U.S.- China Relations

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Introduction

The question of whether or not the United States should increase or limit economic ties with China is a question of international collaboration as well as balancing the flow of power in the world. After the United States, China’s economy is the largest, and growing. China’s population is the largest in the world, and growing. There is no way to ignore the presence and impact of China on quickly shifting sands of globalization, and there is no way to guarantee that greater economic ties may not undermine U.S. interests. Ultimately, the entire world is moving into a deeper economic and social collaboration whether they want to or not due to the necessity of dwindling resources and population growth. 

International Collaboration

Many questions govern the main question whether or not the United States should strengthen or decrease economic ties with China. One of the most pressing question deals with national security, as “How can America be friendly with a country which is friendly with so many of America's enemies -- Iran, Iraq, Milosevic, even Pakistan, when they were selling nuclear material?” (PBS). If America supports China indiscriminately this may enable China to undermine American interests. 

This complexity stems from the very different nature of each country in its character, history, and goals. The director of China studies at John Hopkins School of Advanced International Studies emphasizes the U.S. and China are “always going to have a complex mix of compatible interests and conflictional interests. And really, if you think about it, how could it be different? We have a far different history, far different political system” (PBS). This creates a difficulty of communication and collaboration. There are some who have called for a “de-linkage” between the U.S. and Chinese economies, but that is hardly possible between such superpowers. 

As analysts look at the costs, benefits, and impact of globalization, the question arises what the American impact is on China and the world. This issue became central in the recent economic crash. Analysts observed; in the first three years since the global financial crisis, the serious slowdown of the American economy did not seem to have a conspicuous influence on the Chinese economy, which continued growing at a fairly high speed. People used to say that when the US had a cold other would sneeze. It was not true this time. In the past two years, the American economy has gained a good momentum while China is slowing down. America’s driving role seems to have disappeared. The relevance of this influence is shown in two-way trade. (Mengzi)

This may be related to the fact that China did not heavily invest in the American Wall Street as they are focusing on developing their infrastructure. Last year “The Obama administration has been preparing sanctions against China following a wave of cyber-espionage from Chinese hackers. And China has sparked the ire of U.S. businesses and politicians by devaluing its currency and favoring Chinese businesses over foreign ones” (Swanson). This tension has not lessened with the strengthening ties between China and Russia in the recent year, which greatly impacts the question of deeper ties. 

However, China cannot be ignored as the most populace country with a steadily growing economic impact around the world. This is due to China’s “big and fast-changing that its actions ripple around the world and influence life for average Americans — determining the price of things we buy, influencing what we make at our jobs, even changing the quality of the air we breathe” (Swanson). Finding a common ground with the Chinese is essential for both the United States and international security, and the question of whether or not to increase or decrease economic involvement is also a question of how to impress collaboration upon the world which is quickly changing. 

China is one of the world’s strongest traders, and the volume of goods they are creating is changing the structure of the international market. The question of compete or collaborate comes up when debating involvement in this mad rush for markets. This has resulted in, “The influx of cheap Chinese imports has helped some Americans and hurt others. It has raised standards of living for many Americans, allowing them to afford all kinds of things they couldn't have purchased before” (Swanson). While this influx has supported American jobs in retail, transportation, finance, and construction it has undermined American goods and manufacturing. Percentages in manufacturing has fallen, “more than 13 percent in the late 1980s to 8.4 percent in 2007, as trade with China increased and its imports into the U.S. soared” (Swanson). However, Americans are one of the chief markets for Chinese goods, so whether or not U.S. policy desires it the public are moving towards greater economic ties.

There may be no way to avoid China’s tide of economic impact. The deputy director of the Freeman Chair in China Studies at the Center for Strategic and International Studies, Scott Kennedy emphasizes, “Even if you’re not doing business in China, you’re most likely facing some kind of Chinese competition, or China’s effect on the global economy affects your sector” (Swanson). Industries around the world are now working towards supporting China’s goals of industrialization. It is inescapable since, China accounts for about half of the aluminum, copper, nickel, steel concrete used worldwide each year, making it a major customer for resource-rich countries like Australia and Brazil…China's appetite for resources is so big that the country actually used more concrete in the last three years than the U.S. did in the entire 20th century. (Swanson). 

This amazing and unprecedented growth is creating its own riptide of collaboration which is less the result of a conscious choice and more a reaction to power. The Office of the Press Secretary from The White House attempted to color this as aware collaboration rather than a reaction as, “The United States and China recognize their shared interest in promoting a strong and open global economy, inclusive growth and sustainable development, and a stable international financial system, supported by the multilateral economic institutions” (White House). However, the question arises if these multilateral economic institutions are more in control of how America and China economically relate than the will of the people or governments of these nations. 

