A positive official tone masks U.S.-China tensions
“We have laid the foundation for a positive, cooperative, and comprehensive relationship for the 21st century,” said Secretary of State Hillary Clinton during the conclusion of the inaugural meeting of the U.S.-China Strategic and Economic Dialogue this past July. But three months later, the Obama administration leveled a tariff on Chinese tires. China fired back with an investigation into American chicken imports. While this exchange may not indicate a seismic shift in the U.S.-China trade relationship, such obvious strain contrasts sharply with the positive official tone.
The S&ED’s simple optimism fails to account for a range of issues, particularly trade imbalances and U.S. debt, which could fracture the foundation for positive cooperation between the United States and China. There are also less structural tensions, such as mutual mistrust and negative public perceptions. While there are several ways to improve attitudes, there will need to be a quick turnaround in the current direction of opinion.
Trade and Debt
In the three decades following Deng Xiaoping’s policy of “Reform and Opening Up,” economic issues have come to bind the United States and China tightly: the United States is the largest buyer of Chinese exports, and China holds roughly one quarter of American foreign debt.
Charles Freeman, a China expert at the Center for Strategic and International Studies, noted in an interview with the HPR, “For most of the last five years, household debt in the United States has been 130 percent of household income while household debt in China has been less than 30 percent of household income.” China, meanwhile, has built up a massive trade surplus.
Economists in both countries have decried the current trade relationship as “unsustainable.” Freeman argued that there would be “a lot of hard work” as the United States and China struggle to reverse the imbalances. “China must work to become a demand-driven economy and the United States less of a consumer driven economy,” he explained.
The recession has made this difficult adjustment even more important by augmenting American debt and stoking Chinese fears of U.S. currency inflation.
Imbalance and Interdependence
These economic tensions are exacerbated by trade spats, as embodied in the recent tariffs and probes. Stapleton Roy, former U.S. ambassador to China and current director of the Kissinger Institute on China and the United States at the Woodrow Wilson Center, told the HPR, “If we were to allow ourselves to get into a vicious cycle because of reciprocal [trade] measures justified by the actions of the other country, then the relationship could turn much more confrontational.” At the very least, threats of protectionism reveal a pretty and acrimonious underside to the relationship.
But the tensions become starker when viewed through the lens of China’s nearly $1 trillion investment in U.S. debt, which has helped to sustain the trade imbalance. Kenneth Rogoff, professor of international economics at Harvard, said in an interview with the HPR that the Chinese are “very concerned that the U.S. deficit is out of control and that someday, they could suffer a huge capital loss” due to their massive stockpile of Treasury bills.
Indeed, Chinese leaders such as Premier Wen Jiabao have often worried aloud about American financial problems. Talk of a new global currency to replace the dollar may be premature, but it has laid the rhetorical groundwork for future action. And in the wake of the financial crisis, Wen urged the Obama administration to meet China’s “expectations” with a proper response. “We have lent a huge amount of money to the United States. Of course we are concerned about our assets,” he explained. The seemingly inextricable nature of the U.S.-China economic relationship has raised the stakes and increased wariness on both sides.
Public Attitudes and Mutual Mistrust
Although elite perspectives are more often represented in the Western media, public attitudes in the United States and China are not as positive. According to Gallup, 55 percent of Americans now have a negative image of China, up from 25 percent in 1980.
In China, nationalist sentiment has surged, perhaps symbolized most clearly by this year’s bestselling book Unhappy China, which blames the United States and the West for many of China’s problems. “If China stood as the world’s top country,” reads one passage, “it would not act like the United States, which has been irresponsible, lazy and greedy and engaged in robbery and cheating.”
Suspicion of China in the United States runs deep and wide, ranging from distrust of authoritarian regimes to fear of a growing military threat. Robert Sutter, professor of Asian studies at Georgetown University’s School of Foreign Service, explained that negative feelings are “stronger outside of the executive branch of the U.S. government—they’re stronger in the Congress, and they’re certainly stronger in the media.” These bastions of mistrust can push the relationship in a dangerously confrontational direction.
Responsible Stakeholders and Transparent Dialogue: A Silver Lining?
Despite this negative trend, there are significant opportunities for both countries to develop warmer public attitudes.
To begin with, there is little indication that the majority of the Chinese public endorses the extreme views of Unhappy China. Some Chinese reviewers, in fact, have called the book “embarrassing” and “unconstructive.”
Second, mutual suspicion is partly derived from a lack of transparency in inter-government communication. As Sutter explained, “The American people, like you and I, don’t know what they’re saying in these [strategic and economic] dialogues, and that’s no way to build a consensus in the United States on China policy.” Greater openness about the tone and topics of high-level discussion between the United States and China could soothe suspicions on both sides.
Third, giving China a greater role in international institutions would undercut Chinese nationalist complaints about “U.S. hegemony.” For instance, China has yet to take a proportional role in global financial institutions such as the International Monetary Fund and the World Bank. Enabling China to become a larger stakeholder in multilateral organizations could improve perceptions of its role as a responsible stakeholder in the global community.
Getting Along
It is partly a testament to the power of diplomacy and dialogue that U.S.-China relations are warmer today than they were thirty years ago. As Rogoff noted, comparing the current era to earlier periods in the twentieth century, “The U.S.-China relationship has simply been much more constructive. They’re interested in promoting self-interest, but not in just causing trouble.”
This is an important distinction. The interests of the United States and China may frequently diverge over the course of the next century, but these tensions need not lead to direct confrontation. To interpret Clinton’s statement another way, faith in the fruits of cooperation is itself the foundation for a positive relationship.
“When we lose that common need for pragmatic cooperation,” said Sutter, “as a country we move in a very different direction in dealing with China.”