In the US, it is the latest thing to say China will be the country’s undoing. But the countries’ fates are too intertwined

Like his predecessors over the last two decades, US president Barack Obama will meet with the dalai lama on Thursday. As usual, China expressed its “resolute” objections to the meeting. What seems like the routine reaction to a visit by the Tibetan spiritual leader to a head of state has become a symbol of the increasingly strained relations between the US and China.

What is going on?

The Chinese government, on the one hand, has become more assertive in its relationship with the United States. It was, for example, also very vocal in its discontent over a recent American shipment of military goods to Taiwan.

But Obama has been showing his teeth as well. Just last year he declined to meet with the dalai lama to appease China. But recently he even lambasted China’s monetary policy, saying the country keeps its currency at an artificially low exchange rate to increase its exports.

Other sources of irritation abound. There is the festering conflict over climate policies. Restrictions on Google are another. And there is vexation over the Chinese veto on increased UN sanctions against Iran, even now the Islamic republic seems set to further develop its nuclear programme.

It appears the world’s two largest economies are on a collision course. At the same time, China’s increased assertiveness is interpreted as proof the US is losing its dominant position in the world.

The new must-read

The must read book for the Washington set today is Martin Jacques’, When China Rules the World: The End of the Western World and the Birth of a New Global Order. The journalist’s tome has a status amongst DC intellectuals best compared with Thomas Friedman’s The World is Flat five years ago. Obama’s economic advisor, Larry Summers, was recently spotted brooding over it on a plane to Davos.

To be sure, the US’ weak recovery offers a stark contrast to the unparalleled growth of the Chinese economy. The American political climate has become so embittered that Congress seems no longer able to reach agreements on even the most basic matters, such as the formation of a committee charged with eliminating the monstrous budget deficit. Fear has taken hold; many believe the superpower has become so weak it can only lose out to China.

Predictions of the country’s demise are an American specialty. It is part of the culture. Politicians like to predict doom to spur their voters into action: an American is supposed to rise to the interests of his country. For the evangelical christians, ‘the end of days’ is never far from mind, while opinion makers of a more secular nature rely on overblown assertions to sell their books. As a result, America’s continued existence is believed to be under constant threat ever since the Second World War. During the Cold War, the USSR was the country’s main bugbear, in the 1990s it was Japan, and now there is China.

The facts, however, tell a different story. The US economy is still three times the size of China’s. Only if China keeps up its breakneck pace of economic growth for the next 15 years will it become America’s equal in terms of gross domestic product. When it comes to poverty, infrastructure and military power, China has an even longer way to go.

In addition, continued Chinese growth need not hurt the US. James Fallows, a writer for the American monthly, The Atlantic, concluded the opposite after a three month stint in China. Growth there creates new potential markets and, at the same time, forces the US to deal with what Fallows considers its greatest problems. Fallow wrote that Chinese development could force the US to address the decadence that has caused politicians to leave the country’s biggest issues, namely health care, infrastructure and energy security unresolved.

Behind closed doors, the Obama administration seems to have a rather chipper attitude towards the national debt to China. Of course a lot of money is at stake, but it comes cheap, is the reasoning. The US pays next to nothing in interest.

China: a mid-sized bank

Moreover, from the White House’s perspective, the debt makes China dependent on the US’ recovery. The analogy has been drawn with the relationship between a mid-sized bank and a multinational. If such a bank were to lend all its money to one multinational, it would do whatever it takes to keep that company afloat.

From this perspective, US-Chinese relations have a stable foundation: the fate of the two countries is closely intertwined. This strengthened the US state department’s decision to chide China on its aloofness in international conflicts.

The foreign issues on which the US most wants China to take a stand are North Korea and Iran – two countries the US wants to isolate but with which China continues doing business. The Copenhagen climate conference and Google are more recent sources of frustration. China’s monetary policy has been an American bugbear for years, just as Taiwan and the dalai lama have been for China.

The recent surprise over what both parties said is not so much in their messages, but in their tone. Now China has actually decided to talk back to the US, the traditional meeting between the American president and the dalai lama has come to symbolise an increasingly strained relationship. Strain the American government has consciously sought, assuming there is little risk involved.

– Tom-Jan Meeus

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Updated and expanded new Chinese edition just released.

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Turkish edition just published!

When China Rules the World is the first book to fully conceive of and explain the upheaval that China’s ascendance will cause and the realigned global power structure it will create.

New edition available now from:

Amazon UK
and all good booksellers.

US second edition is available now via: 

Amazon US