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Trade turmoil between China and US spills into military ties

The USS Green Bay passes the USS Wasp as it leaves Okinawa. Photo: US Navy

As the world's two largest economies exchange tit-for-tat tariffs, there are growing suggestions that the trade turmoil has spilled over into military relations.

China has canceled friendly engagements with the US Navy, possibly due to the trade dispute.

In an interview with CNBC's Morgan Brennan, Navy Secretary Richard Spencer explained the intricate relationship between the two naval forces.

"When we look at China, it's a very complex situation to say the least because they are also a great trading power," Spencer said. "We have a major trading power as a competitor," he added, noting Beijing's ambitious military buildup.

Spencer's comments come on the heels of reports that China's top naval commander canceled a planned visit this week to meet with his American counterpart and that the United States was denied a port visit in Hong Kong for its USS Wasp amphibious ship.

"We were informed that Vice Admiral Shen Jinlong has been recalled to China and will not conduct a visit with Chief of Naval Operations Admiral John Richardson," Army Lt. Col. Dave Eastburn, a Pentagon spokesman, wrote in an emailed statement to CNBC. "We have no additional information at this time."

In regards to the port visit denial, Eastburn noted that while the Chinese government did not approve the USS Wasp visit, the United States has "a long track record of successful port visits to Hong Kong" and that the Defense Department expects that will continue.

China, the second-largest economy in the world, links its economic security closely to the hotly contested waterways in the South China Sea, since more than 64 percent of its maritime trade transited through the region in 2016. The South China Sea is also a vital trade artery for Vietnam, Japan and South Korea.

Home to more than 200 specks of land, the South China Sea serves as a gateway to global sea routes where approximately $3.4 trillion of trade passes annually.

The numerous overlapping sovereign claims to islands, reefs and rocks — many of which disappear under high tide — have turned the waters into an armed camp. Beijing holds the lion's share of these features with approximately 27 outposts peppered throughout.

Beijing's interest in developing the crumbs of land across the South China Sea is by no means new.

When asked about China's militarization of the South China Sea, Spencer said that the US Navy will "protect the lanes of commerce at all costs."

"We will ply the internationally agreed upon open spaces of the ocean with our warships at all times to make sure that our commerce and our lanes of communication are open that is something we will always do," he said. "If China comes and joins the world and recognizes international rules and international law of order, we are going to have a great relationship. If they take this position that they are going to use their laws and their understanding of how they're going to trade and protect their spaces, we are going to have to have some sort of discussion about this going forward."

This week, US B-52 bombers flew from Guam and transited through the South China Sea, an area where the Chinese government has built islands and established military facilities on disputed features.

"That just goes on, if it was 20 years ago and had they not militarized those features there it would have been just another bomber on its way to Diego Garcia or wherever," Secretary of Defense James Mattis told reporters at the Pentagon on Wednesday when asked about the bomber flight.

"There's nothing out of the ordinary about it," Mattis added.

A US defense official told CNN that the bombers were escorted by Japanese fighter jets and flew in proximity to the Japanese controlled Diaoyu Islands which China lays claim to.

The bombers also flew into the Chinese military's unilaterally declared Air Defense Identification Zone which extends over the area.

On Thursday, China labeled bomber flights over the disputed South China Sea as "provocative," and said that the United States was solely responsible for a recent downturn in relations between their militaries.

Defense Ministry spokesman Ren Guoqiang also reiterated at a monthly briefing China's objections to a recent US arms sale to Taiwan and the imposition of US sanctions over China's purchase of Russian defense equipment.

"As for the provocative action taken by the US military aircraft, we are firmly against it and we will take all necessary means to safeguard our rights and interests," Ren said.

China has sought to strengthen its claim to the South China Sea by building seven islands on reefs and equipping them with military facilities such as airstrips, radar domes and missile systems.

Analysts say that the military relations between China and the United States are expected to remain in a downward spiral for some time.

In the past, military exchanges between the two sides have continued through diplomatic ups and downs, but the latest tensions – which come on top of the trade war – could make it difficult to get relations back on track, according to Shi Yinhong, an international relations expert at Renmin University in Beijing.

"China and the United States are facing their most serious diplomatic confrontations and crisis in decades, and their military relations will be affected for a long time," he said.

"The two militaries may want to keep up a certain level of exchanges to stop the confrontations from escalating, but there is also a possibility that the impact on military exchanges may worsen the diplomatic tension," he added.

Both Chinese and US officials have emphasized the need for military communications to prevent clashes, especially as the two sides lock horns over a range of issues, including China’s activities in the South China Sea.

Chinese Defense Minister Wei Fenghe told his US counterpart Mattis in June that military exchanges were a stabilizing factor for Sino-US relations. Mattis, who was visiting Beijing, said that the United States was willing to optimize communication channels with China to improve risk management.

China and the United States also agreed to set up a joint strategic dialogue mechanism in August last year, to enhance direct military communication and reduce the chance of any "miscalculations".

Beijing-based military expert Li Jie said that while the People's Liberation Army would not take any provocative action against the United States, it would not bow to pressure either.

"China's military will come up with countermeasures if the Trump administration hits China with more sanctions," Li said.

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