The United States and China: friends under compulsion

By Stanislovas Stasiulis

The United States and China could be considered the two super powers, but one is dealing with the financial crisis and seeks to keep its dominant position in global politics, and the other pursues economic growth and expands its military power. This impression occurred during the summer discussions in the U.S. House of Representatives and the Senate, when budget deficit problems were solved by raising the U.S. debt ceiling by several trillions dollars, and when the ratings agency Standard & Poor‘s downgraded the U.S. credit rating to AA+ from its top rank AAA. China criticized the economic policy pursued by the White House.

Beijing urged the world to introduce a new stable reserve currency and new mechanism of international supervision over the issue of U.S. dollars. The events in Washington were criticized by China. Moreover, China test-sailed its first aircraft carrier providing for the development of the program for construction of these fighting carriers. China is not yet involved in the aircraft carrier building, but the country upgrades the strike-fighter J-15, which is an updated version of the Russian designed Su-33 fighter jets. On 10 August China started sea trials of the reconstructed Russian cruiser Variag which was purchased from Ukraine in 1998, had no military armament or even a navigation system and was used as a floating casino.

China is the largest foreign creditor of the United States, whereas the U.S. is a major market for Chinese exports. It is natural that Washington didn’t like China’s criticism. Washington called for more transparency with regard to military cooperation. One not transparent incident was fixed at the beginning of this year during the test-flight of a new and radar-invisible Chinese stealth fighter J-20 (during the visit of the U.S. Defense Secretary R.Gates in China). According to the U.S. Defense Department, China appears on track to forge a modern military by 2020, but the increasing military power might increase tension with Taiwan (considered by Beijing part of its territory), Japan, Philippines, Vietnam and South Korea.

Has the Chinese domination period begun? According to Arvind Subramanian, an expert of the Peterson Institute for International Economics, though China’s economic growth will slightly decrease, this will not diminish China’s role. China’s economy has already become part of the global financial system and is related to the economic situation of the United States and other global markets. China invests billions of dollars in real estate purchases in the U.S., buys Spanish, Greece and Italian Government bonds, and acquires more international power. At the same time China becomes more dependent on the economic situation of other countries.

Thus, China’s criticism toward the U.S. should first all be evaluated as a concern about its own future. In principle this situation demonstrated that “Sunset of the West” would mean Beijing’s defeat, not victory. The is evidenced by the fact that Chinese central bank urged the White House to act on debt and dollar devaluation, including the situation two years ago when president Barack Obama announced the health system reform, and Beijing started wondering where the U.S. would take money for its implementation and how the reform would affect the country’s budget.

Though bilateral U.S.-China relations are far from perfect, both countries are interested in the retaining the relationship. They have different political systems and pursue different ideologies, but are economically dependent on each other. Economic instability in one of the countries would result in a chain reaction in the other, and this is not in the plans of Beijing and Washington. Forecasts of certain political observers concerning Beijing’s domination in the global political life would hardly come true. Although growing China’s economy makes its voice stronger in solving global political problems, Beijing would hardly catch up and out-distance the United States in the near future.

The growth of the Chinese military potential shouldn’t be underestimated as well. The country’s military budget is increasing annually, but its armament is a combination of the old soviet machinery and new technologies. Although China could attack weakly armed neighbors or the U.S. military bases in South Korea or Japan, its current military potential is far from the U.S. power.

Although today some Beijing’s officials use military rhetoric, real actions are hardly possible. On the contrary, combative statements of the Chinese authorities urge certain countries of the region to turn their eyes to Washington which has many allies in the region. Theoretically possible conflicts between China and its neighbors would destabilize the region, but this could affect China’s further economic growth which so far is the main priority of Beijing.