The United States and China: Forced into Friendship

The United States and China, two global hegemons, seem to be on different tracks. While the former is trying to tackle problems caused by the financial crisis and to preserve its political dominance, the latter is continuing its economic expansion and increasing its military power. Essentially, this is the image one could have gotten after having observed recent debates in the U.S. Congress between the Democrats and the Republicans regarding the budget deficit problem. Despite the fact that Washington managed to escape “economic Armageddon” and raise the country’s debt ceiling from $14.3 trillion to $16.7 trillion, it has produced unexpected outcomes. Rating agency Standard and Poor’s has for the first time downgraded the U.S.’s credit rating from AAA to AA+. It has also resulted in immense criticism by other major world powers toward the economic policy that the White House has been pursuing.

China, America’s major creditor, has criticized Washington for its political shortsightedness. In the commentary published by the Xinhua news agency, this criticism appears even harsher: “The days when Uncle Sam is able to waste money are cnumbered. The decision of Standard and Poor’s has revealed the ugly truth to the global investors.” At the same time, Beijing has been both actively proposing a change in reserve currency as well as emphasizing the necessity to come up with an international solution mechanism for the problem that the U.S. dollar is facing. Ardent discussions in Washington were accompanied not only by criticism from Beijing but also by its military advances, that is, the first aircraft carrier testing which will allow China to further develop its aircraft carriers program. China has not begun producing these carriers itself; the testing of Aug. 10 was conducted using Variag, a Russian carrier which was bought from Ukraine in 1998, had no military armament or even a navigation system and was used as a floating casino. However, China is presently engaged in developing a J-15 jet fighter which is an upgraded version of the Russian Su-33.

Such actions by Beijing were far from being welcomed by Washington. The U.S. has called for China’s greater openness and transparency in its military cooperation. One should remember the not-so-transparent incident that happened at the beginning of this year, when a new radar-resistant J-20 jet fighter was tested for the first time during the visit of U.S Secretary of Defense Robert Gates. In spite of the claims by the Ministry of National Defense that Beijing is not aiming for military dominance and that the aircraft carriers development program is a part of its defense system, the country’s military spending has been growing for the past years and reached $91.5 billion in 2010. According to the U.S. Defense Department, China is able to achieve its goal of building a modern military by 2020, which would be oriented toward potential military actions in East Asia. What is also worrying in this case is that expanding Beijing’s military power might raise tensions between China and other countries in the region, especially Taiwan, which Beijing still considers a part of its territory. The recent years have already shown deteriorating relations between China and Japan, the Philippines, Vietnam and South Korea.

All of this raises a question: Has the era of China’s domination already started? According to Arvind Subramanian, one of the experts of Peterson Institute for International Economics, the country’s economic growth rate will slow down a little bit during two upcoming decades, whilst average income will grow by approximately 5.5 percent — 3.3 percent slower than during the past 20 years. Subramanian also estimates that China will surpass the EU by 2030 in terms of its GDP, and yet its purchasing power will only be half that of the U.S. This will by any means diminish the role that China is playing in the international arena. However, its economy has become a part of the global finance system and remains heavily dependent on the overall situation in global markets.

For a couple of decades China has been America’s major creditor and has invested billions of dollars into U.S. real estate, while its currency remains pegged to dollar. Beijing behaves in a similar manner in Europe: It is buying monetary obligations from the governments of Spain, Greece and Italy. In this way China expands its global influence, at the same time becoming more dependent on the economies of these countries.

The criticism that Beijing expressed toward Washington during the budget deficit crisis should not be seen as an attack on the U.S., but rather assessed as an expression of fear and panic over its own status. Basically, this situation has revealed that the sunset of the West would bring China down instead of bringing it victory. Suggestions by the People’s Bank of China for the White House to take all the necessary measures to rapidly solve the devaluation of the U.S. dollar only prove Beijing’s concerns. Besides, two years ago the Chinese government got openly concerned over Barack Obama launching Social Security reform. Beijing was once again worried about where the U.S. would get money from and how that would affect its budget deficit.

To sum up, the China-U.S. relations might not be perfect, yet it is at the best interests of both countries not to make matters worse. Despite the fact that these countries have adopted different political systems, ideologies and approaches to human freedoms and liberties, they remain economically interdependent. Economic instability in one would produce a chain reaction in the other, and that is wanted by neither China nor the U.S. The predictions by some political analysts about Chinese domination in the global arena will hardly come true in the near future. Its growing economy without a doubt adds volume to China’s voice while debating the world’s problems; nonetheless, China will not be able to catch up to and surpass the U.S. soon.

Chinese military potential should not be overestimated either. The country’s military spending is going up each year, but very often its arms are comprised of a mix of new technologies and old Soviet equipment; Variag aircraft carrier testing only supports this claim. It would not be impossible for China to attack its weaker neighbors or American military bases in South Korea or Japan. Nevertheless, the Chinese military might does not compare to American one: The latter possesses 11 aircraft carrier groups, which encompass more than just aircraft carriers and are equipped with the most recent military technology.

Finally, some of the Beijing officials might have engaged in somewhat aggressive rhetoric (for example, claiming that the South China Sea is a part of Chinese national interests’ zone), but it is highly unlikely that such rhetoric would lead to action. Such talks are only pushing some of the countries to turn to Washington, which already claims a number of allies in the region. Taiwan could serve as an example here. Not only does it have American support, but, as a reaction to Chinese aircraft carrier testing, has publicly announced about its new Hsiun Feng III anti-ship missiles, which had successfully destroyed the already mentioned Variag prototype. Thus, one could claim that theoretically possible conflicts between China and its neighbors would destabilize the region, yet it would also impede China’s stable economic growth, which remains Beijing’s priority.