Introduction
We examine the US foreign policies on China based on a number of emerging issues, which have shifted the relationship from direct to indirect in terms of containing China. This research explores matters related to China’s border disputes, currency, trade, security, diplomacy, energy, governance, and other emerging issues from a realism perspective.
China’s striking economic growth has made a possible competitor to the US in most important affairs of the world today. This relationship is significant has China rises strongly to the second position in the global economy, and increasingly expressing its economic strengths in its relationships with other countries. The US still remains the largest and richest economy in the world. As China rises, there is a still a wide gap between the US and China in relation to their “fiscal growths, institutional, and per capita incomes” (Pan, 2005). In this realization, China has taken advantage of its expanding economic base to seek strategic advantage in areas that concern the US interests.
China has constantly blamed the US policy on creating the global crisis of 2008 by adopting monetary policy that damages other nations’ economy. China argues that the US actions hurt small and emerging nations than developed economies. China has also turned to emerging economies to build strong ties in relation to trade and relations in foreign matters as these countries support China’s policies, and its growing economy for their own advantages.
China also claims that the US public debt is on the rise. On the same note, China notes that the US has a free pass on important issues like financial wasteful habits and excess consumption. According China, the US perpetuates these habits because it is the main source of the global reserve currency. China believes that the situation shall persist if there is no alternative to “robust reserve currencies backed up by deep and liquid financial markets” (Gu and Prasad, 2011).
From the US point of view, there are several issues that continue to mar its foreign relationship with China. The US accuses China of creating trade imbalance in the US, major deficits, and the world imbalance in trade. China has created this scenario by heavily controlling its central bank. In this sense, renminbi (Chinese currency) cannot appreciate against the US dollar and other currencies.
The US has also accused China of sabotage. China has blocked the US investors, banks, and manufacturers from accessing the Chinese markets. In addition, China has also regulated Chinese exporters to the US. This trend has severe negative consequences to the US economy. The Chinese government refers to it has a policy of indigenous innovation. This policy aims at awarding tenders to Chinese firms rather than foreign ones in government contracts. In addition, China also has weak systems of enforcing intellectual property rights. This trend has perpetuated the growth of pirated materials and counterfeits in China.
China has made some reforms so as to please the US. As a result, the US has adopted a relaxed approach in dealing with China in order to curb the rising cases of the global trade imbalance and on other issues of global interests.
In January 2011, the US Secretary Geithner acknowledged the growth of Chinese economy and reforms the Chinese government has instituted. However, he noted that the Chinese government still has many reforms to institute about issues which the US considers important and better for interests of Chinese. Some of these issues cover “accessible markets to all, fair trade practices, a more flexible exchange rate regime, and growth rebalancing to make the economy less dependent on exports and stoke private consumption” (Gu and Prasad, 2011).
On the other hand, the US also clarified that China must meet its standards and interests in order to restore bilateral relationship. Conversely, China needs “access to high technology products, investment opportunities and the same level of access to the US markets as others classified under “market economies” in the US” (Gu and Prasad, 2011).
The US position on the border disputes involving China and others
For a long time, the US has chosen to avoid public utterances on border disputes between China and its neighbors. However, in 1996, there was a problem when activists from Taiwan, China, and Japan confronted each other over the Islands. The US reaffirmed its position on the issue by declaring that it did not support any country that claimed territorial ownership of the islets. Still, in March 2004, the US maintained its position when activists from China Mainland occupied Senkaku (Japanse) or Diaoyu (Chinese) Islands (Fravel, 2010).
According to John Chan, the US has been soft on Japanese government regarding the issue of Senkaku (Chan, 2010). The US has challenged claims China made over the Islands. This is because the US wants to perform a joint US-South Korean military exercise in the Yellow Sea. However, China has opposed such moves.
Critics believe that the US responses to Japan’s actions are bias. For instance, on monetary issues, Japan forced down the value of yen. This action raised concerns in the US Congress. However, Washington approached the matter with a calculated silence. This is a contrast to the US approach in dealing with the issue of Chinese yuan (Chan, 2010).
Some analysts foresee the use of force to protect interests of both states. Wang Zhaokun notes that the rising dispute over Diaoyu Islands shows the danger that may be inevitable between Japan and China as well as the recklessness of Washington in promoting tension in the area (Zhaokun, 2012). They observe that the US is using diplomatic methods to persuade China and Japan to find alternative solutions. However, the US has regional interests through its joint US-Japan military drill.
Therefore, some analysts believe that the US cannot play the role of the mediator in the matter because of impartiality. According to Zhou Fangyin, Washington does not qualify has a mediator or a communicator on the matter (Fangyin, 2012). This is because of its joint military relations with Japan.
