Audio: Two of the world’s biggest navies have faced off in the South China Sea, each accusing the other of breaking international maritime law.

The incident occurred close to the highly sensitive Chinese island of Hainan. China correspondent Tom Ingleton reports.

Audio: China’s largest fishery administration escort vessel has made its maiden voyage. China fishery administration 311 is a four to six hundred tonne ship. It left Southern China’s Hainan province on Saturday for the South China Sea.

Its mission is to enhance fishery protection and maritime surveillance efforts and enforce China’s sovereignty over the South China Sea.

Asia2025: Hi, welcome back to the program.

Well it has been another big week this week in China. The Dalai Lama of course came out and said that Tibet was hell on earth and we have a very public naval incident in the lead up to the Chinese foreign minister’s visit to America.

A regular listener will know that I have addressed the strategic importance of Tibet for both the West and China in previous programs. Its geopolitical importance does not need emphasising at this stage.

So the Dalai Lama’s comments weren’t surprising. Nor was Beijing’s unhappiness at his timing. The anniversary of the Tibet uprising has just passed.

Bigger than that, though, was a naval incident whereby the US ship Impeccable complained about being harassed by a Chinese fleet while the Chinese accused America of spying off the island of Hainan.

It is the location of a major Chinese submarine base and China vehemently accused America of spying in its waters. Just as important was the claim in the Chinese press that the very public outing of this incident was an attempt by hawks in the Pentagon to upset the Chinese on the eve of the Foreign Minister’s visit.

Both China and the US have sent out ships to the area, America claiming it is defending the Impeccable and China saying it is protecting its waters. So as we have discussed many times on this program, maritime boundaries and claims in the South China Sea are coming into play.

To talk to me today about Tibet, the spy ship incident and protectionism in the United States is Victor Gao, the Director of China’s National Association of International Studies, Executive Director of the Beijing Private Equity Association and formerly of CNOOC where he served as Senior Vice President, General Counsel and Company Secretary.

He was also between 1999 and 2000 the China policy advisor to the Hong Kong Securities and Futures Commission. He writes regularly for major newspapers and magazines in China and abroad, including a recent piece on Tibet for CNN. Of course he has worked at the UN and in the Beijing foreign service as well and most notably for me was translator for Deng Xiaoping.

Victor was recently commentator for CCTV9 during the recent National Peoples Congress and he spoke to me just as the leaders were wrapping up their political conference.

I began by asking Victor his view of the Dalai Lama’s comments that Tibet was hell on earth.

VG: Well whether something is hell or paradise is not dependent upon who says so. Facts speak louder than words so whoever who wants to see the reality in Tibet should just make a trip over there to see things for himself. So I think the Dalai Lama is entitled to his own views but whether his view really reflects reality or not, that’s a separate issue.

So this is the caution I want to give to your listeners about what the Dalai Lama’s statement means. On the other hand I think several things stand out very clearly. One is that Tibet is part of China. No country disputes that. All the international organisations recognise that. So whoever wants to challenge this fact, you know, is basically futile and it’s basically a challenge to the collective wisdom of mankind.

Having said that, you know, Tibet is very unique geographically, ecologically speaking and also the great Tibetan ethnic group has very strong and unique cultural and religious heritages. All these need to be protected and preserved by whatever means possible. So there are several different ways or different layers of how to look at the so-called Tibetan issues.

I think if someone wants to use whatever reasons, religious, cultural or social reasons, to achieve the so-called independence of Tibet, then the efforts will be futile.

But whoever wants to contribute to making lives better and improving the situations in Tibet, whether he is Chinese, whether he’s Tibetan, whether he’s a foreigner, so long as his goal is constructive then everything need to be welcomed.

So I think we need to separate oranges from apples and really see through the veil and get to the bottom of the situation.

Asia2025: Well the leaders have said that Beijing must build a Great Wall. I mean obviously Tibet is a sensitive issue, isn’t it?

VG: Well the great wall, Chinese are very good at building great walls. And they built great walls for centuries, and for thousands of years. That’s not surprising. The Great Wall is here used as a metaphor rather than, you know, of concrete terms.

The Great Wall actually I interpret it to mean that we need to defend the frontier region because Tibet is very much a frontier region. And it is strategically important because it has a very long land boundary with India, with Nepal, with several other countries.

And also the natural conditions in Tibet are very, very harsh. Average altitude in Tibet is more than 4,000 metres above sea level and there is insufficient supply of oxygen and many plants don’t grow over there because of the harsh conditions. Many animals don’t grow over there.

So I think the development of Tibet need to have its own very unique and sustainable way of development. You know, industrialisation is out of the question because you will do a lot of damage to the ecological system over there. So how to develop Tibet is a top priority and there are many people including me who have strongly advocated the preservation or the cultural and social and religious heritages in Tibet.

But that should not contradict with the attempt to improve the livelihood for the people in Tibet by building up the economic foundation for that. We need to avoid anything which is polluting, anything which is resource intensive.

