sacrifices she has made," said Webb. "On the other hand… How does the U.S. develop a relationship that could increase the stability in the region and not allow China to have dominance in a country that has strategic importance to the region?"

Secretary of State Hillary Clinton added a new stop to her whirlwind tour of Asia that begins tomorrow, agreeing to travel to China for a meeting with State Counselor Dai Bingguo. Rather than meet in Hanoi, where both U.S. and Chinese delegations will be present for the East Asia Summit, the meeting will take place on Hainan Island -- a location fraught with political meaning for the two countries.

In April 2001, Hainan Island captured the attention of Washington when a U.S. Navy EP-3 surveillance plane collided with a Chinese fighter jet and crash landed there. The Chinese detained the 24 crew members for 11 days until the Bush administration delivered what became known as the "Letter of the two sorries." Your humble Cable guy was an intern at the House International Relations Committee at the time and remembers well the tension and angst in Washington regarding the Chinese government's behavior during the incident, which constituted President George W. Bush's first real foreign policy crisis.

Fast forward to this week, when Clinton will land on the island (hopefully safely) at Chinese behest, during a less panicked but arguably more complicated juncture in the U.S.-China relationship. Assistant Secretary of State Kurt Campbell told reporters Tuesday that the meeting is part of the effort to increase high-level interactions at the top of the U.S.-China relationship, though he downplayed the significance of the location.

"I think State Counselor Dai had contemplated a trip to Vietnam, and then for a variety of scheduling purposes, the Chinese side thought it would make more sense for a quick visit to Hainan," he said. "I think it's nothing out of the ordinary. It's in many respects just a convenience for Chinese friends in particular."

But he also acknowledged that there is a lot of work to do on both sides to bring the U.S.-China relationship back to a point where President Barack Obama and Chinese President Hu Jintao can have a successful meeting in Washington early next year.

"We are seriously engaged in high-level diplomacy to ensure that this trip and the preparations in advance for it go smoothly," Campbell said.

The location of high-level meetings is not insignificant. Defense Secretary Robert Gates met with his Chinese counterpart this month on neutral ground in Hanoi after months of cool military to military relations, which began after the Chinese rejected Gates' offer to visit China. Hanoi is also the location where Clinton laid out the administration's view on the South China Sea dispute in a speech that shocked and upset the Chinese government.

Meanwhile, a lot of reporting in Washington this week has suggested that the Obama administration's new strategy is to build up alliances in Asia while "stiffening its approach toward Beijing." Administration officials tell us that this "stiffening" started as early as last May after the Gates snub and alliance-building has been taking place since the beginning of the administration. But only just now is it showing dividends in public, as was seen during Clinton's last visit to Hanoi, where several other nations stood up to support her remarks.

Campbell explains the balance of the two efforts this way:

"The United States wants very much a strong, productive relationship with China. We're seeking to intensify our dialogue on a range of issues," he said. "We're also working closely with a number of states in the Asian-Pacific region, most prominently to underscore the U.S. strong commitment to remain an active, engaged, diplomatic, political, security and economic player in the Asian-Pacific region going forward at this time."

Campbell also dismissed a Washington Times report that said the administration's China team is divided into two groups: the "kowtow group" that seeks to placate Beijing and the "sad and disappointed" group that is arguing for a tougher tone.

"I think that the discussion of this kind of division is wrong, is incorrect. And myself as a person, I think of myself as quite optimistic, generally," Campbell said.

President Barack Obama may have sent a letter to House Speaker Nancy Pelosi notifying her that the White House was waiving a section of sanctions law related to the "temporary export" of C-130 transport aircraft to China -- but that doesn't mean the United States plans on selling or allowing the sale of the planes to the Chinese military.

The waiver relates to a specific section of the 1990-1991 Foreign Relations Authorization Act, a bill that includes multiple restrictions on arms sales to China that were imposed after the massacre of democracy protesters at Tiananmen Square. Two administration officials said that, in substance, the waiver is extremely limited and doesn't reflect a change in policy: It only allows C-130 planes to land, refuel, and take off in China for oil spill cleanup operations in China or in parts of Asia that requires transiting China.

"The president's waiver allows for the temporary export to China of C-130 aircraft only for the purposes of refueling and/or resupplying with oil spill chemical dispersants in China as necessary for oil spill response operations in the Southeast Asia region," said National Security Council spokesman Mike Hammer. "No C-130 has gone to China or is being sold to China; this is just a waiver for a contingency plan."

