The US and China – shadow boxing over economy?
May 5, 2011 17:15 Moscow Time
Recently, the US Commerce Secretary Gary Locke stated that China is reversing on its previously made promises to open its economy to foreign investments.
The statement could have gone unnoticed but for two factors. One is that next week high-level bilateral talks are to open, and second, maybe even more important is the fact that Mr. Locke is widely perceived in Washington as the next US ambassador to China. Such harsh criticism of a would-be host country is unusual in diplomatic practice. Combined with last week’s official statements made by the State Department on the situation with human rights in China, this statement made by the ambassador-to-be shows that it is the US that is revisiting its whole Chinese policy rather than China trying to close itself for foreigners.
The dispute between the US and China is long-lasting, and its basics are well-known. Recently China has become the world’s second-ranking economy in terms of GDP. The rates of economic growth in China also show that the time when it may surpass the US as the world’s leading economic power are not too distant.
More so, China is the biggest holder of US external debts. About a month ago, calculations showed that China holds more than 3 trillion of US dollar nominated accesses, which amounts to almost one quarter of the US GDP.
And only to add to all this, the US trade deficit in bilateral trade is not only amazing, but rather dangerous to US national security.
Definitely, none of the factors seem to be likely to comfort the US. The US leadership has for years tried at least to minimize the negative impact of the trade deficit, requesting (or, sometimes demanding) that China should revalue its national currency, the yuan, so that the trade deficit would not look this frightening. China made some steps towards the US claims, but definitely those steps were not considered to be sufficient.
That is probably why the very issue of human rights emerged. We know perfectly that the US never raises the issue when dealing with its allies – wherever that might be: in Asia, Africa or Latin America. But when it comes to demanding a direct economic profit, the issue of alleged violations of human rights by this or that country comes in all too handy.
Now, the claims that China is violating the universal principles of human rights have been supported by a clearly economic claim that actually leaves no doubts what the real US purposes in the field are.
Gary Locke has also stated that if he is approved as a would-be ambassador to China by the Congress, he will do his utmost to change the situation with the foreign (read, American) investment climate in China. Is it something different from just interfering into a sovereign state’s internal politics?
Of course, Mr. Locke did not pursue his line too lengthily, saying that “it is always better to choose cooperation over confrontation”. But this is only a logical conclusion from the fact that the biggest foreign country the US is indebted to is China.
Imagine that China would desire to ruin the whole US economy. This could be done very easily – by just declaring that China wants to sell out 20 percent of its dollar nominated assets. That would result in a total fallout of US stock prices incomparable even with the 2008 crisis.
On the other hand, since China does not have in mind any alternative venue for keeping its foreign currency reserves that would also result in an instant devaluation of all Chinese foreign assets.
So, China and the US may exchange harsh criticism indefinitely, but that will hardly influence the very basics of their relations (which have become the basics for the whole global economy). They will hardly take any decisive action against each other because such action could be suicidal for the country that endeavored taking any real action apart from just uttering words.
And words – like those pronounced by Gary Locke – may sound as long as there is an ear ready to listen to them. In fact, they do not change much.
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