China-U.S. Relations: Partners or Rivals?

HONG KONG, June 2, 2010 - The China-U.S. relationship is far more stable than it appears, observes James Fallows, national correspondent for The Atlantic Monthly. He told the Asia Society Hong Kong Center "It is more advantageous for the U.S. to deal with China as a partner than adversary because of the economic advantages. They will still disagree on some issues, but these disagreements can be contained and managed. There are more forces keeping the balance in place rather than disturbing it."

The Chief Foreign Affairs Commentator for the Financial Times, Gideon Rachman commented "Partners or rivals? They are both. They have managed their tensions very well. The rivalrous elements to the relationship are coming to the fore a bit more for a number of reasons. Partly because of the financial crisis, the U.S. is facing a crisis of confidence, but there is tremendous continuity on how the U.S. looks at China."

Amid accusations that China was a currency manipulator resulting in an unfair trade imbalance with the U.S., Fallows noted "Obama mentioned China only once in his State of the Union address. There is very little friction. There just hasn't been that huge fear. It is impressive how little of this pent-up friction there is in America."

Rachman though recalled comments made during the recent World Economic Forum meeting. "There was a significant moment at the Forum. Larry Summers openly said China was pushing mercantilist policies and indirectly responsible for very high levels of unemployment in the U.S.. One has heard that from maverick economists, even mainstream economists, but to hear it from a U.S. government official - that was an implicit threat."

On whether China had emerged as the dominant power in Asia at the expense of U.S. influence in the region, Rachman underscored "Unless we are unlucky, the U.S. and China are not actually going to come to blows in the Pacfic, but they are calculating how military power is shifting. Security hawks in the U.S. do worry because China is gaining new military capabilities. America is watching with concern."

Rachman remarked that in terms of the North Korean issue on China-U.S. relations, "I think North Korea is interesting of a diplomatic issue where at the first instance they share interests, but at the next level, their interests begin to diverge. The end game is a North Korean collapse, not South Korea. China will think ‘Do we really want a unified country in the western camp?'"

Fallows opined that the North Korea issue "is both an area of cooperation and friction. It is an illustration of how China's foreign policy gets more complicated as its power and responsibilities grow."

Meanwhile, Rachman viewed neither the U.S. or China as being happy bedfellows under the G2 concept. "The Chinese don't necessarily want to be alone in the same room as the U.S.. The U.S. is still a much bigger economy and much stronger militarily. It is not in China's interests to be one-on-one with the U.S.. For U.S. diplomacy, it is also difficult to have G2 as their traditional allies, Europe and Japan, will ask ‘What the hell is going on?'"

Commenting on the reality of G2, Fallows pointed out "For example, during the recent Middle East crisis, the first person Obama called was not Hu (Jintao) but other people. On the economy and finance, the U.S. and China are each others most significant partner. On others, they are not."

Reported by Penny Tang, Asia Society Hong Kong Center