Xin Wang, Founder and President of Charigo Center for International Economic Cooperation
Special for globaloverviewmagazine.com
China-US Summit expected to set a new model of China-US relations
After some 10-month close contact and arduous economic and trade negotiations since Trump administration was established, the conflicts and antagonism between China and the United States came out, then President Trump turned to confrontation policy to China, either in economic and trade, science and technology, security or in most of other bilateral and global issues. With this strategic division, corresponding counterattack policies and actions were seen nearly every day in rest of time of Trump administration.
After Joe Biden entered the White House, he summarized 3Cs in his policy to China: confrontation, competition, and cooperation. In general, President Biden has continued Trump's policy and added some of his political thoughts, such as reuniting American allies, setting Four-Country Mechanism targeting on China, restoring the NATO, expanding restrictions in technical cooperation with China, and picking issues like Hong Kong and Xinjiang to stigmatize China in American and world public media.
Of course, President Biden is somewhat different from his predecessor. In the past months, diplomatic channels between the two countries have basically resumed and maintained normal contacts, including meetings between senior diplomats, the new ambassadors began or soon to take their duties, frequent exchanges on climate change and the new joint statement. Normal communication finance and trade issues are also listed in two sides’ top agenda.
The summit on November 16 brought the world some good news, recognizing and clearly underlining the importance of China-US relations to both countries and world, reconfirming smooth and efficient communication to control conflicts, intentional or unintentional, especially military ones, and setting up four groups for further issues.
This paper, describing past and present of China US relations，emphasizes the impact and harm of confrontation and decoupling between China and U.S. to both the two countries and to the world.
A brief review of Sino-American political and diplomatic relations
In the years before the Korean War in early 1950s, the two countries did not have any official direct contacts. As a result, Korean War happened and two armies directly fought against each other, and both paid a heavy price for the war itself and the after. During the Vietnam War in the 1960s, China and the United States began ambassador-level dialogue in Warsaw after many attempts, as China was the most important supporter to Vietnam and U.S. gradually wished to end the war. Later, China-US table tennis diplomacy warmed up Sino-American relations, and then, Kissinger's secret visit to China and the visit of then President Nixon in 1972 realized. Soon after Nixon’s visit, the two countries established liaison offices, and formal diplomatic relations officially established on January 1, 1979. Chinese leader Mr. Deng Xiaoping's successful visit to the United States, bilateral relationship was heated up rapidly. Regarding the border war between China and Vietnam in early 1980s, although not directly show up, US gave China support behind its back and curbed the impulse of the former Soviet Union (USSR) to rashly involved in the war. As former Secretary of State Kissinger put it in his book On China, "this war opened the closest cooperation between China and the United States during the Cold War."
Such a close strategic cooperative relationship and China's reform and opening-up policy in 1980s brought China-US relationship into a honeymoon. For example, China-Vietnam border war exposed urgence for China to modernize its army, while American political and military circles also reached a consensus: A militarily strong China carrying out reform and opening policy would effectively contain USSR. Reagan administration speeded up exchanges with China to a comprehensive scale, including frequent ministerial and general visits to each other, thousands of Chinese students were sent to US, American technology and tourists came to China, as well as a large amount of advanced military supplies.
In the 1980s, the original triangular structure among China, US and USSR obviously moved to China-US emerged and USSR alone. United States won China, a former tough opponent of USA and a strong partner of USSR in 1950-1960s, freed from challenges from China and erased possibility restoring China-USSR alliance, and what is more, obtained a partner against USSR’s aggression (although China did not openly and clearly show its willingness to fully cooperate with US).
Soon after the 9·11 terrorist attack in U.S. in 2001, China actively supported American’s anti-terrorism campaign, warming up Sino-American political relations. In 2008, when the financial crisis broke out in U.S., China also showed a positive response in keeping international market stable and purchasing a large amount of US treasury bonds. So, we saw President George Bush flied to Beijing with his wife for 2008 Olympics. Eight-year Obama administration gave us a generally stable and cooperative China-US relations, mostly because U.S. needed China’s aid in recovering its economy and China concentrated more on its domestic development.
Sino-American economic and trade relations over the past 40 years
Soon after China and the United States officially established diplomatic relations 1979, a trade agreement was signed, and according to U.S. statistics, the bilateral trade volume in 1979 reached US$2.37 billion, two times more than 1978; US$63.5 billion in 1996, US $635.97 billion in 2017 and US $560.1 billion in 2020. The United States was one of the fastest import growth countries from China, and China is also the fastest growing market for the United States.
In the 1990s, especially during the Clinton administration, the United States has adopted a comprehensive engagement policy with China, and two countries committed to establishing a "Constructive Strategic Partnership for the 21st Century”. Despite the constant arguments and conflicts between the two countries on issues such as Taiwan and Tibet, the missile crisis in the Taiwan Strait in 1996 and the bombing of the Chinese Embassy in Yugoslavia in 1999, American’s investment to China had been increasing significantly, together with large-scale transfer of American science and technology to China, such as personal computers, and automobile manufacturing, almost flowed into China. After China's accession to the WTO in 2001, China-US investment and trade entered the fast lane, and China, year after year, became the largest trade deficit country of the United States.