Administration officials told The Cable that the State Department will still need to review and issue licenses for any C-130s that travel to China, and that this waiver was granted at the behest of allied countries.

"A European company that has C-130s wanted to be able to use them in a disaster response in that region and needed the waiver just in case they needed to land in China," a senior administration official told The Cable.

That explanation didn't stop the Washington Times from running an article Monday calling the waiver a "loosening" of sanctions against China and suggesting the move is a carrot to Beijing meant to soften Obama's call for release of Nobel Peace Prize winner Liu Xiabao.

"There was no connection whatsoever" to the Nobel Peace Prize announcement, the senior administration official said.

The Washington Times also quotes experts warning that the waiver signals a move toward further weakening of the arms embargo against China. Inside the administration, the article caused a lot of frustration, as the paper seemed to be taking China's official response to the White House letter at face value.

China Daily, a government controlled media organ, published an article entitled, "US may lift Chinese arms embargo," which also incorrectly characterized last week's announcement as a move toward selling C-130s to Beijing.

Regardless, the furor over the waiver illustrates the rising concern among conservatives about what all sides recognize as an increasingly aggressive posture by China's People's Liberation Army.

Among those sharing that concern is Defense Secretary Robert Gates, who met with his Chinese counterpart Defense Minister Liang Guanglie Tuesday in Hanoi. Gates accepted China's invitation to visit early next year, signifying the resumption of U.S.-China military-to-military ties, which Beijing unilaterally cut off earlier this year.

Secretary of State Hillary Clinton's trip to Southeast Asia last month cemented what officials and experts are recognizing as a more assertive U.S. approach to the region in the face of increased Chinese aggressiveness.

At the ASEAN regional forum in Vietnam, Clinton shocked the Chinese by announcing that the United States intends to play a prominent role in a new regional effort to create a framework for resolving territorial disputes in the waters near East and Southeast Asia. The announcement followed months of diplomatic legwork behind the scenes and provoked an angry reaction from the Chinese government and state media.

"The United States supports a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion," Clinton said in Hanoi July 23, not naming China specifically. "We oppose the use or threat of force by any claimant."

In a response posted to the Chinese Foreign Ministry's website, Foreign Minister Yang Jiechi expressed surprise and described Clinton's comments as "in effect an attack on China," arguing that any territorial disputes in the region should be handled bilaterally, without U.S. involvement.

The Chinese government has been conducting its own backroom diplomatic effort with ASEAN countries, primarily related to disputes over the Spratly Islands in the South China Sea, a complex archipelago of hundreds of minor islands and coral reefs that are claimed by various regional powers.

"What will be the consequences if this issue is turned into an international or multilateral one?," Yang said. "It will only make matters worse and the resolution more difficult."

The Chinese state media was apparently more blunt.

"People's Daily, the ‘voice' of the Party, today charged the US has ‘not thought through in a calm manner' the issue of ‘how to co-exist with a rapidly developing China,'" Chris Nelson wrote in the Washington insider newsletter The Nelson Report on July 27. "Saying that if the US can't ‘control its impulses', People's Daily manages to sound like China's favorite client, North Korea, warning China ‘will not flinch' if the US keeps acting up."

If the Chinese were surprised, they were among the only ones. In the weeks leading up to the conference, U.S. officials worked hard to lay the groundwork for Clinton's announcement. Under Secretary Bill Burns was dispatched to four ASEAN countries while Assistant Secretary Kurt Campbell and NSC Senior Director Jeffrey Bader worked the phones to call the others.

While the Obama team was conducting its quiet diplomacy, the Chinese were working the ASEAN countries as well. In fact, China had secured an agreement from the ASEAN countries that the South China Sea issue would not be on the conference agenda. But during the meetings, the issue was on everybody's minds and when Clinton rose to address it, several other countries joined her in another clear rebuke to the Chinese. "This was organized and coordinated and when the Chinese realized that the American announcement was coordinated with the ASEAN partners, that caught them off guard," said Ernie Bower, director of the Southeast Asia program at the Center for Strategic and International Studies.

The showdown could usher in a new era in Asian regional dynamics. China, which has been building its naval capabilities and working to expand its diplomatic influence, especially in Southeast Asia, has been increasingly assertive due to its rising sense of self-importance and perception that the U.S. is distracted with other international priorities. But Southeast Asian countries are wary of Chinese power and are looking to the U.S. to step in and play a larger role.

