August 23, 2009

By Zhiqun Zhu

On October 1, the People's Republic of China will celebrate its 60th anniversary. And many people are wondering: Are China and the United States friend or foe? What are the prospects for their bilateral relationship?

In 1940, U.S. Senator Kenneth Wherry of Nebraska expressed the hope that "with God's help, we will lift Shanghai up and up, ever up, until it is just like Kansas City."

Were he alive today, the senator would be surprised to learn that Shanghai, China's commercial and economic hub, has indeed been lifted up, and is actually much taller and more dynamic than Kansas City or any U.S. metropolis.

Peace and stability
But it is the United States, not God, which has contributed positively to China's fast growth in the past 30 years, especially through trade and investment, and through maintenance of peace and stability in East Asia.

Trade remains one of the thorniest issues between the two countries. Now China and the United States have become each other's second largest trading partners with bilateral trade volume surpassing $333 billion in 2008.

With foreign exchange reserves of over $2.1 trillion, China is in a position to invest in the United States and purchase money-losing U.S. companies. But America remains ambivalent about Chinese investment, often on grounds of national security, as in the case of Unocal a few years ago, when China was forced to abort its purchase of the California-based oil company.

Economic recovery
Amid the current global economic crisis, China's stimulus packages have fueled domestic economic growth, which in turn, contributes to America's economic recovery. China is America's biggest creditor, with an estimated two thirds of its foreign exchange reserves in dollar assets, including more than $800 billion in U.S. Treasury bonds.

Many in the United States unfairly blame China for the huge trade deficit and loss of jobs, not knowing that U.S. exports to China grew by 20 percent annually in the past five years and that Washington continues to forbid the sale of hi-tech products to China.

Realistically, Washington cannot expect its trade deficit with China to be significantly reduced if it maintains sanctions on China. The trade imbalance is also structural, since many of America's other key trading partners in Asia, such as Japan and South Korea, have moved their production facilities to China, and now export their products directly from China.

More balanced trade
The two countries must work together to achieve a more balanced trade. However, in a clear violation of World Trade Organization rules, Washington recently imposed punitive tariffs on steel pipes and car and light truck tires from China.

Such protectionist measures, which already triggered China's tit-for-tat responses, are counterproductive, and harmful to bilateral relations. Beijing is thus likely to have become a scapegoat for the current high unemployment rate in the United States.

Whether China and the United States are friend or foe is a false debate. It misses the central point that the two countries are so interdependent today that they no longer have the luxury of making such a choice.

Opting for cooperation
Even at the height of the Cold War, the two countries opted for cooperation. U.S. President Richard Nixon made history by traveling to China and meeting with Chinese leaders Mao Zedong and Zhou Enlai in 1972. Seven years later, President Jimmy Carter welcomed Deng Xiaoping to the White House when the two countries just established diplomatic ties.

In addition, U.S. leaders encouraged Deng's reform initiatives. After 30 years of profound economic reforms, China is reemerging as a major player on the world stage.

Today, exchanges at all levels of society have greatly expanded across the Pacific. With monthly contacts among senior officials and regular strategic dialogues, Beijing and Washington are institutionalizing their interactions.

Unquestionably, summit diplomacy has maintained its momentum. Not long after National People's Congress Standing Committee Chairman Wu Bangguo's visited the United States in early September, President Hu Jintao will be coming to attend UN meetings in New York and the G20 summit in Pittsburgh.

More cooperation
President Barack Obama, meanwhile, will go to China in November to seek more cooperation with the Chinese in dealing with the global economic recession, climate change, energy security, terrorism and other pressing issues.

China and the United States are unlikely to see eye to eye on everything, but they are not engaged in a zero-sum game in international politics.

For the foreseeable future, the two powers will have to learn to live together. The most critical issue in their relations in the future will probably not be Taiwan or trade, but determining and abiding by their respective roles in international political economy. They must form a long-term vision for the future of their relations.

Sino-U.S. relations have deep regional and global implications. The era of Chimerica or G2 will not arrive any time soon-but good relations between the world's sole superpower and the largest rising power are vital for maintaining peace and promoting prosperity in the 21st century.

Posted Sept. 22, 2009


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