We need to encourage the growth of tourism for example and other services industry which will minimise the negative impact of the environment and on the geography of that great region which is considered to be the roof on the world.

Asia2025: And now let’s go to the issue and claims and counter claims by the US and China over the naval ship Impeccable.

China says it was spying. America says they were harassed by Chinese ships.

Can you give us a perspective of how China’s viewing this event?

VG: Well let me just, you know, put a spin on this story. If a Chinese ship is spotted 60 miles off the coast of San Diego, what would the Americans do? If it is a reconnaissance ship for military purposes, actually the Americans would be mad about that kind of manoeuvres by any Chinese ship into such close proximity of a sensitive region.

Therefore I think when the Americans are mad about what the Chinese are doing, they need to think about the same thing. Confucius said the following more than 2,500 years ago: don’t do unto others what you don’t want other to do to you.

So it is the fact that the American ship was operating just off the military base in China, Sanya is the home base for the Chinese submarines, that’s for sure. So why should you be so nosey into such a close proximity where all these things are considered to be highly sensitive, need to be militarily sensitive to each other, don’t become too nosey and if you really want to achieve a level of transparency, let’s do it on a reciprocal basis.

If the Americans condemn the Chinese concern about the American ships getting too close to the Chinese military base, then think about what if the Chinese do the same to the Americans.

Asia2025: Well there are reports that it was towing an underwater listening device and I’ve talked about this sort of stuff that’s going on I guess in maritime waters today.

But it comes as the Chinese Foreign Minister is visiting America and some commentary has said well this is stirring up trouble between the two powers while the Foreign Minister is in America.

Dennis Blair yesterday said it was the worst incident since the 2001 spy plane incident.

What’s your view and do you think it will influence the visit of the foreign minister?

VG: My personal view is that for China and the United States which are so important in their own respective ways, these two countries need to be friends with each other. We cannot afford not to become friends with each other, because otherwise the whole world will have no expectation of peace and stability. Therefore, each of us need to bend backward to accommodate each other rather than, you know, being at each other’s throat. That’s not the right way to approach.

Just imagine if China and the United States are becoming hostile with each other or even worse, what will be the situation of the world? So I think I’m very confident about China and the United States being able to come up with enough wisdom and vision to handle the bilateral relations very well, even though there are hiccups.

The incident in the South China Sea is a major hiccup, but we will get over such nuisances I think eventually.

But on the other hand I think both China and the United States need to apply an equally sensitive way in dealing with each other’s sensitive information. Being too nosey is not the way to proceed.

Asia2025: Well I see that China has responded by saying that a fishery patrol ship is going to be dispatched which will look after Chinese interests in the South China Sea. So I mean this is very interesting what’s going on in the region.

Now I want to talk about the Foreign Minister’s speech on Monday where he talked about threat assessments and national security. And interestingly he talked about the move from traditional geopolitical threats to non-traditional areas such as financial security, climate change and food security.

What does he mean by this and is he indicating that these are areas where China is currently pressured?

VG: Well I think traditionally China, for example back in the 1970s before China started to open up to the rest of the world and started the economic reform, China was more or less isolated, sometimes by itself, sometimes due to the embargo imposed by Western countries.

And it is only during the past three decades that China is more and more opening up and is engaging the rest of the world with greater confidence. And the world in its turn is becoming more and more curious about what’s going on in China because China’s becoming so increasingly important.

So in this way if you look at the development or the evolution of the Chinese diplomacy, it’s following the same cause. Back in the 1970s it was very, very purely diplomatic, that is, political diplomacy. And increasingly in the last 10 years or so, protection of the Chinese overseas ... overseas Chinese for example or the Chinese nationals operating or living abroad, and the consular protection and also consular services, etc, is becoming more and more important.

The Minister mentioned it in his major speech and the press conference that an increasing amount of time and resources of the Chinese diplomats are devoted to economic purposes. For example when you have a major Chinese delegation coming to your country of assignment, you need to line up meetings with the business community, you need to invest a lot of time and resources in talking to the local business community. So I think this means that the Chinese diplomacy is also evolving. It is gearing up more and more to serve the fundamental needs of the economic development of China.

And especially when the financial crisis globally is still deteriorating, I think the diplomats in China are mobilised to really get to the bottom of the situation to analyse the root causes of the impact of this financial crisis upon the different countries because China is a major trading partner. China has business relations with almost all the countries in the world. We need to understand for our own benefits and well as for mutual benefit, what exactly is the impact of the financial crisis.

On the other hand I think, traditional business situations like the, what we called the poisoning, melamine poisoning of the milk powder for example, or the fast food poison, etc. Normally these were purely commercial things and the Chinese diplomats rarely get involved in such things.

But where you have a cross-border dispute like that between China or Japan or between China and another country, then the diplomats of course need to me mobilised to try their best to use their wisdom to help seek solutions to these disputes.

So I think it is foreseeable that going forward, the Chinese foreign ministry and the diplomats will increasingly spend more time on consular services and protection as well as on working to mediate disputes, commercial disputes between China and the other countries, and also try to provide assistance, advice, help for the Chinese people in all this business with the other countries.

