With President Hu Jintao’s recent visit to the United States, the question of U.S. foreign policy toward China has again been brought to the table. The two countries are inextricably linked through trade, yet considerable tensions exist on issues such as the trade deficit and the lack of transparency in China’s defense budget. In our world of campaigns against terror and the rising threat of a nuclear Iran, maintaining and improving U.S. policy relations with China might seem trivial. However, a rising great power on the world stage is no small matter to the security of the United States. Our relations with China have the potential for great success or great disaster. Now is the time to engage this nation to secure our hopes for a mutually peaceful and prosperous future.
Since the implementation of the Open Door Policy in 1976 and its accompanying economic reforms, China’s economy has enjoyed an average annual growth rate of 9.5 percent and has emerged as one of the world’s largest trade markets. These trends have made China a major global player and have raised U.S. concerns about the effects of their development. China has emerged as the center of Asian-Pacific trade, and its bilateral trade has increased by as much as 250 percent, in some cases even 1,800 percent, in nations such as Japan, Singapore, Malaysia, and the Philippines. China has also modernized internally, but the increasing gap between urban and rural standards of living and the weaknesses in the banking and financial sectors indicate faults in the country’s socio-economic development.
Despite deep economic ties between the two nations, China’s secrecy in its internal politics has the potential to spark a U.S. foreign policy based on fear and mutual distrust. Dissolution through misunderstanding poses a real threat to our government’s current relationship with China. The United States is becoming increasingly concerned about China’s lack of transparency in its budget. China is one of the few global powers that does not publish an annual report detailing its allocation of funds, purchases, and projected expenses. This is of particular concern with regard to China’s defense budget. In 2006, China’s official defense budget jumped by 14 percent, rising to $35.3 billion a year. The United States, however, has claimed that China is masking its true defense expenditures, spending not $30 billion, but close to $90 billion a year, also that the increases have been in the “double digits,” since the 1990s. A spokesman for the Chinese parliament claimed that the increased official budget was “to cover fuel and salaries.” While China claims that increases in spending are occurring in proportion to its economic growth, China’s massive manpower and economic resources are a serious point of concern for the United States, which fears the acceleration of a regional arms race.
In addition to the mutual defense spending concerns, there exists the possibility of disentigration of the currently amicable economic relations because of disagreements over debt and trade. Currently, the United States’ net international debt has risen to nearly $2 trillion, accounting for five percent of its GDP, which is a high number when compared with European Union nations that keep their deficits below three percent of their GDP. China has purchased U.S. Treasury bonds currently worth over $200 billion, which helps to keep U.S. interest rates low and to finance the United States’ enormous international debt. The United States believes that the undervaluation of the Chinese currency, the yuan, is partly responsible for the high trade deficit the United States runs with China, and the Bush administration constantly pressures China for the revaluation of the yuan. The Chinese find the American position unfair. During his recent visit to the United States, President Hu Jintao stated that China would “take measures to meet U.S. complaints” about the bilateral trade imbalance, but also warned that the United States needs to take responsibility for its own economic problems. Indeed, it is estimated that the revaluation of the yuan would lower the U.S. trade deficit by only about one percent. This contributes to the Chinese opinion that the United States is willing to interfere with China’s development, but unwilling to address its own internal shortcomings. This image is not conducive to cultivating mutual trust and goodwill, as it fosters annoyance at an alleged meddling in the domestic affairs of another country. China wants to be viewed as a serious world power, and the last thing the United States needs is for China to fear being undermined by the United States.
Assuming that the United States moves toward a more effective relationship with China, there is potential for massive reciprocal benefits: a future where China and the United States work together as strategic partners for mutual economic prosperity and stability of the international system. We can create a dialogue that promotes positive, open, and honest engagement focusing on both economic and military issues by not framing interaction between China and the United States as an inherent security competition.
If our government commits itself to accept and assist China’s expanded role on the world stage, the United States would be investing in a peaceful and prosperous future.