Observers believe that visits from Washington cannot resolve the dispute over the Islands. Instead, they believe that the US wants to use “the Sino-Japanese dispute and Japan to contain China’s rise so that it can maintain its military supremacy in Asia-Pacific” (Fangyin, 2012). However, the US is cautious not to let the dispute degenerate into war because it will result into direct military action against China.
The US concerns about China’s rise in the Asia-Pacific region and other parts of the world is an issue that Washington has to deliberate carefully. It will mean declining power of the US and rising power of China. This change in balance of power is not healthy, at least according to Washington. Therefore, the US has turned to indirect measures to exert its influence in the East Asia region and thwart China’s rising diplomatic ties. This explains why the US has found indirect methods in Islands disputes to deal with China. This is an indirect and smart approach to exerting control in the region. However, this approach may be a short-term measure of dealing with foreign policy on China (Eland, 2005).
The issue of Taiwan and China has also set a precedent for tension between the US and China. For instance, China reacted with fury on arms deal between the US and Taiwan. Lynch notes “Taiwan shows a “new toughness” toward Beijing and perhaps even a “fundamentally new direction” in the Administration’s China policy” (Lynch, 2011). This is an indication of indirect approach the US has taken to deal with the rising Chinese military in the region.
Trade
In the last fifteen year, Chinese economy has maintained an average growth rate of 10 percent per annum. This is the highest of economic growth rate in the world today. This growth has changed living standards in China and transformed agricultural sector in the country. In the year 2004, China achieved total trade volumes worth more than $1.1 trillion. This placed China in the third place after Germany and the US. China has remained open to trade, and this approach has expanded its gross domestic product (GDP). According to John Makin, in the year 2009, China’s contribution to “the world growth rose from 15 percent of the total to 20 percent” (Makin, 2009).
The US has remained significant trading partner of China. However, there are foreign relations issues that interfere with smooth trading relations. Consequently, these nations have declared some controls over trade relations between them. For instance, the US and China reached an agreement to control and restrict the volume of Chinese textiles flooding the US markets. However, there is a huge trade deficit between the US and China. As a result, there is tension among the US officials who have accused China of dumping cheap imports in the US domestic markets and limiting the US exports into Chinese markets. However, some believe that the US should not blame China for its massive consumption that has created a deficit in its current account (Keidel, 2007).
In the recent past, Obama administration had approached the issue of trade imbalance aggressively. For instance, the US reported China to the World Trade Organization on creating trade imbalance and blocking American investors to China. In addition, the US has formulated and implemented unilateral trade measures on Chinese imports (Yaqing, 2011). The Obama administration took an indirect approach when it decided to promote competitive interests of its domestic firms. For instance, the US Export-Import Bank availed cheap loan to Pakistan Railways so that General Electric’s could win the bid against Chinese companies (Gu and Prasad, 2011).
This is a clear message to China that the US will take the necessary steps in order to match Chinese policies that favor its indigenous firms. This shows that the US has decided to deal with China in any manner possible and will not watch China subvert their trade relations and international standards.
On the other hand, President Hu’s visit to the US shows the willingness to work with the US on equal terms. China has recognised its domestic challenges. However, the message to the US remains clear that it wants to control the international monetary system, support emerging economies, and be active in military developments.
Currency
The US has known that China has manipulated its renmenbi. This tendency has persisted for over a decade. This is what economists refer to as artificial low rate. China controls its central bank. As a result, the country has pegged the value of renmenbi against the US dollar. This creates a difficult situation for the US exports to China by making the US goods expensive. On the other hand, Chinese imports to the US will be cheaper than the US goods. Analysts believe that the difference is more than 40 percent. Differences in currency rates contribute to the US trade deficit that China has projected to exceed $200 billion in 2010 (Gu and Prasad, 2011).
China has reviewed the value of renmenbi upwards by 2.1 percent and changed its peg from the dollar to include other international currencies. However, China Currency Coalition believes that this is a strategy to push American manufacturers out the Chinese market. It claims that Chinese government keeps interfering with the exchange rate in order to establish a fixed rate.
According to Geithner, the Chinese currency has appreciated at the rate of three percent in July 2010. This happened after the Chinese government reviewed the rate after two years. However, inflation is high in China than in the US. This has forced renminbi to appreciate against the dollar. The US believes that renminbi has not acquired a state whereby forces of the market can determine its value. The US has recognized that this action hurts China, the US and other currencies. It is also responsible for creating fiscal instability through encouraging global imbalances.
