Still think China's going to sign on to a new round of tough sanctions against Iran? Think again. China has most likely already passed the European Union to become Iran's No. 1 trading partner, the Financial Times reports:

Official figures say the EU remains Tehran’s largest commercial partner, with trade totalling $35bn in 2008, compared with $29bn with China.

But this number disguises the fact that much of Iran’s trade with the United Arab Emirates consists of goods channelled to or from China. Majid-Reza Hariri, deputy head of the Iran-China Chamber of Commerce, said that transhipments to China accounted for more than half of Tehran’s $15bn (€10.9bn, £9.6bn) trade with the UAE.

When this is taken into account, China’s trade with Iran totals at least $36.5bn, which could be more than with the entire EU bloc. No definite conclusion is possible because it is unclear how much of Iran’s trade with Europe is channelled via the UAE.

Iran imports consumer goods and machinery from China and exports oil, gas, and petrochemicals.

Today, China depends on Iran for 11 per cent of its energy needs, according to the chamber.

Look at it this way: Would the United States support hard-hitting sanctions against Saudi Arabia, which in November supplied nearly 8 percent of U.S. oil imports?

China wasted no time in heating up the 46th Munich Security Conference. In the opening address Friday, Chinese Foreign Minister Yang Jiechi strongly asserted Chinese policy, and took more than a few swipes at the United States.

Yang is the first Chinese official to speak at the annual conference, and he seemed to have turned the normally stoic affair into something much more direct and confrontational. His remarks are yet another indication of the growing differences between China and the United States.

Addressing a recent U.S. arms sale to Taiwan which he called a violation "of the international code of conduct, Yang said:

The Chinese government and people feel indignant about this... We have one fifth of mankind. At least we deserve a chance to express our views on how things should be run in the world.

Yang further intimated China would block new UN sanctions directed against Iran, claimed that Chinese media was more reliable and "solid" than Western news organizations and that he didn't know how "this Google thing popped up."

The onslaught of recent commentary on U.S.-China disagreements has come so fast and furious over the last two weeks that one could be forgiven for thinking startling tectonic shifts had just reshaped the surface of the Earth.

But the funny thing about most of the news highlighted is that it isn't really news: China upset about the U.S. announcing arms sales to Taiwan?  Old school. China objecting to a U.S. president meeting with the Dalai Lama? Status quo. China dictating the terms by which foreign companies can operate within its borders?  Long true -- the real news here isn't that China did anything different, but rather that Google picked this moment to raise the issue so publicly.

In fact, although the headlines we read are mostly about China, a better case could be made that a more pronounced change in attitudes is occuring within the United States, especially among the chattering classes and in Washington. Suddenly even mundane stories about friction with China are being fitted into an uber-narrative about dangerously escalating tensions. And once a grand narrative takes hold, watch out: it gets harder for the facts to speak for themselves. 

What has changed across the Pacific is perhaps the stridency of Beijing's tone, if not the substance of its complaints. But a more striking shift is evident in Washington, where China-phobia is rising, all economic news seems to be bad news, and defensiveness is ascendant.

Since when is the uplifting applause line in a president's State of the Union address: "Well, I do not accept second place for the United States of America. (Applause.)" 

(As if George W Bush would have even entertained the thought of being number two.)

Writing today in Time magazine, Jeffrey Wasserstrom makes a smart point that surely applies here: "Just as all politics is local (to a degree), all diplomacy is domestic (to a large extent)." 

I hadn't seen this earlier: John Pomfret relays word that Google's declaration that it would no longer comply with Chinese Internet censorship rules was a verboten subject in Davos this year.

"At China's request, that topic was left off the table at this year's World Economic Forum in Davos, Switzerland, Josef Ackermann, chief executive of Deutsche Bank and co-chairman of the event, told Bloomberg News," he writes.

So now China is capable of silencing debate in what's supposed to be an open forum?

Here's more from Bloomberg, which quotes Ackermann saying "China didn't want to discuss Google":

At Davos, participants such as financier George Soros, economist Joseph Stiglitz and French President Nicolas Sarkozy debated technology topics such as social networking and 3-D features used in the motion picture "Avatar." The discussion didn't include the conflict between China and Google, even in panels such as "The Rise of Asia" or "Redesigning the Global Dimensions of China's Growth."

Way to tackle the tough issues, guys.

Google CEO Eric Schmidt did briefly raise the subject on his own, however, according to the Wall Street Journal:

"We like what China is doing in terms of growth...we just don't like censorship," Mr. Schmidt said, speaking at the World Economic Forum's annual summit here. "We hope that will change and we can apply some pressure to make things better for the Chinese people." [...]

Mr. Schmidt maintained Friday that Google wants to continue operating in China. But he said the company didn't want to do so if it had to operate under China's censorship laws. To operate its Web site, Googe.cn in China, Google had to agree to censor its results.

"We would very much like to stay in China. We would very much like the censorship we oppose to improve in China," Mr. Schmidt replied.

Li Keqiang, China's vice premier, didn't address the issue in his speech, but apparently insisted in private that foreign companies must follow Chinese laws.

Via FP contributor Ashby Monk, here's an interesting story from Bloomberg News that hasn't gotten much attention. It seems that Russia tried to use its vast financial holdings and conspire with China to create "economic disruptions" in the United States in 2008. An astonishing scoop, if true.

The source of the tale is Hank Paulson, the former U.S. Treasury secretary whose memoir, On the Brink, is coming out soon. 

Says Bloomberg:

The Russians made a “top-level approach” to the Chinese “that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies,” Paulson said, referring to the acronym for government sponsored entities.