The fundamental reason for the rapid development of bilateral investment and trade was the great differences in economic development level or called as the complementary economic structure. China was a developing country with low labor costs, but short of funds and technology as well as international business operation. America is a developed country with sufficient capital, developed science and technology and strong demand, but high labor costs. China’s main exports were labor-intensive products such as textiles, clothing, shoes, toys, household appliances and travel bags to the United States in the 30 years after 1978, while American’s were capital and technology intensive products such as aircraft, power and mechanical equipment, electronic devices, tele-communication and chemical products to China The complementarity structure had dramatically benefited to the two countries.
According to a report released by the World Bank in in 1994, the same goods were produced in U.S. consumers had to pay $14 billion more a year. For China, millions of workers found jobs in the processing and assembly industry exported to the United States and other developed countries and saved dramatic amount of funds for its future economic development, thousands of talents in science and technology as well as international business.
U.S. investment in China had also made great progress. By the end of 1996, the number of projects invested by the United States in China was 22,240, with a contract investment totaling US $35.17 billion. According to the report of Rhodium Group in 2015, American’s investments to China is as high as a cumulative amount of US $300 billion.
Over the past four decades, China has done its best to help the world and the United States recover from the Asian financial crisis in 1997 and the global financial crisis triggered by the United States in 2008. China also progressed from a developing country with simply agricultural and processing industry to the world's largest manufacturing and trade country. What is more, China is a major global market, major scientific and technological power and the largest tourism that can keep closer pace with the United States.
People-to-people and cultural exchanges between China and the United States in the past 40 years
According to the report released by the American Federal Immigration Enforcement Agency in 2016, about 353,000 young Chinese studied in the United States, accounting for 34% of the total number of international students in U.S., while the data released by the U.S. Immigration and Customs Enforcement Bureau (ICE), the total number of SEVIS records of F-1 and M-1 students in 2019 was 474,000. Information from Ministry of Commerce of China, Chinese students spent about $45,000 per capita in 2016, contributing about $15.9 billion to the United States, and $18 billion in 2017. Chinese tourists to U.S. amounted 249,000 in 2000, 802,000 by 2010, and 3 million in 2016, 3.17 million in 2017 with an expenditure of US $33 billion.
Changes in the strength balance and new structural contradictions in China-US relations
Such economic strength and the changes in various relations have brought new variables and dimensions to China-US relations, and the relations are not limited to the two countries anymore. Soon after war against terrorism and recovering from of the financial crisis in 2008 in the second term of Obama administration，U.S. started its Revolting Asia Strategy and TPP. In Trump administration, China, the second largest economy in the world, was no longer merely a manufacturing base, but a big country with international influence. China’s overseas investment and the "One Belt and One Road" had spread all cover the world. As a result, anti-China voice in U.S. from some politicians began to dominate media, and stronger voice after the Covid-19 started in early 2020. Then, U.S. and some western countries started a wide confrontation and suppression strategy to China. Because of repeated media publicity and the tireless speeches from some American and western politicians, "Anti-China" or China Threat, "Curbing China" had become part of the "political correctness" in American and the West. Now we see the China-US comprehensive relations has dropped to the lowest point since 1972, so did the relations in economy and the science and technology, even in education and people-to-people exchanges.
Outbreak of covid-19 in 2020 should have been a time to push countries to put aside their differences and join hands to deal with global common challenges, but the result is that it has exacerbated political extremism and the division of international political relations. Trump administration attributed the epidemic to China, and used it serving its domestic and international disputes. The Biden administration, actually, had the opportunity to readjust American foreign policy and China strategy, but due to the U.S. domestic politics and 2022 mid-term election and presidential election in 2024, Biden continues to move forward along Trump’s policy. These factors, coupled with the changes in China-US strength balance and other reasons, lead to the deterioration of China-US relations.
David Shambaugh, Professor of political science and international relations at George Washington University, believed that the deterioration of US-China relations this time is "systematic" and "structural". In the future, the model and dynamics of US-China relations will be confrontation, competition, and pressure. The challenge is how to manage the tension in the relationship to avoid turning into a comprehensive hostile relationship.
Future relationship between China and the United States
Facts we witnessed in past years tells us the China-US relations have shifted from engaging in bilateral understanding and economic exchange to focusing on competition and confrontation supplemented by cooperation, while overcoming various problems and frictions at the diplomatic and technical levels. For the United States at this moment, the most important is domestic issues and the strength balance with China in the future.