Meanwhile, the US does not concentrate much on the currency issue has inflation sets in China and trade volumes have begun to decline (Gu and Prasad, 2011). If the trade deficit widens between the US and China, then the issue of currency rates shall be among the policy issues Washington must discuss. Recent report noted that China has decided to “improve the exchange rate pricing mechanism in a proactive, controlled, and gradual manner with reference to international capital flows and major currency moves” (Makin, 2009). This is a strategic move to slowdown its rising inflation.
Security
The report on China’s military spending is two to three times more that the reported figures according to the Pentagon’s report on the strength of the Chinese military. The current estimate stands at approximately $95 and $106 billion. Currently, the Chinese is undertaking modernization processes of its military with massive resources (Perlez, 2012). Experts claim that the Chinese army can possibly challenge the US army. This observation has rattled the US. As a result, in 2005, the US Defense Secretary Donald Rumsfeld questioned the Chinese military buildup. The US has expressed its concern over the rate at which the country has turned to military spending, yet it has no known enemies. The US wants China to expand its political freedom, encourage enterprising, and free expression in order to welcome China as a partner.
This relationship remains weak because of secrecy and opaqueness in Chinese presentation of its military budget and activities. Consequently, the US has adopted indirect method to deal with it. For instance, President Obama declared in November 2011 as follows “the US military interests in the Asia-Pacific region would be immune from cuts to the Pentagon budget” (Perlez, 2012). According to China, this commitment targets its growing military power.
China has lured Russia, Uzbekistan, Kazakhstan, and Tajikistan into a joint military training under Shanghai Cooperation Organization (SCO), a body that focuses on security threats in the Central Asia region. China’s neighbors could also be threats to its national security due to their tattered relationships.
Emerging issues
Diplomacy
The US and China have only agreed on taming North Korea and its ambition of developing nuclear weapons. According to China, its foreign policy aims at “peace and development for bringing harmony, security, and prosperity to all” (Gu and Prasad, 2011). In the recent past, China’s diplomatic ties have increased across the world. As a result, China has made inroads in Africa, Asia region, Arab region, and Latin America among others.
Critics believe that the Bush administration neglected important foreign relations in order to focus on Iraq and Middle East while China was busy building international ties. Consequently, the country has gathered confidence through its new diplomatic relations. Through SCO, they tried to pressure the US to withdraw its troops in the Central Asia region. This reflects that China is not comfortable with the US presence in the region. These newfound alliances and ties have helped China to increase trade and build its economy.
Energy
The growth in China has resulted in massive demand for energy. China still depends on coal for most of its energy needs. However, the country needs oil to run its economy. The US still consumes more oil than China. According to National Development and Reform Commission (NDRC) of China economic planning, “the US consumed 29.6 percent, China spent 6.31, and Japan used 11.3 percent of the world oil trade” (Gu and Prasad, 2011).
However, the growing need for oil in China’s growing economy has resulted into China’s search for reliable energy partners. Some of its partners are countries the US has accused gross human rights violation such as Sudan, Iran, Chad, Uzbekistan, Myanmar, and Venezuela. China has promised these countries support at the UN Security Council, greater access to its markets, military aid, and economic aid. China has veto power, and it has used that power to block Sudan sanction over the Darfur issue. This means China is going against what the US and its allies support.
The country is striving to keep oil reserves for its domestic use. However, the country has ignored authoritative nature of such leadership protecting these oil reserves. Experts believe the country shall “import 70 percent of its oil needs” (Gu and Prasad, 2011) by 2020. This situation may force China to seek any country for oil regardless of their leadership styles and create tension with the US.
Governance
The Chinese Communist regime has led to economic growth and preservation of social stability in the country. For instance, the country decided to curb any right to freedom of expression and political protest by punishing reporters and censoring the Internet. This action created international outcry and the need for transparency in China.
In November 2010, President Obama responded to Chinese Internet censorship while addressing students in Shanghai that free flow of information is necessary so that citizens can think of themselves and hold the government accountable. China censored this news. However, it was Hilary Clinton’s statement on the Google issue that made Internet censorship in China a part of foreign policy (Lynch, 2011). She stated “In an interconnected world, an attack on one nation’s networks can be an attack on all” (Prosser, 2012). “Countries or individuals that engage in cyber attacks should face consequences and international condemnation” (Prosser, 2012). In a quick rejoinder, the Chinese government responded as follows “The Google case should not be linked with relations between the two governments and countries; otherwise, it’s an over-interpretation” (Prosser, 2012).
China values stability after its 1960s chaos. However, it will be difficult for China to continue oppressing reporters and curtailing freedom of speech as China experiences massive internal migration ever in the world history.