"The Chinese set themselves back years by the way they overreacted" following the conference, said Bower. "They fulfilled every bit of Southeast Asia's fears that these guys are showing us a nice face but behind it they have other objectives."

The conference appears to represent a turning point in the Obama administration's approach to China. After a year and a half of largely avoiding confrontation but getting little increased cooperation from Beijing in return, the administration is setting firm boundaries with China on key issues.

"The Obama administration started out thinking they could have this partnership with China so they treaded lightly. But their new approach is, ‘We're going to have to show them some determination and show them that we are going to follow through,'" Bower said.

An administration official close to the issue said that Clinton's remarks in ASEAN were not meant to signal any change in the U.S. approach toward China, which is comprehensive and complex. But increased public discussion of international issues that involve China goes hand in hand with the renewed U.S. commitment to being present and involved in Asia going forward.

"Part of this is a reminder to China that we will be a player in the region for a long time," the official said.

The administration has noticed increased Chinese assertiveness on a range of issues. "China, in the recent period, has definitely sensed that that they have a perceived strategic opening," the official added.

Deputy Secretary of State Jim Steinberg, in a recent talk at the Nixon Center, tied Clinton's South China Sea initiative to recent uncooperative actions by the Chinese, including their cutoff of military-to-military relations with the U.S.

"We continue to stress that [military to military cooperation] is not a favor to one country or the other, but it is absolutely critical to manage this very complex process of China's own economic growth and military modernization, that a number of the issues that we have can only be satisfactorily addressed if we have direct dialogue, and that it's, frankly, counterproductive for China to see this as a benefit to be offered or withheld in relationship to other issues," he said.

Steinberg said that the recent dispute over a U.S. aircraft carrier conducing naval exercises in the Yellow Sea off China's northeast coast could have been resolved if mil-to-mil contacts were still ongoing. The U.S. tacitly acceded to China's demand to move the exercises, but the Pentagon said it will feel free to operate in the Yellow Sea in the future.

The Obama administration's overall strategy is to expand and strengthen regional mechanisms, such as the East Asia Summit, which Clinton has been invited to join. The effort is meant to counter China's penchant for dealing with smaller countries on a bilateral basis, where Beijing can exert more pressure.

"Ultimately, the Chinese leadership is going to have to look at that and say: ‘Are we better off showing more flexibility and a willingness to engage on a more multilateral basis, or just insist on our position at risk of raising questions in the minds of other countries in the region as to why it's not willing to engage multilaterally?'" said Steinberg.

The administration's increased assertiveness in Southeast Asia includes its own bilateral outreach to ASEAN member countries as well, including new military cooperation with Indonesia and discussions of civilian nuclear cooperation with Vietnam.

"They are trying to strengthen ties with various Southeast Asian countries including Indonesia and that's a very worthwhile thing to do," said Paul Wolfowitz, former ambassador to Indonesia and former deputy secretary of defense.

Wolfowitz called on Obama to follow through on his promise of an Indonesia visit, which has been postponed twice.

When the results of the international investigation into the sinking of the South Korean ship the Cheonan were released in May, the U.S. State Department was adamant that it believed North Korea was responsible -- and that the country would have to face some actual punishment for killing 46 innocent South Korea sailors.

"I think it is important to send a clear message to North Korea that provocative actions have consequences," Secretary of State Hillary Clinton said May 21 while visiting her Japanese counterpart in Tokyo.

Fast forward to today, when the United Nations released a presidential statement which not only does not specify any consequences for the Kim Jong Il regime, but doesn't even conclude that North Korea was responsible for the attack in the first place.

The statement acknowledges that the South Korean investigation, which included broad international participation, blamed North Korea, and then "takes note of the responses from other relevant parties, including from the DPRK, which has stated that it had nothing to do with the incident."

"Therefore, the Security Council condemns the attack which led to the sinking of the Cheonan," the statement reads.

The White House's spokesman on such matters, Mike Hammer, issued a statement clearly stating that the Obama administration believes North Korea was responsible and arguing that the U.N. statement "constitutes an endorsement of the findings" of the Joint Investigative Group that issued the report blaming North Korea.  

So the U.S. and the South Koreans believe North Korea was guilty but the U.N. isn't willing to go that far. But what about the next step? Will there be any follow up, any "consequences" for North Korea, as Clinton seemed to promise in May?

