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Foreign Policy

Strategic Shifts in China-US Relations Presage Challenges Ahead

Dec 20 , 2011

2011 witnessed the collapse of long-standing regimes in the Arab world and the near-collapse of the Euro, and proved to be a wild, rollercoaster ride for actors in the international arena. The US-Sino relationship was no different. Looking back at how the two sides have evolved in their interactions over the course of the past year can provide some valuable insight into what 2012 may hold for the rocky yet crucial bilateral relationship.
The year kicked off on a seemingly positive note in January, when President Obama welcomed China’s President Hu Jintao to a formal state visit. Notably void of the gaffes that plagued Hu’s previous visit during George W. Bush’s presidency, the trip was deemed by both sides as a success. Then, in July, Admiral Mike Mullen made a high profile visit to China that resulted in more ephemeral bilateral goodwill.

Yet this reservoir of goodwill dried up quickly in the second half of 2011, a sign of the underlying tensions constantly simmering below the surface. These tensions, ratcheted up by anti-China currency legislation which made its way through the US Senate and Washington’s announcement of new arm sales to Taiwan, will only increase in the upcoming presidential election year as China-bashing rhetoric heats up.

Several presidential hopefuls have already incorporated such criticism into their campaigns. Republican presidential hopeful Mitt Romney, one of the more economically moderate of the candidates, produced an economic plan that promised to confront China and demand immediate currency revaluation. If he does become president, the reality of bilateral relations would quickly force him to take more sensible action, as has been the case for all prior presidents.

The challenge for President Obama in preparing for the 2012 election is different. As an incumbent who has dealt with China for nearly three years, Obama cannot credibly take a simplistic approach of blaming China for America’s economic failing. Instead, Obama focused on several creative and multi-faceted initiatives to deal with China that caught the world by surprise.

While attending the Asia-Pacific Economic Cooperation (APEC) summit in Hawaii, Obama proposed a new free trade agreement called Trans-Pacific Partnership (TPP). Member nations around the Pacific Rim that promptly signed up included Chile, Peru, the U.S., Vietnam, Malaysia, Brunei Singapore, Australia and New Zealand.

Obama pointedly explained that China is not specifically precluded from joining this partnership. But, he said all members must respect workers’ rights, compete on a level playing field, protect intellectual property and new technologies and base their currencies on market conditions. The message was clear. If China expects to play in the TPP pond, they will have to abide by Obama’s rules.

Obama sent similar strategic messaging to China during his visit to Australia, where he made a joint announcement with Australia Prime Minister Julia Gillard to base a small contingent of U.S. marines, first 250 and gradually building up to 3,000, on the port of Darwin in Australia’s Northern Territory.

This military cooperation is ostensibly to ensure security of shipping through international waters north of Australia. Though puny in number, the presence of basing American troops in China’s backyard is a message obvious to anyone.

Obama also sent Secretary Clinton on an historic visit to Myanmar, heretofore considered a pariah state, based on a “flicker” of reform. While ostensibly the visit is to encourage further liberalization of the regime, Myanmar’s warming of relations with the U.S. is accompanied by cooling of Myanmar’s relations with China, up to now its only major ally.

Obama’s nuanced and non-confrontational initiatives this year seem to indicate that after three years in the White House, he has learned some of the subtle finer points of international diplomacy and eschewed the usual diplomatic harangue.

China’s position during all of this maneuvering has been somewhat removed. China has not viewed the bilateral relationship as a zero-sum game. Even if Beijing wants to make a tit for tat counter punch in response to Obama’s actions, there are no real viable means where telling blows could be struck. China has long shunned direct confrontation with the U.S. and it remains in their best interest to continue to do so.

The highest priority for China in 2012 rests on a myriad of domestic issues. Their focus on international relations is to continue fence mending with its neighboring states. In the exuberance of having recovered from the 2008 financial crisis in better shape than anyone else, China may have been too eager to show its new confidence. Feeling intimidated by the rising China, neighboring states became more receptive to alliances with the US to offset the discomfort of a powerful neighbor next door.

The resentment of countries such as Philippines and Vietnam towards China may have created the opportunity for the U.S. to interject itself into the South China Sea arena as the peace maker and arbitrator. It appears that China will need to refocus its diplomatic efforts with careful exercise of soft power.

China can be expected to follow the coming presidential election closely. But both possible outcomes of the election seem to bode poorly for the future of China-US relations. If a Republican becomes the next president, China’s approach to bilateral relations will be much like before, i.e., patiently interfacing with the administration until the new team understands the complexity of the relationship and the importance of finding common ground.

If Obama is re-elected, China will face a different challenge. He is beginning to show that he knows how to make nuanced diplomatic moves, rather typical frontal demands and accusations. His strategic messaging through foreign diplomacy this year should signal to China that neither Obama nor Congress has any desire to look for a stable, mutually beneficial bilateral relationship. The best China can hope for is wary and fragile mutual accommodation.

The last time a fading power gave way to a rising power peacefully was when the UK lived beyond their means and exhausted their coffers. By the end of WWII, the US had to bail out the British sterling, and the dollar became the reserve currency of the world. Today, the US has already exhausted its coffers, but China has a long ways to go to be in a position to bail out the dollar. Beijing would be wise to remain patient.


George Koo is a retired international business advisor and a Board Member of New America Media.

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