Asia2025: Well one interesting aspect obviously of financial security is the discussion in China regarding the buying of American Treasury bonds.

What did Hilary Clinton say in her visit and what can we expect from China? Are people saying let America suffer or are the buying of bonds something China has to continue to do?

VG: Well China has a population of 1.3 billion and each one has his or her own views. Actually there is a great diversity of views in China regarding many other things including this very, very controversial issue.

Now, regardless of whatever views you hear from the academics for example, or from the practitioners or from the professionals in China, I think eventually the final decision is with the government. And so far the government has applied a very steady hand to this very, very sensitive issue.

China now has the largest foreign reserve in the world. About two trillion, actually the number is increasing. And China is the largest creditor to the United States. And the United States is the largest debtor in the world.

So, and China and the United States are among the top three economies in the world. So you can see the interaction and the dynamics between these two countries in this particular sector, how can a debtor deal with his largest creditor without sufficient amount of sensitivity?

So I think this goes without saying and because of such close interrelations not only in the financial sector but also in the business sector and also in many strategic and geopolitical considerations, China and the United States are increasingly in the same boat, whether they like themselves, like each other or not, or whether they like each other sufficiently enough or not, that’s a separate issue.

But they are more and more so in the same boat, they need to avoid anything which will rock the same boat because otherwise both will suffer. If they can be more and more on the same page, see things more and more on the same page eye to eye, then they will benefit and the rest of the world will benefit.

So I think again we need to see through all this haze and really get to the bottom of this. I’m confident that the Chinese government has enough wisdom, has enough caring to nurture this relationship and will avoid anything which will do damage to the fundamental interests of the United States because in its turn it will come back to haunt the Chinese national interests too, because in this important respect, the interests of these two countries are more and more aligned with each other.

Asia2025: Let’s talk about the Buy America campaign and other American initiatives like currently there’s a protest, the Chinese are protesting at the WTO over a possible ban on poultry coming into the United States.

What do you think the view is of Chinese policy makers regarding a sort of a rise in US protectionism? Do they see it as something that, you know, that there is a rise in US protectionism, or do they just see this as sort of smaller sort of blips on the trade and economic radar?

VG: Well, in a fundamental way, protectionism does not equate to patriotism. A real patriotism will need to take the fundamental interests of the nation into consideration. Protectionism does not serve the fundamental interests either of the United States or of any European country or of China.

And if we look back upon what happened in the Great Depression, America actually introduced a bill which was meant to serve the interests of the United States but eventually it caused all the other countries to adopt reciprocal measures aimed at protecting their own interests. But eventually the whole ship sank and the United States suffered the most. The lessons should be very vivid not only for America but for countries like China.

So I think when there is a crisis, when there is a dangerous downward spiral, people get nervous, politicians get nervous. Sometimes they have knee jerk reaction. It’s understandable. Sometimes they want to seek protection behind hastily erected walls in the belief that this will help their fundamental interests. But those who want to put up the wall of protection mostly will be buried by the wall to start with. And sometimes causing collateral damages to all the other countries.

Therefore when we are still in the middle of this financial crisis and when we still cannot see where the bottom is, we need to raise our voices, everyone, in China, in the United States, in Europe, in Japan, to combat protectionism. We need to extinguish this dangerous alarm from the very beginning, or to neaten up, so we cannot allow this protectionist to grow because otherwise we do not know how much damage it will cause to those who practice protectionism as well as the trading partners.

Asia2025: The G20 meeting is coming up and obviously the Presidents of America and China are going to meet on the side at this stage, what do you think the top three issues will be?

VG: Well, President Hu Jintao and President Barack Obama will meet for the first time in London for the G20 meeting and I personally hope this will be a very, very important milestone meeting. China and the United States need to talk to each other and the better way is for the number one guy in China, the number one guy in the United States to see things eye to eye, to really test each other out and to really try their best to get onto the same page.

Therefore the meeting in London will be crucially important for these two heads of state to understand each other and to bring the agenda more and more in alignment with each other, and there are so many things to talk about.

The financial crisis is impacting with such great velocity upon all the countries in the world, without exception. And because of the size of their economy, China and the United States are suffering a great deal. And there are so many things that we need to do with each other and help each other.

So I think the meeting in London will need to cover a very broad range of topics, but with also a high concentration on a number of very critically important top priority issues like the financial crisis and what we need to do.

How can we be sure that Chinese investment in the United States will be safe? How can you make me sure that while I will continue to buy the Treasury bonds, you know, the Americas will maintain all the credibility going forward?

So I think this will be crucially important for the years to come between these two countries. And once they have a successful first meeting, I hope, you know, they will be able to meet much more frequently going forward.

Asia2025: And that was Victor Gao, Director of China’s National Association of International Studies, well known Chinese commentator and formerly translator for Deng Xiaoping.

Next program we talk about where to next, for the United States and China in the lead up to the G20 meeting.

Thanks for listening. Have a great week.