"I think right now we're just allowing North Korea to absorb the international community's response to its actions," State Department spokesman Mark Toner said Friday.

North Korea's representative to the U.N., Sin Son Ho, called the statement a "great diplomatic victory."

"That doesn't sound like a lot of absorption," one member of the State Department press corps shot back at Toner.

When asked what comes next, Toner said there were no plans to pursue additional measures, other than enforcing U.N. Security Council Resolution 1874, and there were no outstanding requests from South Korea for additional measures. "We'll wait and let the statement stand," he said.

So what happened between May and now? According to both South Korean and U.S. officials, the countries pushing for actual penalties were serious about it at first, as is shown in the June 4 letter from South Korea, endorsed by the U.S., which urged the Security Council to "respond in a manner appropriate to the gravity of North Korea's military provocation in order to deter recurrence of any further provocation by North Korea."

But as China, ever the defender of the Hermit Kingdom, stalled on making any definitive statements about the incident, officials in Seoul and Washington began to worry that they might not be able to get any U.N. action whatsoever.

Then, toward the end of June, Beijing became nervous about the mounting international pressure and decided to try to wrap up the U.N. discussions as quickly as possible. They calculated that it was a losing game, so moved to get a statement out quickly with a small concession as a means of getting the whole issue behind them.

"This is less than we expected from the beginning," a South Korean official told The Cable, "But it clearly says the Cheonan was sunk by an attack, cites the five-country international joint-investigation result, and condemns it as a deplorable behavior. Even though it did not clarify it was North Korea's torpedo attack, it theoretically points the finger at North Korea as being responsible."

The South Korean official pointed at Russia and China as being responsible for the weakness of the statement.

"Definitely there has been a tough negotiation, especially to persuade the PRC and Russia, and this is result," the official said, "All the other countries except [China and Russia] strongly supported putting pressure on them."

Korea experts and former officials in Washington are sympathetic to the Obama administration's compromise in terms of the statement, but strongly lament that this administration seems not to be in any rush to do anything to engage North Korea or get back to tackling the problem of its growing nuclear arsenal.

"This is a glass one third full, with an explanation to convince you that it's not two thirds empty," said former North Korea negotiator Jack Pritchard, now president of the Korea Economic Institute. The statement was meant not to identify winners, but to allow everyone to avoid being named losers, he said.

"It's not clear cut and it's unsatisfactory, but it may have been the best that we could do," Pritchard acknowledged. The problem as he sees is it that now the Obama administration is back to the status quo, which means no discernable progress on North Korea nuclear discussions, something referred to as "strategic patience."

Joel Wit, another former negotiator who is now a visiting fellow at the U.S.-Korea Institute at Johns Hopkins University, said the time is way past overdue to find some way to get back to talking with North Korea.

"The key issue here is, are we ready to turn this corner and try to return to some sort of negotiation, some sort of dialogue that tries to deal with the problems between us, or do we just continue with strategic patience?" Wit said.

Pritchard warned that because Pyongyang has backed off its promise to move towards denuclearization and the Obama administration can't accept a nuclear North Korea, the only way to move forward would be to get North Korea to change its calculus... and that can only be done with Chinese help.

"It requires at least a perception that the Chinese will abide by U.N. Security Council Resolution 1874 and that's not currently the case," said Pritchard. "Strategic patience is an attitude, not a policy."

Beijing's refusal to accept Defense Secretary Robert Gates's offer to visit China this week has exposed divisions inside the Chinese Communist Party structure and is also causing Washington to take a hard look at what's now seen as an overly optimistic view of the current state of the relationship.

U.S. officials admit privately that the the Gates snub is a bad sign, one that contradicts the impression they had coming off the U.S.-China Strategic and Economic Dialogue that saw more than 200 U.S. officials travel to China just two weeks ago. Officials said that they still hold out hope that Gates will be granted a visit soon, but their confidence about China's willingness to improve military-to-military relations is quickly eroding, and the road ahead is far from clear.

"Nearly all of the aspects of the relationship between the United States and China are moving forward in a positive direction, with the sole exception of the military-to-military relationship ... the PLA [People's Liberation Army] is significantly less interested in this relationship than the political leadership of China." Gates said Thursday in a rare open rebuke of the Chinese military. Gates made the remark en route to Singapore, where defense officials from all the Pacific countries except for China are convening for the annual Shangri-la Dialogue.

