COMMENT:美中戰略經濟對話

A lot to work out together

Two days of strategic and economic dialogue between China and the United States ended last week. Both of them acted extremely friendly toward each other and sent out their highest rank personnel to talk about economic cooperation, climate change, energy issues, and regional security. But there were no firm commitments coming out of the talks. The real purpose was a display of unity.

What is going on? Although they have established diplomatic relationship over 30 years, China has always been a potential rival of the United States. During the Cold War they were ideological rivals, later following the growing of global political and economic influence of China, they have become global energy competitors. A rising China becomes a threat of the U.S.

According to an article written by Hillary Clinton and Timothy Geithner in the Wall Street Journal, they explained the strategic and economic dialogue between China and the United States on the basis that few global problems can be solved by either country alone, and in fact both of them have no choice but to cooperate with each other. They need each other.

As we know, China has the largest foreign exchange reserves in the world, mostly held in U.S. dollars. On the other hand, the U.S. national debt has reached its historical peak and most of its treasury bonds are held by China. The structure of interdependence has caught them in a prisoner’s dilemma. For China, they are worried about the U.S. economy and currency policy, if the U.S. decided to depreciate the dollar to mitigate their pressure on economy, it would affect the value of China’s dollar reserves and damage its export-led economic growth significantly. As for the U.S., they are afraid that China will take the lead in dumping the U.S. dollar, which might cause a chain reaction worldwide and cause severe damage to the U.S. and global economy. Based on their own rational choice, they realized that cooperation with each other is the only way to meet their best interests.

At present, the economy is the most important issue for both of them, other issues like climate change just are simply sideshows. And they do not even have to reach any agreement, except for being nice to each other. How long will the peaceful relationships last? At least, they will not breakup until the recovery of global economy is complete.

As Hillary Clinton said “while we are working to make China an important partner, we will continue to work closely with our long-standing allies and friends in Asia and around the world and rely on the appropriate international group and organization.” The U.S. still has not given up considering China as a potential rival.