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The Paradoxical State of China-U.S. Relations

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“China’s going to take over the world” was the common joke on the street, as news of China’s booming GDP and population hit the headlines and entered American consciousness. But behind the jokes was the incipient fear that China’s rise meant America’s fall. And on the other side of the Pacific, the wariness was reciprocated.

“Many Chinese still view the United States as a major threat to their nation's security and domestic stability,” writes Wang Jisi, Dean of International Affairs of Peking University, in a Foreign Affairs article.

China is the most likely candidate to supplant America as the most influential global player, but the reality of the China-America situation is much more complex than “Us vs. Them.” The rippling effects of America’s recession, especially on China, have revealed at least that much.

It makes sense, then, that the Obama administration has reached out to build a strong partnership with China, most recently with the Strategic and Economic Dialogue.

The history of China and America has been converging towards this point. Gone are the old days of the Cold War which pitted Communist China against democratic America. Not that today China and America are beaming and holding hands, but their current relations have certainly become much more interdependent. As a result, “co-operation” has become the buzzword of current China-America bilateral relations.

It has also been the general buzzword of the current administration’s approach to international relations. President Obama emphasized in a speech given in Moscow that “given our interdependence…pursuit of power is no longer a zero-sum game—progress must be shared.”

International “interdependence” is especially evident in China-America relations, prompting the word “Chimerica,” coined by Nathan Gardels, editor-in-chief of NPQ, a renowned journal of social and political thought.

According to Gardels, the global financial boom which led up to the current crisis was the result of the virtual fusion of China’s and America’s economy.

“The Chinese did the saving, the Americans the spending. The Chinese did the exporting, the Americans the importing. The Chinese did the lending, the Americans the borrowing,” he says in an interview with the Huffington Post.

Gardels believes China’s hungry consumption of American dollars lowered interest rates and helped foster the 2002-7 financial bubble. The long and short of it is China now holds $1.5 trillion of American bonds and securities.

Now, with the current recession, the honeymoon is over. American consumers are saving more and Chinese exportation to America is collapsing. What’s more is, China is worried that the Obama administration’s big-spending fiscal policy will spur inflation, depreciating the dollar and consequently their international reserves. China has issued cautionary warnings to Washington, even hinting of the possibility of looking towards other currencies to replace the dollar.

America also needs China’s cooperation on issues such as climate change, nuclear nonproliferation and counterterrorism, according to Jisi.

Jisi goes on to say that it is dangerously “simplistic” to view “the Chinese-U.S. relationship in traditional zero-sum terms;” or in other words, in “I win or you win” terms. It is already clear how the American recession is affecting all countries, especially China. If China suffers economically, American investors in China and American consumers, who buy inexpensive products from China, would also suffer.

Both countries are competing global powers, but it has become increasingly apparent that they have become too intertwined and entangled to progress without the other’s help.
Comments
#1 | Bridget Campos on August 01 2009 00:45:32
In reference to the recent collapsing of business trading between America and China, this decline mainly has a lot to do with products from China not meeting the high quality of safety, which lead to quite a few deaths.

Some citizens have felt that the U.S. should enforce more restrictive standards on China in order to make products safer for consumers.

Personally, the matter of consumer safety rests in the hands of both countries that are trading goods to each other. They are to regulate products that are sold and to make sure that they are safe for all people.
#2 | kirt8686 on August 01 2009 11:49:05
In this era of Globalization not only China and America are inter-Dependant almost all the countries are dependent on each other for their resources...and because of the collapse in American economy..whole world is suffering...
#3 | hcastro on August 02 2009 00:30:08
The global economy is obviously extremely interdependent and is true that a quick decline in either the U.S.'s or China's economy would be disastrous, but a slow decline could see the replacement of one of the countries.
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