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5 Minute Tute: US-China relations

How does China view its increasing power in the world?

There are, of course, different perspectives on this in China. Chinese material power has been growing steadily over the last thirty years with particular advances after 2001, when China joined the World Trade Organization, and again after 2008 and the global financial crisis, which damaged China far less than most other countries. Thus, its relative power has grown quite significantly. For some Chinese, this suggests that the country deserves a larger voice in world affairs, and that its economic model has much to teach other countries. Other Chinese, however, realise that the country’s domestic development challenges remain huge and this makes them reluctant to consider taking on greater global responsibilities commensurate with its status as the second largest economy in the world.

How important is the economic relationship between China and the United States?

These two countries are economically very interdependent and the global economic crisis has brought this home to both countries. As of June 2011, China held nearly $3.2 trillion in foreign exchange reserves, largely in US denominated assets. It certainly does not want those assets to decline in value. The US remains a major market for Chinese goods and Chinese leaders worry about the capacity of America to continue as the second major recipient (after the EU) of its exports. For America’s part, China has been the fastest growing major export market over the past 15 years or so. The economic crisis has had less of an impact on the Chinese economy; thus the value of that market to US firms is even more significant. One other pertinent point is the sense that some US officials have of a shift in the global power hierarchy in China’s favour. As US Secretary of State Hillary Clinton is reported to have remarked to the Australian Foreign Minister, Kevin Rudd, in December 2010, “How do you deal toughly with your banker?”

What was China’s reaction to Obama’s announcement that the US defence strategy will now focus on the Pacific region?

Although the US government has tried to reassure the Chinese leadership they are interested in cooperation and engagement with Beijing, this defence move has been viewed negatively in China and is seen mainly as directed at it. Strategic mutual distrust is high in this relationship and this is unlikely to diminish as a result of changes in the US defence strategy. At a minimum the two countries need to think of ways of increasing levels of trust and diminishing the sense of rivalry, for example by strengthening their military-to-military ties.

What is the future of US-China relations?

Factors which help to stabilise this important relationship are the economic factors discussed earlier, the fact that the costs of military conflict between them would be extremely high (both are nuclear-armed states,) and that they do hold interests in common (e.g. stability on the Korean peninsula and in China-Taiwan relations). The relationship has also been institutionalised; there are now about 65 bilateral dialogue mechanisms between them and these are helping to build personal relationships and maybe even to manage tensions. Nevertheless, this relationship is going to be difficult and competitive in the years ahead. The US seems reluctant to accommodate itself entirely to a stronger and more prosperous China. China has a hard task before it in reassuring its neighbours that its rise will remain peaceful and in the absence of that reassurance China’s neighbours will want to see the US stay a major player in the Asia-Pacific region.

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