The U.S. and China Are Co-dependent

Barack Obama must have had a tough time fulfilling all the expectations heaped upon him. He was charming to Chinese students, who are normally quite courageous people – especially during such events. He engaged in a little courteous criticism to maintain his image for the folks back home and to still get a little cooperation out of the Chinese leadership. The Chinese are a friendly people, so they smiled. But both the U.S. and China are still dependent on one another.

But the balance of power has drastically changed. While the People’s Republic of China is seen as ascendant – despite all the pitfalls on the way – the United States is seen as being in a profound decline. To be honest, the nation is really bankrupt – and everyone knows it. But the United States is systemic, as it were, and it can’t be allowed to go bankrupt. And as strange as it may sound, China has to finance America’s consumption to a large extent; first, because the U.S. is China’s best customer and, second, because if they didn’t finance it, America would have few options other than the military one. China cannot and will not chance that. So we’re left with the paradox: Mao’s heirs are financing imperialism’s supreme power.

So what is Obama doing in China? That business with a climate summit, as important as it may be, is secondary in this context. Obama has to keep China as an economic and security partner. Simultaneously, he has to avoid becoming so obviously dependent on China. The Chinese have to support the United States, but they run great economic risk in doing so because as the dollar suffers massive losses, China’s investment in the U.S. goes in the tank as well. Talk of plans to switch from the dollar to a mixed basket of currencies (similar to the International Monetary Fund’s special drawing rights) would only put increased pressure on the United States and, therefore, on the world. So did anything worthwhile come out of Obama’s visit? Well, it sure was nice that they were talking to one another again.