Biden's oppression of China's military forces in South China Sea inherits from Obama Asia Pacific Strategy and Trump’s Indo-Pacific Strategy, while in trade, science and technology and people-to-people exchanges, it’s easily to see it’s from Trump's decoupling strategy. In terms of diplomatic security, it has restored and courted relations with allies or countries around China, forming a situation of isolating and encircling China, including AUKUS, Four Country Mechanism, "Democratic Alliance". However, due to China's economic status and market scale, relevant countries will naturally consider their own relationship with China and U.S. mostly from their interests. It cannot be all as the United States wishes. For example, China is the largest trading partner of Japan, India and Britain, and China is also ASEAN and EU's largest trading partner. In addition, the sudden withdrawal from Afghanistan and the involvement Australia's submarine business with France (German manufacturers are also part of this deal) have had an extremely negative impact on American’s image and strategy.
Militarily, the United States encourages its allies to expand armaments to help the United States containing China, use Taiwan to tease China, and retreat its arrangement to the second island chain with Guam as the main fulcrum (this is why the United States forcibly intervenes in the French-Australia submarine business, wishing that Australia spend its own money to serve U.S. future military strategy). Now China's military power has become so strong that it is not afraid of the alliance of surrounding countries and the interference of the United States. Even the second island chain is also difficult to limit China's military power. Moreover, all relevant countries have their own interests and may not devote their financial and military resources wholeheartedly to encircle China.
Economic and trade relations are the most complicated part between China and the United States, and they still play the role of ballast. Although Trump administration tried to suppress Sino-US trade and even proposed decoupling, the trade volume has even increased comparing with previous year, especially American’s imports from China. After Biden took office, 35 American enterprises and chambers of commerce recently appealed President Biden to readjust its trade tariff policy with China as soon as possible.
1. As the world's two largest economies and permanent members of the United Nations Security Council, the global economy, security, and global issues need joint efforts of China and U.S. When China-U.S. relations is smooth and stable, some tough international problems could be better solved through consultation and cooperation. In the 2008 financial crisis, if China did not vigorously stimulate China's market demand, recovery of American and international economy would be a big question. Paris climate agreement is another good example.
At the current global epidemic is still rampant and economic recovery is still a great challenge, China and the United States should appropriately put aside their own interests, find common ground and strengthen cooperation. China-US Summit indicated the two countries are ready to restore working relations. Quarrel will be normal, but much better than NONE. Avoid falling into Thucydides trap will be the blessing of the people all over the world.
2. China’s rapid economic progress is mostly benefited from economic cooperation with U.S., but America also benefited a lot too, and so did Chinese and American businesses and people in the past 40 years. American enterprises have found a reliable, cheap, and well-trained labor force and omnipotent manufacturing base, thus obtaining remarkable profits. American consumers have enjoyed well-qualified daily necessities of competitive price, which also helps the United States avoid inflation and financial difficulties.
World economy has developed to varying degrees in many countries in the past 40 years driven by China and U.S., the two economic engines. America has been a leading role in science and technology, and high-end manufacturing, while industrialization of American technology has mostly depended on China. China-made American products , from shoes to Apple cellphones, go to the world. Meanwhile, many countries find markets in China and U.S., which led to the extensive development of globalization and formed a relatively complete and delicate supply chain all over the world.
3. Since the establishment of diplomatic relations, China and the United States both recognized the complexity of China-US relations. Whenever difficulties appeared, the two countries have always insisted that separating economy from any political or other issues, and rarely thought of military means. Trade and investment have played as a ballast for decades. Now there are countless chains, large and small, closely connecting the two countries. Once the political, military and trade relations are intertwined, it will be very difficult to straighten out China-U.S. relations or maintain relative peace. It will also bring confusion and immeasurable concerns to the world.
4. With the continuous expansion of people-to-people and cultural exchanges, including mutual tourism, cultural and educational exchanges, the two countries have been becoming culturally closer and understandable. A friendly atmosphere among peoples is a cornerstone of overall smoothness of China-US diplomatic relations. Therefore, the two countries should strive to avoid interfering with the normal people-to-people and cultural exchanges from political or others aspects.
Now it can be foreseen the rising tension between China and the United States in the past six months is expected to ease. Further fruitful communication between China and the United States in various fields will happen, especially in trade and people-to-people aspect. The attitude of some countries that followed American in opposing and curbing China will, to some extent, change their attitudes. South China Sea and Taiwan Strait will see more peaceful signs.
The Anti-China voice in U.S. is corporate in all parties and most of politicians, and we’ll see it continuing in coming years.But, all in all, the fundamental contradiction between China and the United States is still structural and complicated, that will remain for coming decades.
It is widely agreed that China-US relations is impossible for to return to that before Trump, and the two countries needs to explore a new relationship, that, it seems to me, a multi-color complex of confrontation, competition, exchange (including difference in values, new technology and trade) and cooperation (international issues such as climate change and Iran nuclear issue).
Stable communication between China and the United States, especially high-level communication, is important to understand each other. Serious conflicts between China and the United States (such as the Korean War) are mostly because of lack of communication. Good communication can ease or manage conflict, while poor communication increases mutual suspicion, and quite possibly lead to the result harmful to both or other relevant parties.
Both sides need to better understand each other, especially two countries in such different cultural and institutional environments and especially under the condition that the two countries are the world's largest and second-largest power. Better understanding is the fundamental way to avoid China and the United States entering a harsh state of war again.