China-US ties to grow

China-US ties to grow - experts

By Wang Jianfen (chinadaily.com.cn)
Updated: 2009-01-21 19:32

Obama's economic policies towards China

Bilateral ties between China and the United States are expected to grow even closer after Barack Obama took office on Tuesday, Chinese experts said.

In face of the worst global financial and economic crisis in decades, the two giant countries need more cooperation to regain their growth momentum, according to them.

Shi Yinhong [file photo]

"At a time of economic crisis, the US is in growing need of China," said Professor Shi Yinhong with the Institute of International Relations under the Renmin University of China. "It is an opportunity for the countries to forge full cooperation and develop closer ties."

Given that China's foreign currency reserves – the world's largest – are rising towards US$2 trillion, the US hopes that China can do more to help lift it out of the current situation. In the past months, China has continuously increased its holdings of US treasuries, after surpassing Japan in September to become the biggest foreign holder of US treasuries.

"If China continues to inject capital into the US via the purchase of US treasuries, which will help the crisis-hit nation weather the current crisis, bilateral ties are sure to improve," said Shi. While welcome at the US side, the Chinese move has been met with criticism at home, as critics describe the move as subsidizing the world's wealthiest nation.

Despite the positive outlook in diplomatic ties, Shi foresaw the potential of more trade conflicts between the world's two major economies, as the US slides deeper into a recession.

If American expectations for Chinese capital injection are not met, the US could show its discontent in China's currency value and financial market access, Shi explained.

His view was echoed by Jiao Liru, head of the China Institute of Contemporary International Relations (CICIR) in Beijing. Jiao said the issue of trade would be an area of growing disputes between China and the US this year and perhaps even beyond, as Obama, a Democrat, was more inclined to take a protectionist policy.

In case any dispute arise, China should refrain from overreaction, said Wang Yusheng, executive director of the Center for Strategic Studies under the China Foundation for International Studies (CFIS).

"Such conflicts may happen. We must be well prepared and deal with it cautiously, but overreaction must be avoided. The bilateral ties may stumble at some point, but will forge ahead in general," Wang noted.

Climate change is seen as another potential source of conflict. Obama might exert more pressure on China in this regard when he comes to power, while China, as a developing country, would only be able to do what it can to reduce pollution levels, thus a dispute may arise, according to Jiao of the CICIR.

However, he expected no major confrontation , as the two countries share the ultimate goal of alleviating global warming.

Wang Yusheng of the CFIS also anticipated closer ties between China and the US, which have become increasingly interdependent, particularly in the economic field.

Wang Yusheng [file photo]

"China needs the US. Likewise, the US needs China," said Wang, "After Obama takes office, the development of bilateral ties will be positive. If their core interests are seriously considered and properly respected, the ties would grow to a higher level."

Wang found some support for his argument from the 2008 US presidential campaign, in which Obama did not attack China as relentlessly as his predecessors.

This was because of not only the growing importance of China on the world stage but also the need for change as Obama has been stressing, according to Wang.

In the heat of his presidential campaigns, Obama said that United States had to maintain a "strategic military stance", so as to deal with challenges posed by potential "competitors" like China. But he also emphasized that the time are different now, and most of the powerful nations, including China, comply with internationally recognized rules.

He believed the biggest challenges posed by China are not military, but economic. He believed the US is more powerful than China, and American businessmen would continue to prosper in China for a long period.

Wang dismissed as naive the proposals by some in the US to build a Group of Two (United States and China) to co-govern the world. He criticized those Chinese experts and scholars who support the ideas, saying they overestimated the strength of China and forgot about China's principles on diplomatic relations.

China has observed the Five Principles of Peaceful Co-Existence while conducting state-to-state relations.

The Five Principles of Peaceful Co-existence are mutual respect for sovereignty and territorial integrity; mutual non-aggression; non-interference in each other's internal affairs; equality and mutual benefit; and peaceful coexistence.