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US and China: locked in rivalry?

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Robin Lustig | 16:59 UK time, Friday, 5 October 2012

WASHINGTON DC -- Why do you think President Obama has blocked a Chinese-owned company from buying some fields full of wind turbines in the Western state of Oregon?

Why, on the other hand, is another Chinese-owned company building a network of 50,000 solar panels on a flood-prone field in Illinois? Come to that, why does the same company employ thousands of American workers in the car components industry, making things that, in some cases, are then exported back to China?

It's all part of an increasingly complex relationship between the world's two biggest economies - a relationship that is at the heart of the US presidential election campaign and will be at the heart of the American foreign policy debate over the next four years.

First, those wind turbines in Oregon. It so happens that the land on which they stand is close to a US military base at which unmanned drones are tested. The White House says having a Chinese company as a neighbour could threaten US security interests, so - for the first time in more than 20 years - the President has used his powers to block the sale. (The company says he has overstepped his powers, and is suing him.)

There are no security problems with the solar panels in Illinois, which are being erected in a field that isn't close to anything of any conceivable military significance. So the message from the US seems to be: Chinese investment, yes please, unless we think you could be spying on us.

For several years now, American politicians have accused China of "stealing" American jobs. Low pay rates and unsafe working conditions, they say, make it irresistible for American manufacturers to shut down factories at home and open up instead in China. More jobs for Chinese workers, fewer jobs for Americans.

Now, though, the picture is getting more complicated. Chinese pay scales have been on the up, the currency exchange rate has shifted so that it's no longer quite as favourable to Chinese exporters - and, as with those wind turbines in Oregon and solar panels in Illinois, Chinese companies are investing in the US, buying American companies and hiring American workers.

So what does all this mean for the future relationship between the two global giants? In a special programme which we hoped to broadcast last night, but which will run tonight instead, from the Carnegie Endowment for International Peace here in Washington, a panel of distinguished guests, including two former US ambassadors and one of China's leading strategic thinkers, discuss the challenges and opportunities that will face whoever wins next month?s presidential election.

They don't agree on everything, but they do agree that the relationship is undergoing a profound transformation. Quite apart from China's meteoric economic growth, which means that within the next few years it's likely to have overtaken the US as the world's number one economy, it is also about to appoint a new generation of leaders, and they, according to Professor Yan Xuetong, will want to develop "a new type of relationship". What that means exactly isn't entirely clear - although he does say it won't be anything like the old Cold War relationship between the US and the Soviet Union.

Will China go on investing in American industry? Yes, he says, because it makes good commercial sense. Should the next US president be cautious about encouraging such investment? No, say the former ambassadors, unless there are clear security concerns.

China has been increasing its military expenditure steadily over recent years; the US has been cutting back. And with rising tensions in the East and South China Seas, where Beijing is determined to protect what it regards as its essential strategic interests, there are inevitable concerns about the potential for naval clashes between China and one of America's regional allies, like Japan or the Philippines.

So yes, there is clearly the risk of trouble ahead. But what our panellists do agree on is that leaders in both countries are anxious to avoid them wherever possible. Increasingly, the relationship between Washington and Beijing is becoming a relationship between equals - and that's something America isn't yet used to.

You wouldn't know it from the way the presidential campaigns are talking about China, but maybe we shouldn't pay too much attention to anything they say in the run-up to a closely-fought election. The key will be what they do after Inauguration Day next January.


Comments

  • Comment number 1.

    History plays a role. The USA became quite interested in China around 1897. Mahan, Lodge and Hearst planned a war to steal bases from Spain to fuel ships making contact with China. (Familiarly, they claimed Spanish abuse of helpless Cubans as a pretext for intervention).

    China has endured many humiliations that they have not forgotten and this has produced a great sensitivity. Confucian practice requires that one always compromise and always preserve face. Conduct that violates these principles is not appreciated.

    China does not expect to reach military parity until 2050 and certainly would like to avoid armed conflict until at least then. Its commercial and diplomatic advances are done with the methods of the oriental game of GO, rather than with the rigid linearities of chess.

    I would say that the Chinese approach is one of competition, while that of the US is that of heavy-handed force. The US may be expected to behave in a rigid, inflexible fashion, while the Chinese, when not overly insulted, will move flexibly and deftly.

  • Comment number 2.

    A very interesting discussion, it opened for me many new angles to look at not only China-USA relations, but also European realities.

    The Chinese guest at times was a little difficult to understand --but not to an extent that the excellent arguments of all participants lost any of their significance or originality.

  • Comment number 3.

    The largest PC maker in China, Lenovo, made a stunning announcement October, 2012 when it said it will make laptops, tablets, & desktops IN THE UNITED STATES.
    It was an announcement that really surprised me because the United States has 2 premier digital suppliers - Apple and Hewlett-Packard; and both make virtually nothing in the United States, almost everything in China or Asia.
    Yuanqing Yang, CEO of Lenovo, said that the answer is more complicated than "growth opportunities" in the United States, and seemed to imply that the decision also had something to do with the Obama Administration upping rhetoric on Chinese investment in the United States.
    So, this leaves me asking: Why? Why is Lenovo making this announcement and not HP or Apple?
    After a little search, I found an answer directly from Lenovo: "The U.S. manufacturing line will be capable of turning out some of Lenovo's newest and most challenging products, such as the recently announced ThinkCentre M92p Tiny desktop and ThinkPad Tablet 2."
    Okay, so if Lenovo is claiming that it can make and/or assemble a ThinkPad Tablet 2 in the U.S. (early 2013), why can't Apple assemble a consumer device in the United States, or HP make a PC or a high-profile gadget?
    No matter how I searched, I couldn't find an answer from Apple or HP on why they don't/can't make things in the U.S., but Lenovo, which acquired IBM's PC business in 2005, seems to prepared to challenge that very assumption.
    Lenovo also plans to make "engineering workstations and servers".
    Most PCs at one time were made in the United States. Back in the '90s, a giant IBM U.S. facility was assembling the company's consumer PCs. At that time, so was Compaq with its sprawling PC manufacturing sites in Houston & Micron Technology in Idaho (Micron eventually sold off.).
    I haven't quite figured out why this reversal: China sophisticated manufacturing to the United States; I only know that it is happening.
    I do wonder how Obama would respond to this Chinese job-creation in the United States of America.

  • Comment number 4.

    "Lenovo also plans to make "engineering workstations and servers". Note that this is a step up from PCs and would a particular Californian acquisition very attractive.

    Long term, would Lenovo buy out IBM?

  • Comment number 5.

    *would make a particular

  • Comment number 6.

    #3 BB

    ´Lenovo´ bought ( majority stake)´Medion´(the German ´Aldi´ supplier) in 2011.

    http://news.lenovo.com/article_display.cfm?article_id=1447

    -- they are quickly expanding.

    http://news.lenovo.com/article_display.cfm?article_id=1635

    --your point is well taken.

  • Comment number 7.

    The EU commission is contemplating a European re-industrialization, to be presented on Wednesday. (Spiegel-German)

    -- The ´service industry´ based economies have taken more Europeans into poverty. Better paying jobs is the aim.

  • Comment number 8.

    Lenovo also plans to make "engineering workstations and servers". This is in another league beyond PCs. There is one California firm that would be an attractive takeover target.

    Would Lenovo eventually contemplate a takeover of IBM?

  • Comment number 9.

    #8 madmax

    -- Would probably be blocked --military reasons.

  • Comment number 10.

     

     
                    HAPPY THANKSGIVING DAY!


    to BluesBerry and all our Canadian contributors!

  • Comment number 11.

 

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