China tangled up in red, white and blue
By Dingli Shen
China is keenly following the Democratic and Republican tickets in the United
States presidential elections - the Chinese Communist Party (CCP) even sent Ma
Hui, director for the Americas at the CCP Central Committee's International
Department - to observe the Democratic National Convention at the invitation of
the National Democratic Institute, marking the first time that the CCP has
participated in an American political party convention.
Numerous government-affiliated think-tank reports in China have repeatedly
stated that Sino-US relations are the single most important bilateral relations
for Beijing. Since Deng Xiaoping, the de facto leader of the People's Republic
of China from 1978 to the early 1990s, initiated China's economic reforms, the
United
States has facilitated China's opening and development by providing capital and
technology as well as an immense market for Chinese exports.
In 2006 US foreign investment in China reached $22 billion, more than twice the
amount four years earlier. Outsourcing by US businesses has propped up China's
growing labor market while generating more taxable income, which in turn
promotes social stability - and by extension the government's legitimacy in the
eyes of the Chinese polity.
These are facilitating factors that have accompanied the transition of the
Chinese economy from a centrally planned to a more market-oriented system.
Respondents to a recent survey published by the Institute of Sociology of the
Chinese Academy of Social Sciences (CASS) revealed that 75 % agreed that China
was stable and harmonious - although the same study expressed concerns over the
possibility of increasing conflict between the masses and government officials.
The Chinese view of its government's relations with the United States is
primarily based on economic terms and is shaped around the premise that it sees
China as a newly developing economy that offers opportunities to American
investors to expand their wealth. According to The 2008 Pew Global Attitudes
Survey in China, 55 % of Chinese respondents think China's economy has a
positive effect on the economies of other countries.
Low-cost Chinese manufacturing helps save $70 billion for American taxpayers
annually, which provides credit for the United States to spend additionally
elsewhere where needed. Beijing provides support to the currency of the US
government by investing heavily in US Treasury Bonds and government-backed
subprime mortgages at some $1 trillion in total.
According to Ha Jiming, the chief economist for China International Capital
Corp, it is estimated that China holds up to $400 billion in Fannie Mae and
Freddy Mac securities.
Parallel to this trend toward greater interdependence on the economic front,
Beijing has been the host of the six-party talks since 2003. Beijing has - in
measures proportionate to its evolving security interests - joined Western-led
international sanctions against Iran's nuclear proliferation. In reciprocal
measures China expects the United States to curtail Taiwan's move toward
independence. Beijing cannot accept Washington's intervention in a resolution
of the Taiwan Strait through its continued arms sales to Taiwan. Thus China has
been augmenting its military to render its threat to Taiwanese independence
more credible.
China as an election issue
China policy has been a major bone of contention in the past two US
presidential elections, especially after the end of the Cold War as the United
States fundamentally needed to remap and redefine its security environment and
national interests respectively. Former president Bill Clinton, when
campaigning in 1992, vowed to sweep away repressive regimes from Baghdad to
Beijing. President George W Bush came into power in 2001 with the belief that
China would be the United States' "strategic competitor".
In the 1992 and 2000 elections, it was more relevant for Beijing to watch who
would be elected in Washington, given the stark differences of the candidates'
China policy. Beijing tended to lean toward the side of the governing party: it
was Clinton who challenged the China policy of George H W Bush, and it was the
latter's son who was hostile to the China policy manifested in Clinton's second
term that emphasized engagement with China.
When welcoming Former Chinese president Jiang Zemin to visit Washington in
1997, Clinton even called US relations with China a "constructive strategic
partnership toward the 21st century". Compared to the 2000 election, the
salience of China as a contentious issue in the 2008 presidential campaign has
been much less pronounced in the race for the White House between Senator John
McCain and Senator Barack Obama.
This demonstrates to the Chinese that, within the past decade, there has
emerged a nascent bipartisan consensus on China in the United States: That with
US cooperation, China has successfully embarked upon economic reform and is
effectively shaping Chinese institutions. When coupled to the success of the
Beijing Olympics, these reforms have generated a great amount of Chinese
enthusiasm and productivity, as well as wealth that enrich both Chinese and
American. China's opening has made the country far more connected to the
international community, both strengthening the nation while exposing its
vulnerability due to increasing global interdependence.
The 2008 presidential election
Sino-US relations are stabilizing, and it has been less critical to base
Chinese assessments on the ideology and personality of the candidates. After
all, Beijing and Washington have managed to overcome the fall out from the
collision between a US Navy EP-3 Reconnaissance aircraft with a Chinese
jetfighter in 2001.
Bush has since visited China four times including his most recent participation
in the Beijing Olympics. Yet Beijing is still keenly observing US electoral
politics as the policy priorities of the different presidential candidates may
still diverge.
The United States is now China's number one export destination; China's exports
to the United States in the first six months of 2008 totaled $116.79 billion,
up 8.9% from the same period last year. Furthermore, China's export volume to
the United States stood at $232.7 billion in 2007, representing an increase of
14.4 % over the same period in 2006 [1]. In peacetime, the Chinese government
will first consider domestic economic development, measured primarily at this
stage by production and export, though often at the cost of environmental and
ecologic degradation.
The United States faces immense economic volatility, especially with the
subprime mortgage crisis coupled by the spike in oil prices as well as the
weakening dollar. Due to globalization, China's economy is now increasingly
intertwined with the rest of the world, in particular with the United States. A
decline in the US economy would undercut America's ability to consume, hence
reducing its demand to import from China.
Obama appears firm in advocating a value-based international trade system,
urging negotiations with the EU on a trade arrangement that will take labor and
environmental factors into account. Obama has suggested revising NAFTA (the
North American Free Trade Agreement) to allow similar considerations. Though he
has not said much about China, Obama has indeed indicated that his
administration will "use all the diplomatic avenues available to seek a change
in China's currency practice" to balance US economic relations with China.
Overall, Obama appears to take a tougher position on China regarding issues of
trade, currency, and environment/climate as well the protection of intellectual
property rights (IPRs).
McCain has also stressed the need to keep China committed to international
trade rules, protecting IPRs, reducing tariffs of manufacturing industries, and
honoring the promise for a market-oriented currency exchange rate. In the
meantime, he has noted that to assure US leadership, America shall seek
international cooperation rather than isolation, and global free trade rather
than national protectionism. He has also suggested that the United States
should provide necessary low-carbon-emission technology to China and India
because it would benefit America.
Whether Americans elect McCain or Obama as the next president of the United
States, there is likely to be less volatility in bilateral relations and fewer
concerns in Beijing that there will be any major policy shift in US-China
policy compared to previous elections.
Shen Dingli is a professor and director of the Center for American
Studies at Fudan University. He is also the executive dean of Fudan's Institute
of International Studies. He has a PhD in physics and did arms control post-doc
at Princeton University from 1989-1991. He was an Eisenhower Fellow (1997) and
advisor to the UN secretary general for strategic planning (2002).
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