June 12 could be a big date for US-China ties — and not because of North Korea

The hot-and-cold relationship between the world’s two largest economies could potentially take a turn for the worse on June 12. Not because of the anticipated U.S.-North Korea summit scheduled for that day, but due to a new office building in Taiwan.

The American Institute in Taiwan, a non-profit that operates as the de-facto U.S. embassy in Taipei, is set to launch its new office that day and a senior U.S. official — many theorize it could be National Security Advisor John Bolton — is widely expected to attend.

The $250 million facility is reportedly twice the size of the current building and represents a major strengthening of U.S.-Taiwan relations. But it could also add strain to a U.S.-China relationship that’s already weighed down by trade tensions.

The Asian powerhouse, which claims Taiwan under a policy known as “One China,” opposes other countries pursuing relations with the self-ruled island. That means nations seeking ties with China must cut off diplomatic links with Taipei. Washington did that in 1979 but it created the American Institute, or AIT, the same year to maintain relations on an unofficial basis.

Trump’s outreach to Taiwan, which includes a 2016 telephone call with President Tsai Ing-wen, increased arms sales and a law that ended restrictions on official travel between U.S. and Taiwanese officials, has already irked Beijing. That piece of legislation, according to the Chinese embassy in Washington, violated the political foundation of the Sino-U.S. relationship.

Depending on which high-ranking White House employee attends the AIT launch, Beijing’s displeasure could grow.

Not only is China unhappy “with the scope and scale of the U.S. relationship with Taiwan, particularly in the security field,” the country “also objects to U.S. actions that suggest that its relationship with Taiwan is actually official,” Richard Bush, senior fellow at the Brookings Institution, said in a recent note for the U.S.-based think tank: “If it had its way, it would probably prefer that Washington have a simple trade office in Taipei, as other countries have.”

The new AIT compound was expected to house barracks for U.S. marines, according to Taiwanese media, but AIT director Kin Moy dismissed those reports in a May press conference. The de-facto ambassador said increased U.S. support for Taiwan did not mean Washington was changing its acknowledgment of the “One China” policy — despite Chinese media indicating otherwise.

Bush, a former AIT chairman, described how the institute has operated out of a complex built in the 1950s, noting that employees “have long deserved a new building.”

China’s intensifying crackdown on Tsai’s administration may also influence the White House’s decision on who to send to Taipei.

Fearful that Tsai will push for formal independence even though the 61 year-old has said she wants to maintain the status quo, Xi’s government has been restricting the island’s role in the international community and conducting provocative military exercises nearby.

China is also believed to be poaching Taiwan’s allies using pledges of investment and financial assistance — last month, the Dominican Republic become the fourth country to cut ties with Taiwan since Tsai entered office.

The world’s largest economy “should therefore seize opportunities to signal its opposition to China’s punitive tactics,” said Bush: “Sending a senior U.S. official is one of those opportunities.”

Speaking over the weekend, U.S. Defense Secretary James Mattisreaffirmed Washington’s commitment to Taiwan, stating that his department “remains steadfastly committed to working with Taiwan to provide the defense articles and services necessary to maintain sufficient self-defense.”

Source:CNBC