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View Full Version : The Call: US and China on a collision course?



Shuimo
06-07-2009, 11:51 AM
By Ian Bremmer

Some want to see the US and China form a comprehensive political and economic partnership, an alliance of pragmatism that provides workable solutions to key international problems: the global economic slowdown, climate change, collective security, and other issues. Those who make this argument ignore the reality that China remains a developing country with serious internal challenges ahead. This will sharply limit the Chinese leadership's eagerness for taking on new international burdens, however triumphalist their rhetoric becomes.
More to the point, U.S. and Chinese advantages are not as complementary as some think. An America that is gradually losing much of its economic advantage over fast-emerging states will continue to take on much of the geopolitical heavy lifting --on nonproliferation, on the Middle East peace process, on the challenge of quelling militancy in Afghanistan and Pakistan, on Iraqi stability, on risks that Iran will destabilize the region, on piracy, and plenty of other issues. The U.S. military and U.S. taxpayer will begin to feel even more over-extended, and the electorate will challenge U.S. policymakers to justify America's global security presence.
Beijing may soon announce that China is building its first aircraft carrier. That will set off alarm bells in the American media, but it's really much ado about not much. China's navy is focused on protecting Asian shipping lanes. Building one carrier isn't the same as assembling a complete carrier battle group. The United States has 11 such groups. In other words, for all the talk about China's future blue water navy, Beijing will not be able to project a global naval presence for decades to come.
Yet, though the United States will maintain its military dominance for the foreseeable future, China will feel that it's doing more than its share in the provision of public goods on the geo-economic side. In particular, the Chinese will be expected to buy U.S. Treasuries as Americans inflate away the value of those assets. That's why high-level Chinese officials have been talking up the idea of a new reserve currency.
With this obvious mutual dependence, can't Washington and Beijing form a mutually profitable partnership? The United States makes the world safe for Chinese commerce while, in the interest of global economic stability, China continues to subsidize U.S. spending?
Don't bet on it. Here's why:
The economic downturn will move domestic constituencies in both countries to complain about their share of burdens and dismiss much of the value provided by the other side. Populist-minded U.S. political officials will get in front of this public anger to avoid being swallowed up by it. Not so long ago, the Chinese leadership could simply have shrugged off this problem on their side. But an increasingly active Chinese blogosphere and a more assertive local press can, without directly challenging the Party's right to rule, help drive public demand for action that the government can't afford to ignore.
But here's the bigger problem: Those on the U.S. side providing the geopolitical leadership (mainly in the Pentagon) and those on the Chinese side managing foreign economic policy don't speak the same institutional language. Their values, their worldviews, and their vocabularies are entirely different. There is not enough common ground on which these two institutions can forge a partnership.
That's why the U.S. and Chinese governments are likely to find themselves increasingly at odds over the next several years --and why hopes for a G2 solution to a wide range of transnational problems are likely to be dashed.
Jed Jacobsohn/***** Images
http://eurasia.foreignpolicy.com/posts/2009/06/04/the_call_us_and_china_on_a_collision_course

Blue_0
06-07-2009, 12:29 PM
I found myself agreeing with much of what this article said.

Especially:
1. We will inflate away our dept. We have done this for the last 50 years, and it has been working great.
2. The values thing could be a big deal. I wanted to ask you though, what values do you feel are radically different from ours?

Ritual
06-07-2009, 02:13 PM
Ok ok, Reddies.

We'll make you a deal.

We get everything in south america, europe, and asia until Persia. You can have everything there and east until Japan.

Africa is 50/50.

Deal? :|

sinophile
06-07-2009, 02:34 PM
The author's premise, that the Chinese government is too preoccupied defending failing economic policy decisions of the past to prevent a present economic collapse, is wrong.

The central government will continue to purchase short-term US debt (it has no other option), and is already investing in commodities to hedge inflation risk. This will keep short-term US dollar borrowing costs lower than borrowing short-term in other currencies, and demand for dollars is likely to increase. Yup, increase.

There is no linkage between this and US/China politico-military affairs. Mostly because the short term domestic stability interests of both government are closely aligned at present. They've both equally screwed their citizens and need time to work out of the hole they've dug.

In short, the author is wrong.

Blue_0
06-07-2009, 04:38 PM
The author's premise, that the Chinese government is too preoccupied defending failing economic policy decisions of the past to prevent a present economic collapse, is wrong.

The central government will continue to purchase short-term US debt (it has no other option), and is already investing in commodities to hedge inflation risk. This will keep short-term US dollar borrowing costs lower than borrowing short-term in other currencies, and demand for dollars is likely to increase. Yup, increase.

There is no linkage between this and US/China politico-military affairs. Mostly because the short term domestic stability interests of both government are closely aligned at present. They've both equally screwed their citizens and need time to work out of the hole they've dug.

In short, the author is wrong.

A few questions:
1. It was not clear to me the authors premise was that the Chinese were defending anything. Could you explain what I am missing in the articule?

2. Why do you feel the demand for dollars will increase? I was under the impression some US securities were already purchased at auction at greater then face value during the panic. I would have thought demand would have to go down from that?

3. You state that the author is wrong, but from what I read the author seems to agree with you on a disconnect on political military affairs, the author does not say china will not purchase US dept. Simply that they will complain about it, which is what they are already doing.

In short, it is not clear to me from your post what the author is wrong about?

deagle
06-07-2009, 05:32 PM
USA and China, China and USA

this can be the greated Alliance or Confrontation.

i say partnership is best.

Holmes85
06-07-2009, 07:14 PM
With America's staunch defense of Taiwan, I doubt the tension between the countries will not go away any time soon.

Scriptable
06-07-2009, 07:17 PM
USA and China, China and USA

this can be the greated Alliance or Confrontation.

i say partnership is best.

Sadly, irrational choices seem to prevail in the realm of geopolitics.

sinophile
06-07-2009, 08:52 PM
A few questions:
1. It was not clear to me the authors premise was that the Chinese were defending anything. Could you explain what I am missing in the articule?

"an increasingly active Chinese blogosphere and a more assertive local press can, without directly challenging the Party's right to rule, help drive public demand for action that the government can't afford to ignore"


2. Why do you feel the demand for dollars will increase? I was under the impression some US securities were already purchased at auction at greater then face value during the panic. I would have thought demand would have to go down from that?

The US has recently needed to buy some of its own treasuries to keep longer duration rates low. The dollar remains weak relative to other currencies. My point was global borrowing demand will continue to favor the dollar and demand for dollars will increase as a global recovery increases demand for borrowing. Today's weakness in the dollar may not translate into future weakness or collapse. I'm not 100% sure of this, but see some signs in that direction.


3. You state that the author is wrong, but from what I read the author seems to agree with you on a disconnect on political military affairs, the author does not say china will not purchase US dept. Simply that they will complain about it, which is what they are already doing.

The author is referring to a growing domestic movement in China opposed to purchasing US debt securities, and angry over losses in the securities already bought. Those losses continue to mount, and its not clear to me that economic necessity will prevail over public sentiment.

Its difficult to know how deep this recession is affecting China's internal stability. I haven't been there recently, but several people I know who have are telling me about noticeable increases poverty, and increasing conversations about how the US put China in this position. Failure to argue that position may limit China's investment options in the future.

The author claims US and Chinese interests will diverge diplomatically, economically and militarily. I argue the opposite and state that if China chooses to view the current economic situation as a worldwide systemic failure (rather than a US mistake), then both countries interests can be aligned for a positive outcome.