Territory - Diaoyu Islands

An FM spokesman voiced concern and strong dissatisfaction after US Secretary of State Hillary Rodham Clinton said the Diaoyu Islands fell within the scope of the US-Japan security treaty. He said, as a bilateral agreement reached during the Cold War, the U.S.-Japan security treaty should not harm the interests of third parities, including China.

Continental Shelf - East China Sea

Believing that it is "highly likely" that China has started drilling in the disputed oil and gas fields in the East China Sea, Japanese PM Naoto Kan reportedly was considering sending a seismic survey ship to check whether China has started drilling.

Later, China rejected a report that China agreed to resume negotiation with Japan on the exploration of oil and gas fields in East China Sea during a meeting between the two countries' foreign ministers.

Trade

Dispute Settlement

China lost another case at WTO as a panel upheld US tariffs that were imposed on Chinese-made steel pipes, tires and other products during the Bush administration. China made a number of technical arguments, most of which were rejected by the panel.

Territory - Diaoyu Islands

Law of the Sea

An FM spokesman denied the existence of a secret agreement between China and Japan whereby Japan would not detain Chinese citizens who mounted the Diaoyu Islands while China would stop her ships from approaching the islands. He justified the fishing activities of Chinese fishermen by claiming that waters near Diaoyu are China's 'traditional fishing grounds''.

Meanwhile, Japan rejected a Chinese proposal to jointly develop offshore natural resources near the Diaoyu Islands. Japanese FM Seiji Maehara also denied that Japan had ever agreed to former Chinese leader Deng Xiaoping's 1978 proposal to shelve the territorial disputes over Diaoyu and leave the settlement of the issue to the next generation, as Japan continued to turn a blind eye to the elephant in the room by maintaining that "there exists no territorial dispute" over the Diaoyu Islands.

Finance

Having largely caused the global financial crisis that has inflicted damage on the world economy, the US somehow found the moral courage to pressure China to sacrifice its interest by raising the value of renminbi. The American effort failed, for the time being, as the annual meeting of IMF failed to reach agreement on the currency issue.

Territory - Paracel and Spratly Islands

Law of the Sea

Speaking in Hanoi, US Defence Secretary Robert Gates reasserted that Washington had a strong interest in maritime security in Asia and called for "multilateral institutions" to confront the security challenges in the South China Sea. Later, at the "Asean Plus Eight" meeting of defence chiefs, he said, "Disagreements over territorial claims and the appropriate use of the maritime domain appear to be a growing challenge to regional stability and prosperity." He suggested that "competing claims should be settled peacefully, without force or coercion, through collaborative diplomatic processes, and in keeping with customary international law." At least Robert Gates, unlike Secretary of State Hilary Clinton, had the humility not to invoke the UN Convention on the Law of the Sea, a treaty that US itself had not ratified (together with like-minded states such as North Korea and Iran).

Territory - Paracel Islands

Law of the Sea

The Vietnamese Foreign Ministry demanded China to release "immediately and unconditionally" a Vietnamese fishing boat and nine crew seized in September near the Paracel Islands in the South China Sea for fishing with explosives. After first refusing to release them without paying a fine, China later freed the Vietnamese fishermen.

In a further twist on the matter, Vietnam claimed that the fishing boat and the crew had gone missing since their release from China.

Trade

China scored a victory at WTO when a panel supported China's complaint against the US over a measure on imports of poultry from China. The US imposed a ban on Chinese poultry products since the 2004 bird flu outbreak.