Understanding that China could not play by America’s rules in order to dominate the U.S., China has utilized currency manipulation as a systematic tactic for increasing their trade potential. China has, increased its holdings of foreign exchange reserves by at least $359 billion per year, on average, between 2006 and 2012 (see Figure A). Gagnon (2013) has shown that there is nearly a perfect, 1-to-1 correlation between a country’s official purchases of foreign exchange reserves and its current account balances. China has acquired over $4 trillion in foreign exchange reserves and other foreign assets since 2000. (Scott)

This move has enabled China to make the U.S. a debtor, and more dependent on their trade even as they devalue the American currency. While this is hardly behavior befitting a strong collaborative partner, some see it as just dues for how America utilizes her influence around the world.

However, the Chinese economy is starting to slow due to the rise in development slowing as it fills out the present markets. All economic markets are in a state of dynamic change. Analysts emphasize that currently, spending by its consumers is continuing to grow at a very rapid pace. This offers huge potential foreign businesses. Ensuring that U.S. companies are able to access these opportunities should be the main focus for both current and future U.S. administrations. (Council on Foreign Relations)

While some are saying that China’s economy is not as sure of a bet as it was a decade ago this is most likely an overly short-sighted projection. The G20 summit continues to meet to discuss this changing landscape, and “The leaders whose countries make up 80% of world trade are still looking for ways to strengthen everyone’s economic growth and head off any new financial crises” (Jennings). Those who discuss China’s slowing economy do so with thinly veiled contempt for their success and the shifting of power going on today. It is likely that due to jealousy of this type some nations will avoid collaboration with China simply to undermine their growth. However, this is unlikely to stem the tide of their influence. 

Motivations for Collaboration

One of the strongest reasons the United States may be led to strengthen economic ties is the hope of winning their allegiance against Russia. Analysts emphasize, “Some of the most innovative intelligent students in American universities today come from abroad, and many of those come from China. So we have cultural reasons, economic reasons and military reasons” (PBS). The military advantage is couched in the many reasons to seek greater mutual support, and they are quite valid. It is projected,

Economic mutual dependence between these two countries will shift from quantitative expansion to structural interdependence. The interdependence will be increased through various consultations at all levels, such as those to speed up negotiation of a bilateral investment protection agreement, open further trade in high tech and financial services and seek development of common rules in regional integration. (Mengzi)

This is a strong perspective towards collaboration which may seek true strengthening of international support.  

Conclusion

The movements of international economies have incredible momentum that are continuously shifting. The United States is being pulled inexorably into the riptide of China’s gravity along with every other nation. It is possible that the locus of power is shifting away from America and into the realm of the East, and in this case strengthening economic ties with the most populace nation in the world would be a smart move. Balancing such investments with mutual respect will be difficult for such different personalities, but if accomplished could greatly aid the international peace accord.

Works Cited

Council on Foreign Relations. “How to Improve U.S.-China Relations.” Cfr.org, 22 Sep. 2015. Retrieved from: http://www.cfr.org/china/improve-us-china-relations/p37044

Jennings, Ralph. “World's Top 20 Countries Tighten Scrutiny Of Shaky Chinese Economy.” Forbes, 2 Aug. 2016. Retrieved from: http://www.forbes.com/sites/ralphjennings/2016/08/02/worlds-top-20-countries-tighten-scrutiny-of-shaky-chinese-economy/#179473f4875c

PBS. “The U.S. China Relationship.” Frontline, 2016. Retrieved from: http://www.pbs.org/wgbh/pages/frontline/shows/china/experts/relations.html

Mengzi, Fu. “China and U.S. Should Treasure Their Economic Mutual Dependence.” China Focus, 17 Sep. 2015. Retrieved from: http://www.chinausfocus.com/finance-economy/china-and-u-s-should-treasure-their-economic-mutual-dependence/

Russel, Daniel R. “The Future of U.S.-China Relations.” U.S. Department of State, 25 Jun. 2014. Retrieved from: http://www.state.gov/p/eap/rls/rm/2014/06/228415.htm

Scott, Robert E. “Hearing on U.S.–China Economic Challenges.” Economic Policy Institute, 21 Feb 2014. Retrieved from: http://www.epi.org/publication/hearing-us-china-economic-challenges-trade/

Swanson, Ana. “7 simple questions and answers to understand China and the U.S.” The Washington Post, 22 Sep. 2015. Retrieved from: https://www.washingtonpost.com/news/wonk/wp/2015/09/22/everything-you-need-to-know-about-china-and-the-u-s/

White House. “Fact Sheet: U.S.-China Economic Relations.” White House, 25 Sep. 2015. Retrieved from: https://www.whitehouse.gov/the-press-office/2015/09/25/fact-sheet-us-china-economic-relations