US FOREIGN POLICY DURING OBAMA’S ADMINISTRATION: CHINA

- María Victoria Retondaro

Introduction

In this essay I will analyze the current relationship between China and The US, two of the “leaders” of the biggest world’s powers.

Current situation: “Chimerica”, China and the US during the Obama Administration

In 1971, when Kissinger visited China for the first time, the U.S. economy amounted to about five times the economy of the Asian country. Forty years later, following the industrial revolution unleashed by Deng Xiaoping, it is conceivable that China could overtake the U.S. in a decade. How China will use its newfound economic power could be the most important issue of our time.

In the past 60 years, the U.S. has exercised undisputed world leadership that began to be seriously discussed when the crisis exploded in 2008 due to its model of financial capitalism.

Barack Obama received from the administration of George W. Bush a complex and negative heritage: a country mired in an economic crisis and foreign policy weakened and poisoned by conflict in Iraq and Afghanistan, the cost of a heavy economic burden on the already battered American finance. The president needs to push geostrategic changes in its foreign policy firmly committed to dialogue, negotiation and pragmatism in an open and dynamic international setting in which many new players are and will be Asian.

Obama has acknowledged with humility the errors of the arrogant unilateral attitude by the Bush administration and the current limitations of the U.S. to act alone in addressing the complex global challenges. It's time for the US to share the defense of global public goods. The answer is now up to the international community, mainly to China.

In contrast with the characteristic unilateralism of the Bush Administration, Obama is embracing a multilateral attitude, applying (or trying to) democratic principles such as equality and pluralism of opinions to the relationships between countries, aspiring to reinforce the voice and power of every country in the decisions attaining international issues.

Obama's foreign policy needs to prioritize the relationships of all kinds with Asia. International relations in the first half of this century will be determined by the changing power relations between the United States with China, India, Brazil and other emerging countries.

Shortly after taking office, Obama declared that for America, the "most important bilateral relationship in the world was held with China”. The US has to face the challenge of conducting a pragmatic relationship with China.

                Economy

The U.S. needs to cooperate with China to bring back the effects of the economic crisis and addressing other global challenges such as climate change and nuclear proliferation. Both countries have many economic issues to "dialogue": the weak dollar, the yuan, the U.S. deficit financing or the temptations of a return to trade protectionism.

China is the largest U.S. creditor. The country bought over 900 billion in Treasury bonds and is still buying a debt that helps finance the huge U.S. fiscal deficit. China funds a large part of the U.S. Social Security and Medicare checks service, not to mention other forms of public spending. After the Federal Reserve, China is the largest holder of U.S. Treasury securities, to have $ 1.1 billion or about 7% of the debt.

In turn, the U.S. continues to import Chinese products that feed a huge trade deficit with China. This country is already the leading supplier of goods in the U.S. market. 

Since Communist China opened its economy in the 1980s, America has always imported more Chinese goods than it exports to the country. China is the third largest export market for U.S. after Canada and Mexico. U.S. companies exported a record $ 104.000 billion in goods to China last year, almost double the amount exported just five years earlier. The growth of exports to China is critical to the plan by U.S. President Barack Obama to double exports by 2015 at a general level, a move it says will create jobs among U.S. manufacturers.

In China, exists the aim of promoting investment and economic growth based on demand and domestic consumption, while reducing excessive dependence on export sector. Objectives that Washington has also demanded to Beijing to alleviate the strong U.S. trade deficit. The United States is concerned that China is saving too much at a time when the global economic crisis has caused a drop in consumption.

Chinese investment

China argues that America has not exactly been open to investment by Chinese companies. In one of the many offers rejected by national security concerns, the U.S. Commerce Department blocked the proposal of the Chinese telecommunications giant Huawei to build a new wireless network for emergencies.

"Chinese companies are willing to invest, but are being discouraged or rejected by the U.S. government," said Shang-Jin Wei, director of the Chazen Institute of International Business from Columbia University.

"There is a perception in China that the U.S. policy of foreign investment is not as open and transparent as the Government of the United States," said the expert.

The U.S. president announced that his intention is to cooperate with China in his new role of great power and do it in a pragmatic manner without letting differences on human rights create conflicts that could be dangerous for world peace.

Intellectual property

Last January, in his State of the Union Address, Obama spoke harsh words against China saying he wants to level the trade field of play. He announced the launch of a unit of trading control designed to detect cases against countries with unfair trade practices, including China.

Meanwhile, the US-China Business Council, which represents about 240 U.S. companies doing business in the Asian nation, encouraged Obama and Xi to focus on measures to deter faking and reduce the restriction on U.S. companies expansion into China.

To operate in China, the government requires U.S. companies to partner with Chinese

companies and share some of their intellectual property.

"There is concern in the United States on the protection of intellectual property rights, and China is beginning to recognize this," said Dwight Perkins, professor of economics at Harvard University. "If you do not protect property rights, means that the inventors of your country cannot protect their property. Eventually, sufficient Chinese people will be pressuring their own government on this issue."

