Reluctant Partners: Global Crisis Makes US More Dependent on China than Ever

By Gabor Steingart and Wieland Wagner

When US President Barack Obama visits China this weekend, he will encounter a rival that sees the financial crisis as more of an opportunity than a threat. America, on the other hand, has been fundamentally weakened by the global crunch -- and is more dependent on the goodwill of the rising superpower than ever.

The scientists at the National University of Defense Technology in Changsha, China, had plenty to celebrate: They had developed a supercomputer that could perform more than a quadrillion calculations per second.

The announcement, released just in time for US President Barack Obama's visit to China this weekend, had symbolic value: With their new computer, dubbed "Tianhe" ("Milky Way"), the Chinese claim they will be the first country to become a direct rival to the superpower.

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Photo Gallery: China's Growing Confidence

China is bursting with self-confidence. The new world power sees itself as a winner in the financial crisis, with its economy growing by an impressive 9 percent in the third quarter, while the economies of the West struggle to recover from a deep recession. And while the Americans are focused on their own problems, China is expanding its influence, both in Asia and among resource-rich African countries.

China's leaders are challenging the Americans more and more aggressively, not least to demonstrate to their own population of 1.3 billion how far the country has progressed under their leadership.

In an article in the party organ of the People's Liberation Army, Air Force General Xu Qiliang announced China's plans to expense its defense capabilities deep into space in the future. By the mid-21st century, the general predicted, the People's Republic will have become a world power, and its air force will be required to defend the country against many kinds of threats.

Shifting Balance

Thirty years after the two major powers established diplomatic relations, the bilateral balance is now shifting in China's favor. When Obama arrives in Beijing this weekend as part of his first Asian tour since taking office, the Chinese will expect him to behave far more modestly than his predecessor. The president is unlikely to disappoint his hosts.

Judging by what his advisors have indicated in recent weeks, Obama will not inundate the Chinese with demands. The vision of a nuclear weapons-free world will have to wait. The calls for binding climate protection goals will only be mentioned quietly, if they are mentioned at all. The American will continue to press Beijing to revalue its currency, the yuan, but only at the expert level. Rarely has the superpower been this mild-mannered.

Obama describes his foreign policy as a new age of cooperation. He is seeking to develop a relationship with a Chinese leadership that he needs more than it needs him. About two-thirds of China's foreign currency reserves are denominated in dollars. Any abrupt shift on the part of Beijing would threaten the stability of the US currency. Cheap imported Chinese goods help push up the American standard of living and minimize the risks of inflation.

Washington has been particularly enthusiastic about China's economic stimulus programs: the Chinese launched the world's biggest investment program after the start of the financial crisis. Without their spirited course of action, the world economy could very well have imploded. Beijing's stimulus program amounted to about 13 percent of Chinese gross domestic product, making it almost twice as large as the US program and close to five times the size of its German equivalent. Obama's economic team has been deeply impressed by the success of China's stimulus policy.

The discussion that has begun in China over curbing government spending and tightening liquidity is happening too early for Obama's taste. When he visits Beijing, he will try to encourage the Chinese to continue playing their role as the principal driver of the world economy.

Meanwhile, the Americans see Europe moving from the passenger's seat to the back seat in terms of the US's international partners. It was former President George W. Bush who upgraded the Chinese by launching a G-20 summit process to combat the financial crisis, rather than leaving it up to the G-8 member states, as the German Chancellery would have liked him to do.

'Peace, Progress and Prosperity'

Obama is continuing this course of realignment. If, from the American perspective, there is anything resembling a tentative world government, it does not consist of either the United Nations in New York or the G-8. In Obama's opinion, the G-20 is the key forum.

Next to the United States, China is the most important G-20 member, and the Americans are treating it with appropriate deference. When she became US secretary of state, Hillary Clinton's first foreign trip was to Asia, to pay her respects to the new world power. "The United States is committed to pursuing a positive, cooperative relationship with China, one that we believe is important for the future peace, progress, and prosperity for both countries and for the world," she gushed.

Obama agrees with Clinton completely. "The relationship between the United States and China will shape the 21st century," he said in the summer. Sources close to Obama talk -- half seriously, half jokingly -- about a G-2 group of the world's two most important countries. In a recent opinion piece in the Wall Street Journal, Treasury Secretary Timothy Geithner and Secretary of State Clinton wrote: "Few global problems can be solved by the US or China alone."

Europe's importance has declined, primarily because the importance of Asian nations has increased. According to a new study by the European Council on Foreign Relations, Europeans believe that shared values and a common history are sufficient to ensure their permanent place at America's side, and they see themselves as the "natural partners" of the United States. But they are mistaken, the study concludes, because America's policies are defined mainly by its interests.

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Graphic: Key economic figures for the US and China Zoom
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Graphic: Key economic figures for the US and China

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Graphic: Change in American and Chinese GDP since 1990



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