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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.
Note
1. The US-China Business Council, US-China Trade Statistics and China's World Trade Statistics.
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).
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.
Note
1. The US-China Business Council, US-China Trade Statistics and China's World Trade Statistics.
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).