The US has to be careful with China in its quest for democratic and transparent society. This is because the relationship covers issues relating to security, public-health, trade affairs, and economic development. This explains why the US is slow on China.
However, it is the World Bank’s outlook of China that raises matters of fundamental concern. According to the World Bank, the country has been on the decline in key areas such as application of rule of law (40 percent), control of corruption (40 percent), and democracy and accountability (8 percent). According to Keidel, these issues are “the economic basis for social unrest in China” (Gu and Prasad, 2011).
It remains unclear whether China can drive both economic development and a repressive system simultaneously. This Chinese style of handling both internal and external affairs for economic development is what observers call biggest gamble in history, which requires careful observation as it turns out.
Is there a possibility of war?
According to the former US ambassador to China, Jon Huntsman, Chinese economic development presents “both danger and opportunities to the US” (Schlesinger, 2012) as Schlesinger notes. Huntsman believes that Xi Jinping (the current vice president) can facilitate reforms that the US wants if he ascends to power. However, the challenge is whether the US is ready to engage, it strategic agenda on “market openings, trade expansion, and military relations” (Schlesinger, 2012). According to Huntsman, the possible war between the US and China can take the form of Peloponnesian complex. This was the war between Sparta and Athens in the 15th century B.C as a reaction to the rise of Athens. He argues that since this war, the world has experienced 15 significant global wars, and 11 of such wars have their roots from a “rising power bumping up against the existing power in the world” (Schlesinger, 2012). He points out that the issue requires diligence and sensitive management to prevent Peloponnesian complex.
According to Paul Craig Roberts, a former Assistant Secretary to the US Treasury in Panama, the main reason for the US invasion of Libya was to clear China out of the area. This also applies to the US interest in Syrian unrest where it wants to remove Russia. In other word, the US wants to dominate the Mediterranean by eliminating Russia and China. These countries have massive investments in these oil regions with Russia having naval base. According to Roberts, these two countries are in “the way of American hegemony in the Mediterranean and certainly the Americans do not want a powerful Russian fleet stationed there, and they certainly do not want China drawing energy resources” (EU Times, 2011). He notes that Russia and China will realize that the US cannot handle their issues in a rational manner and ready to subdue them, then all forms of confrontations can occur, including a major war.
On the other hand, China sees a possible American attack on Pakistan as an act of aggression against China. This is a strategic warning to the US. However, the US will not hesitate to invade Pakistan if terrorist organizations want to use its base and facilities to avenge the death of Bin Laden (EU Times, 2011).
Stephen Glain believes that the US reduced commitment to Iraq and Afghanistan targets Asia for a possible war with China. This has been the focus of Pentagon on acquiring and adapting a new concept called AirSea Battle specifically for China. Glain notes “a small group of US Navy officers known as the China Integration Team is hard at work applying the lessons of AirSea Battle to a potential conflict with China” (Glain, 2011). This is a program to support the 1992 Defense Planning Guidance. This is the Pentagon white paper that allows the US to thwart any rising power and competitor in ‘the global commons’ consisting of “seaways, land bridges and air corridors that are the arteries of international commerce” (Glain, 2011). Therefore, any foreign power challenging the global commons as technically declared war on the US. This is the case of China in the Diaoyu Islands’ contest.
Conclusion
China and the US have recognized the tension between them and have expressed the spirit of cooperation in handling such issues rather than resorting to rancor (Dingli, 2012). Both President Obama and Hu have chosen reconciliatory approaches in handling their affairs. Analysts are watching to see if collaboration will work in this case.
This approach is significant for the bilateral relationship between these two nations. This is because the US and China can resolve the international monetary squabble, create balance in trade, enhance the global security, and tackle effects of climate change (Wenjing, 2012).
Therefore, collaboration between China and the US has been effective in achieving meaningful gains. For instance, both the US and China supported financial stimulus plans during the fiscal crisis of 2008 in their G-20 meetings. Both countries have also expressed their support in IMF. In addition, cooperation of these countries has protected the euro zone from severe effects of the euro crisis.
There are two fundamental approaches to tackling the US and China issue according to Keidel. First, both countries can use the US-China Strategic Economic Dialogue (SED) to ensure China’s compliance with significant matters backed with forceful action from the Congress and other administration agencies if China does not accept the proposal. The second, approach involves both long-term and short-term collaboration on developing structures for resolving these issues slowly (Friedberg, 2012).
Meanwhile, before the US and China can realize any meaningful collaboration in bilateral relationships. The US should assertively use its indirect approach in handling gross misconducts of China in its areas of interests around the world.
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