Sino-American ties delicately poised

During the years of the Cold War, US-Soviet Summits were dominated by discussions on issues such as arms control and Cold War rivalries. Bilateral economic ties were virtually non-existent. The two superpowers had little to discuss on the global economy.

With the US and China closely tied together economically, the major focus of attention in Sino-US relations is on trade, investment, market access and exchange rate mechanisms. This is even more necessary now, with the ongoing economic crisis engulfing the Western world, the American trade deficit with China in 2010 being estimated at $280 billion, and with the OECD countries unable to fashion a unified strategy to confront the crisis they face.

ECONOMIC ISSUES

The Obama-Hu Jintao Summit on January 22 was aptly described as a “meeting between a still dominant, but fading superpower, facing a new and ambitious rival, with suspicion on both sides”. China's economy continues to boom, recording a growth of 10.3 per cent in 2010. China has spent over $100 billion in aid to developing countries during the past few years — exceeding the aid given by the World Bank. Chinese aid is ostensibly without strings, but is mercantilist and focused on acquiring natural resources in recipient countries.

The US, on the other hand, is mired in an economic crisis with unemployment reaching 10 per cent and with a budget deficit estimated at 10.64 per cent of GDP. Moreover, the wars in Afghanistan and Iraq have drained the US Treasury, strained its ties with NATO allies and resulted thus far in the loss of 5,900 American lives. These conflicts have also resulted in 655,000 civilians killed and 4.2 million people displaced in Iraq. Afghan civilian deaths in the conflict are estimated to be between 14,643 and 34,240. American credibility and prestige have suffered heavily from these military misadventures.

AGGRESSIVE CHINA

If the Americans have miscalculated in military adventures abroad, the Chinese also seem to have been afflicted by hubris in recent years. In 1991, Deng Xiaoping advocated a strategy of “hide your strength, bide your time”.

Ignoring this advice, the Chinese have also been flexing their military muscle in recent years, resulting in their hitherto docile neighbours getting seriously concerned. China has aggressively sought to intimidate its neighbours, ranging from Japan and Vietnam to Indonesia and India, with strident and unilateral claims on its maritime and land borders.

Following the 26/11 terrorist strike in Mumbai, the Chinese media went ballistic, threatening to invade and takeover Arunachal Pradesh, if India retaliated against terrorist havens. Expressions of friendship and partnership from the incoming Obama Administration only increased Chinese “assertiveness”.

Mr Obama appeared more than ready to bow to Chinese demands during his November 2009 Summit with the President, Mr Hu Jintao, in China. Apart from conceding that Taiwan and Tibet were areas of “core interest” to China, Mr Obama pointedly avoided meeting the Dalai Lama before his visit and avoided reference to “human rights,” while in China. When China became increasingly belligerent, American silence led to US allies such as Japan and South Korea feeling abandoned. MrPresident Hu brushed aside American concerns on currency and other economic issues during the G-20 Summit in Seoul.

US CHANGES APPROACH

With domestic criticism of his China policies growing, Mr Obama adopted a more assertive stance during the Washington Summit. He spoke of the “universality” of “human rights” and religious freedom, compelling an evidently flustered Mr Hu to concede that “a lot has to be done in China in terms of human rights”. Mr Obama is also said to have urged his Chinese guest to enter into a dialogue with the Dalai Lama. The Chinese were persuaded to voice concern about North Korea's uranium enrichment programme (developed thanks to the exertions of Dr. A.Q. Khan).

The Americans had perhaps belatedly realised that Chinese nuclear and missile proliferation to Pakistan was vigorously continuing and that China had no intention of being on the wrong side of the Taliban in Afghanistan.

In substantive terms, however, the Chinese have made no concessions on monetary or other economic issues, but have succeeded in keeping American corporations on their toes, holding out prospects for lucrative deals in the future.

It is evident that as Chinese economic and military power grows, the US is going to be more circumspect and accommodating in dealing with China. The Chinese will, in turn, claim to be a “responsible power” by periodically responding positively to American concerns on issues such as nuclear proliferation in Iran and North Korea.

The Russians seem to be prepared to take advantage of this situation by extending selective support to the US on issues like their logistical needs in Afghanistan. These developments have created strategic space for emerging powers such as India, Indonesia, Brazil and South Africa to work with others to maintain their autonomy on global affairs. India has to show diplomatic dexterity in safeguarding and promoting its national interests in the emerging multipolar world order.