Sino-U.S. Relations: Cooperation and Competition Are Here to Stay

That foreign policy is meant to promote a nation’s interests is an iron-clad law of international relations. To a foreign relations scholar, the starting point of all observation, analysis, anticipation and advice is in the nation’s domestic and international circumstances.

Since early this year, constant conflicts have been disturbing Sino-U.S. relations: arms sales to Taiwan, Google’s threat to leave China, bilateral trade friction, the RMB exchange rate issue, Obama’s meeting with Dalai Lama, etc. Out of all of these, the arms sales to Taiwan stirred up the most indignation among the Chinese people. Hence, anxiety over these issues led to newspaper and website headlines such as “Sino-U.S. Relations Have Reached the Breaking Point” or “Sino-U.S. Relations: Another Cold War Is on the Way.”

Let’s look at the domestic situation. In February the biggest news is the special seminar held in the Central Party School for the leading cadres of the provinces, with the theme “to accelerate the transformation of economic development.” President Hu Jintao used the keyword “accelerate” 50 times in his Feb. 3 address, reflecting the seriousness of the situation and government’s determination to transform the way in which the economy is developing.

Is there any connection between the transformation of China’s economic development and the recent conflicts in Sino-U.S. relations? My answer is a big yes! In his address President Hu especially emphasized the importance of transforming China’s mode of economic development, claiming this was critical to winning the upper hand in international competition after the financial crisis. He understands the domestic and external situations very clearly.

As for Mr. Obama, he understands the situation pretty well too. The arms sales to Taiwan on January 30 certainly upset the stability of Sino-U.S. relations, with China taking an unprecedented strong response – America will pay for this. However, irritating China is certainly not the keystone of the Obama administration’s policy. Just three days ago, in his State of the Union address on January 27th, Obama said the job market is the priority of the government in 2010. Some goals included increasing assistance for the unemployed, encouraging people to set up small enterprises, increasing exports, developing clean energy increasing investment in education and infrastructure construction and pushing forward health reform, etc. Obama also inspired his American listeners with lines such as “China is not waiting to revamp its economy” and “I do not accept second place for the United States of America.” Though he doesn’t adopt the Chinese concept of “accelerating the transformation of economic development,” what Obama wants to do for America is the same, that is, to take the upper hand in international competition after the financial crisis.

America plays a major role in the external situation for China, and vice versa. The external situation China and America are facing is the same, as the two countries are important elements each other. China is the biggest landing place for American industry and investment displacement; America is the biggest market for China’s export. For America, China is the most important country with which it must cooperate on the hot issues of international security and the challenge of global climate change. For China, America is a vital element in China’s foreign relations. America, which relies very much on the virtual economy, consumption and energy imports, needs to reconstruct its economy through re-industrialization and increase the export of technological innovations. China, which can no longer rely on vast investment and export boosts, has to change its old economic development pattern, which requires large investment but consumes much at the expense of depleting resources and putting the environment at stake. China has to expand domestic consumption and encourage the development of independent innovation-focused enterprises.

　　

To a certain degree, the economic reforms of China and America are complementary and reciprocal. If neither country speeds up its domestic reforms or cooperates with the other in international affairs, its economic recovery and social stability won’t last for long, and the international efforts to combat climate change and develop new energy won’t make any great headway. American economist Niall Furgurson’s so-called Chimerica and the G2 theory of some American economists and strategists mainly refer to such close relations between the two countries.

The domestic reforms of China and America will not only create momentum for cooperation, but will also bring new conflicts and long-term competition. For instance, due to its high unemployment rate, America needs to decrease imports and increase savings, which means there will be more trade protectionist policies against China in order to restrain the appreciation of the RMB. Promoting export and protecting the interest of the overseas enterprises will make American enterprises great competitors to Chinese independent innovation-focused enterprises. This is the backdrop of the Google incidence, cyber war and the gripe of many China-based American enterprises. Cooperation, as well as competition, between China and America in the area of climate change and clean energy development has just begun. The long-term trend of Sino-U.S. relations increasingly depends on these new topics related to national welfare, people’s livelihoods and the core interests of the two countries.