China rejected the idea, according to Paulson, and the Russians are denying the story. Monk, an expert on sovereign wealth funds, comments:

If true, it would appear that Russia was plotting economic warfare against the US during the summer of 2008; I don’t really know what else to call it. Their intention was to use their sovereign wealth to purposely weaken and damage the US economy. The fact that all this apparently occurred around the same time that Russia was engaged in a traditional war with Georgia, a US ally, lends some credibility to the idea.

Remember how I said 2010 would be a rough year for U.S.-China relations?

The first shoe to drop was Google's announcement that the privacy of Chinese human rights activists using its email software had been violated, and that cyberattacks on its servers had been traced to within China. 

Now, China is expressing furious anger over U.S. arms sales to Taiwan -- threatening unprecedented actions in response, including sanctions on U.S. companies, and hinting darkly of a broader unwillingness to cooperate with American diplomatic priorities (read: North Korea and Iran). Military-to-military cooperation between the U.S. and China now seems to be off the table, and deputies-level talks will be suspended.

Truth be told, China hadn't been and probably wouldn't be super helpful on Iran and North Korea's nuclear programs, but the direction the relationship is taking is worrying. In February, President Obama is supposed to meet with the Dalai Lama, and that is sure to provoke further ire in Beijing.

Obama administration officials had been expecting some blowback from the arms sales, and are downplaying China's reaction, but I wonder if even they see Beijing as upping the ante. Is this going to be the usual loud, public show of anger, followed by a return to business as usual? Or is China feeling its strength and looking to demonstrate that it can force the mighty United States to change course?

I detect a bit of arrogance in Beijing right now. Most recently, Colum Lynch reports, China sent a third or fourth-tier diplomat to U.N. discussions over Iran's nuclear program. At the climate talks in Copenhagen in December, not only did China seem to renege on promises it had made earlier, but Premier Wen Jiabao famously snubbed other top world powers by sending his deputy to a high-level meeting (I'm told by one participant that French President Nicolas Sarkozy was especially angry about the slight). This kind of thing may not make headlines, but it shapes other countries' willingness to make concessions and accomodate China's interests at the margins.

China is going to learn sooner or later that the famous line from Spider Man -- "with great power comes great responsibility" -- applies to real-world superpowers as much as it does to fictional superheroes.  Let's just hope it's sooner.

This New York Times article about the surprising release of records from the late Mao era raises the question: Just how crazy was the Cultural Revolution, anyway?

This crazy, according to the eminent historian Jonathan Spence, as told in his landmark biography of Mao Zedong:

An announcement from the "Beijing Number 26 Middle School Red Guards," dated August 1966, gave the kind of program that was to be followed by countless others. Every street was to have a quotation form Chairman Mao prominently displayed, and loudspeakers at every intersection and in all parks were to broadcast his thought. Every household as well as a trains and buses, bicycles and pedicabs, had to have a picture of Mao on its walls. Ticket takers on trains and buses should all declaim Mao's thought. Every bookstore had to stock Mao's quotations, and every hand in China had to hold one. No one could wear bluejeans, tight pants, "weird women's outfits," or have "slick hairdos or wear rocket shoes." No perfumes or beauty creams could be used. No one could keep pet fish, cats, or dogs, or raise fighting crickets. No shop could sell classical books. All those identified by the masses as landlords, hooligans, rightists, and capitalists had to wear a plaque identifying themselves as such every time they went out. The minimum amount of persons living in a room could be three -- all other space had to be given to the state housing bureaus. Children should criticize their elders, and students their teachers. No one under thirty-five might smoke or drink. Hospital service would be simplified, and "complicated treatment must be abolished"; doctors had to write their prescriptions legibly, and not use English words. All schools and colleges were to combine study with productive labor and farmwork. As a proof of its own transformation, the "Number 26 Middle School" would change its name, effective immediately, to "The Maoism School."

And you thought your middle-school experience was rough.     

China's overwrought reaction to Hillary Clinton's speech on Internet freedom yesterday has had the interesting effect of making her words seem much bolder and significant than they actually were. Here's what a foreign ministry spokesman had to say:

"Regarding comments that contradict facts and harm China-U.S. relations, we are firmly opposed," Ma said in a statement posted Friday on the ministry's Web site. "We urge the U.S. side to respect facts and stop using the so-called freedom of the Internet to make unjustified accusations against China."

China's Global Times newspaper went farther, accusing the United States of "information imperialism." It's interesting to read the London Times' write-up of the Chinese reaction, which reports that Clinton had "warned Beijing that its alleged attack on Google, which prompted the internet search engine to threaten withdrawal from China, would have “consequences”".

In fact, Clinton warned that "Countries or individuals that engage in cyber attacks" -- defined generally -- would face consequences. Here's what she actually said about China (my emphasis):

The most recent example of Google's review of its business operations in China has attracted a great deal of interest. We look to Chinese authorities to conduct a thorough investigation of the cyber intrusions that led Google to make this announcement. We also look for that investigation and its results to be transparent. The internet has already been a source of tremendous progress in China, and it's great that so many people there are now online. But countries that restrict free access to information or violate the basic rights of internet users risk walling themselves off from the progress of the next century. The United States and China have different views on this issue. And we intend to address those differences candidly and consistently.

Elsewhere in the speech, Clinton mentioned China's restrictions on information, particularly religious material, but it certainly doesn't sound like the United States is planning to take concrete actions against China's Internet censors anytime soon.

It strikes me that Beijing could have issued a statement along the lines of, "Secretary Clinton is right to say that the United States and China have different views on this issue. We welcome her invitation to dialog but ask that the United States respect the sovereignty of our electronic space and unique political context. We are actively engaged in cracking down on criminals and extremists who take refuge in cyberspace."

Acting as if Clinton's temperate remarks amounted to a thrown gauntlet makes it appear to the outside world that they have something to be ashamed of. It doesn't seem like the response of a secure superpower.