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Economy

Three Elements Relating to China-US Relations

Oct 11 , 2018
  • Han Liqun

    Researcher, China Institutes of Contemporary Int'l Relations

Now much attention is paid to China-US relations because of their trade frictions. All parties are closely following these two countries’ policy orientations and attempting to predict the results of trade war. However, a focus on the interactions between China and the US on trade may well lead to the international community, Chinese and American people in particular, losing sight of many major changes taking place at the same time. These changes may have significant influence on China-US relations in the future.

First, world politics is changing. The July/August issue of Foreign Affairs offered a feature titled ‘Which world are we living in?’ Both realists and liberalists were engaged in the discussion. Realists believe that the world has again gone back to the state of competition between major powers that existed in the 1920s, just with different competitors. For liberals, on the other hand, the international institutions the US helped to create after World War II remain valid, the US has withdrawn from some international mechanisms only in form, and so long as most Western countries stick to liberal capitalism at home, the whole international system will remain free and open.

The discussion is very inspiring. But when we discuss about whether the world has changed there must be a defined time span. For the discussion of China-US relations today, the time span is best defined as the past three to four decades. We reach a conclusion rather different from that of the magazine. Both realists and liberals would acknowledge major changes in world politics. From the realist perspective, the return of great power competition means the end of converging development since the end of the Cold War. From the liberal perspective, changes are taking place in many countries, for example, views on liberal capitalism are being readjusted and so too will be their views on the world. Trump’s withdrawals from treaties and Brexit were not just formalities. There were profound reasons behind them.

Against this backdrop, the China-US trade war is actually the epitome of changing world politics. Competition has been determined not only by the two countries but also global development trends. This offers a new perspective when we try to weigh various countermeasures.

Second, the roles of Europe and Japan are changing. Europe and Japan are increasingly stuck in between China and the US. Since reform and opening up started, Europe, Japan, and the US have engaged in cooperation with China mainly for the purpose of investing in the Chinese market and also gradually changing the Chinese political system. However, the rapid development of China has exceeded the expectations of almost all countries. The country’s economy has become larger than that of Japan or any European state.

Sino-European relationship has become the de facto new model of major country relations. The two sides are geographically distant from each other. If the old scores of over two centuries ago could be cast away, there is almost no problem left over by history between them. At the same time, although China and Europe had different political views, most statesmen of major European countries are rather pragmatic, which has facilitated sound development of relations. The recent European restrictions on Chinese companies in hi-tech industries focus on more competitive fields. In areas where cooperation is still possible, cooperation between China and Europe remains sound. This type of major country relationship has never existed in the past four centuries. China and Europe may have gone beyond the traditional strategic competition between major powers and established a new de facto model.

Japan is still looking for and adapting itself to the new role in between China and the US. In the past forty years, China-Japan relations have gone through the most twists and turns. Should it side with China or the US? It is a difficult choice for Japan to make. And this choice will also be of great influence on future China-US relations.

Third, large companies and big capital are also changing. Economic globalization benefits large multi-national corporations and capital. Development of China-US relations has been attributable to the great work of the business community in both countries. But today the roles of large companies and big capital in international politics are also quietly changing. The weakening of economic ties has been a result of both political influence and changes within business communities.

In the past ten years, giant enterprises have risen and new industrial and financial models have taken shape, not only changing the traditional economic system but also posing a threat to sovereign states. For example, technological standards formulated by tech giants may be in conflict with governments; large financial institutions are still lobbying governments to make policies detrimental to national economic systems; multinational corporations are less loyal to their countries of origin and leave large amounts of profits overseas. Large companies and big capital that once created great prosperity in America are now outside the country and those that once created ties between China and America are now looking for new markets and sources of profits, which is beyond the control of any government.

The above three elements constitute the overall background for China-US relations, and they are important.

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