The conventional wisdom in Washington is that China is still protesting U.S. arms sales to Taiwan. But an administration official told The Cable that it's just not that simple. There is a struggle inside the Chinese Communist Party between those who want to more forcefully confront the U.S. on a range of issues, mostly within the PLA, and those who genuinely seek better ties, and the faction favoring confrontation is gaining ground.

At the May dialogue in Beijing, that dichotomy was exposed during bilateral meetings in an unusually open way. In what were otherwise constructive, albeit predictable exchanges, "The Chinese representative from the PLA ... could not have been more out of step with the meeting," a senior U.S. official told reporters during the plane ride back to Washington.

"Many on the Chinese side you could tell were going, ‘Oh my God, this is not the message we should be giving the United States and our visitors at this time," the official said. "And actually, several of us went up after, and said, ‘That was unhelpful.  That's not the direction that we want to take the mil-to-mil relationship.'"

Still, as of that point, top U.S. officials were nonetheless convinced that Gates would be granted a visit soon. Another senior U.S. official remarked at the time how remarkable it was that the Chinese seemed to have gotten over their anger about the Taiwan arms sales so quickly.

Not so fast. Here's the statement Chinese embassy spokesman Wang Baodong gave The Cable in response to queries about Beijing's refusal to receive Gates.

"Military to military ties are an important part of China-US relations. China has been attaching importance to fostering mutual trust and cooperation between the two countries in the military field, and is willing to engage with the US side for exchanges and cooperation in the principle of respect, equality, mutual trust, and reciprocity. China hopes the US side conscientiously respects China's core interests and major concerns, to create conditions for resumption and healthy advancement of their bilateral military relations."

Wang also noted that there were mil-to-mil exchanges in Beijing. The PLA's deputy chief of staff, Lt. Gen. Ma Xiaotian, met with Admiral Robert Willard, head of Pacific Command, and Wallace "Chip" Gregson, assistant secretary of defense for Asian and Pacific security affairs.

But what Wang didn't mention is that Willard and Gregson had meetings with members of the Chinese Ministry of Foreign Affairs and other parts of the Chinese government as well. That surely irked PLA representatives. The credit for those meetings goes to Secretary of State Hillary Clinton, who fought hard, over Chinese objections, to make sure the U.S. military was well represented in the dialogue, because she saw the PLA trying to cut off ties.

"The military in China would like to control those avenues of discussion," one senior U.S. official said. "But because Secretary Clinton is prominent, and is saying, ‘I'd like to do that,' the Chinese would very much like to say, ‘Actually, it's not convenient for us.' And they tried, but she insisted."

China watchers in Washington lament that the Obama administration apparently had concluded that Beijing was just blustering about the arms sales and are calling on the administration to revise its expectations about the relationship.

"We need to be firm yet restrained: firm in our commitment to befriend a Taiwan serious about improving cross-strait relations; restrained in our belief that Chinese rhetoric is often inflated and their core interests include growing cooperation with the United States," said Patrick Cronin, director of the Asia Security program at the Center for a New American Security.

Some critics wonder aloud why the U.S. is always in the position of the ardent suitor when it comes to deepening military relations with China. After all, the U.S. is still the world's pre-eminint military power and the Chinese refusal to engage is a net loss for China, they say.

"The Chinese are seeking leverage wherever they think they may find it to persuade us to curtail or stop completely U.S. arms sales to Taiwan -- and our actions surely give them the impression they have leverage by holding out on mil-mil contacts," said Randall Schriver, former deputy assistant secretary of State for East Asia.

It is almost unthinkable, however, that Beijing would succeed in persuading Washington its decades-long policy of arming Taipei. The Obama administration has made it more than clear that the U.S. will continue to support Taiwan's defense as spelled out in the Taiwan Relations Act -- especially given that the balance of power across the Taiwan Strait is tipping heavily toward the Chinese side.

"There was nothing new, surprising or noteworthy in the Obama arms sale," said Dan Blumenthal, former China desk director at the Pentagon. "The real problem is China's unrelenting build-up even during a time of nonexistent cross-strait tension."

"As the United States, Japan, and South Korea take measures to increase their combined deterrent capabilities against North Korea, a country that borders China, now would seem an opportune time for China to seek military dialogue with the United States," he said. "China needs this dialogue more than we do." 

"There are good reasons for us to exercise strategic patience and engender the feeling in China that things won't start again in a serious way until China asks for it," said Schriver.