External threats

The U.S. commitment to China is short, strategic and all its consequences.

"America will approach China," Obama said, "with an eye toward our own interests. And precisely for that reason it is important to get pragmatic cooperation with China on issues of mutual concern, because no nation can meet the challenges of the XXI century alone, and both the U.S. and China will be better if we're together. "

"We will not agree on everything," he acknowledged, "and the United States will never cease to speak in favor of fundamental rights, and that includes respect for religion and culture of all peoples."

Nowadays what is urgent for the United States is gaining support from Beijing in imminent problems such as the nuclear threat from Iran and North Korea, the war in Afghanistan and eradicating Islamist extremism in various regions, including Asia.

Human rights

The U.S. president praised "the peaceful assent" of China, but warned that "this extraordinary

development of the last two decades, this expansion of power and prosperity comes with increased responsibilities" with the international community.

"We want to work with China," Obama said, "but the country hast to work according to the same rules when it acts in the world economic system, and that includes making sure that there is balanced trade, not only between the U.S. and China but between China and the rest of the world. "

"On the fundamental issue of human rights," the president said, " we will continue emphasizing that we believe in the importance of recognizing the aspirations and rights of everyone."

Obama also claimed that China has to put its currency on the price it deserves and has to give up the practice of industrial piracy to get the recognition the country seeks.

In addition to human rights, the U.S. administration criticizes the treatment that the Chinese authorities give their various minorities.

Contamination

U.S. and China, the world's biggest polluters have made ​​official the failure of the climate conference held in Copenhagen. Leaders of both countries reported in Singapore to the Government of Denmark that it will not be possible to get at that time an agreement to significantly cut emissions of carbon dioxide.

It was assumed that the fate of Copenhagen was fully in the hands of the United States and China. Despite the evident willingness of the U.S. president to move in this matter, that arrangement has not been finally possible both by the resistance of China and by the inability of the American Congress to pass the energy legislation consistent with the purposes of Copenhagen.

Obama do not want to sign any agreement that will not be endorsed by Congress after. China, meanwhile, is unwilling to make appropriate movements in the field which are not backed up by Washington.

Conclusion

All in all, both countries are so linked in a mutually dependent for their economic well-being in which any attempt to break those ties would amount to a mutually assured destruction in financial terms. Just as a beleaguered U.S. economy cannot do without capital flows from China, the U.S. market is the lifeline of the giant Chinese exporter.

The US and China as allies are now united by such and interdependent relationship that economic historians Niall Ferguson and Moritz Schularick have coined the term "Chimerica" to illustrate it. U.S. and China "compete and take into consideration" mutually, at the same time.

It is hoped that the US-China relations, already underpinned by strong economic ties and four decades of political cooperation in a number of regional and global issues

will acquire a broader and deeper basis.

In fact, mutually interdependency with China suggests that it is unlikely that the U.S. intends to compete or to openly confront Beijing. The US is eloquent enough that even prefers to avoid the question of democracy, America prefers to lecture other dictatorships that the oldest and largest in the world autocracy, China.

Following, a comparative chart between both countries:

	CHINA	UNITED STATES
Territory	9 596 961 km2	9.826.675 km2
Population	1.347.350.000	313.537.000
Density	140 hab/km²	34.01 hab /km2
GDP per capita 2011	$8,400 (120º/226)	$ 48,100 (12º/226)
Human development index 2011	101º/187	4º/187
Life expectancy at birth 2012	74.84 (95º/221)	78.49 (50º/221)
Population growth rate 2012	0.48 (152º/230)	0.90 (120º/230)
Birth rate (nº of births/1000 population)	12.31 (158º/228)	13.68 (146º/228)
Infant mortality rate (deaths/1,000 live births) 2012	15.62 (111º/222)	5.98 (174º/222)
Health expenditures (2009)	4.6% of GDP (148º/189)	16.20% of GDP
Last PISA  Report Reading - PISA average: 493 Mathematics - PISA aver: 496 Sciences – PISA average: 501	1º/65 - Score: 556 1º/65 - Score: 600 1º/65 - Score: 575	17º/65 - Score 500 31º/65 - Score: 487 23º/65 - Score: 502
GDP (purchasing power parity) 2011	$ 11,290,000,000,000 (3º/226)	$ 15,040,000,000,000 (2º/226)
GDP real growth 2011	9.20 (7º/215)	1.50 (171º/215)
Unemployment rate 2011	6.50 (73º/200)	9.10 (105º/200)
Investment (total business spending on fixed assets) 2011	54.20 % of GDP (2º/186)	12.40% of GDP (174º/186)
Public debt 2011	43.5% of GDP (69º/137)	69.40% of GDP (32º/137)
Inflation rate 2011	5.4 % of (131º/222)	3% (57º/222)
Labor force 2011	816,200,000 (1º/229)	153,400,000 (2º/229)
Internet users 2009	389,000,000 (1º/216)	245,000,000 (2º/216)
Mobile cellulars 2010	859,000,000 (1º/219)	279,000,000 (3º/219)

Source: The World Factbook (CIA)