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The Obama Administration and China

Gunjan Singh is Research Assistant at the Institute for Defence Studies and Analyses, New Delhi. Click here for detailed profile
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  • March 05, 2009

    Prior to the Democrats coming to power the Chinese Communist Party believed that the Barack Obama administration will push harder on Human Rights and other sensitive issues. The stability in relations between Washington and Beijing during the Bush era appeared to be on test given that both Barack Obama and Hillary Clinton were quite critical of China during their election campaigns. But the visit by Hillary Clinton to China as the United States Secretary of State showed that the United States is less interested at the moment in raising human rights related issues, notwithstanding the report published subsequently where criticism of China’s human rights record was aired. The visit steered clear off any debate on Human Rights or arms sales to Taiwan. There was also no discussion on the issue of China’s alleged manipulation of currency to gain an advantage in the international market. Clinton made it clear that what she wanted to do was to discuss ways in which both sides could work together and not to highlight their differences.

    By not highlighting contentious issues, the United States has sent a clear signal that it is not interested in antagonizing China especially at a time when it needs Chinese cooperation to successfully handle the global financial crisis. Hillary Clinton in fact stated that China should continue to buy US treasury bonds to ensure that the financial crisis does not deepen further. For its part, China realizes that it has to continue to finance American debt so as to safeguard the value of its existing investments. As the Secretary of State noted, "By continuing to support American Treasury instruments the Chinese are recognizing our interconnection. We are truly going to rise or fall together."

    Hillary Clinton’s first ever overseas visit to the East Asian region highlights the ongoing power shift in international order from the West to the East and the recognition by the new administration of this reality. No other country captures this power shift better than China. China has the world's biggest foreign exchange reserves of about US $2.3 trillion dollars, of which $1.7 trillion are invested in US debt of various types. Continued Chinese investment in the American economy is necessary to finance the administration’s $787 billion economic stimulus package and to fund the ballooning budget deficit.

    In return for its financial assistance to shore up the American economy, it is quite likely that the Chinese would drive a hard bargain. Firstly, given growing concerns about climate change and the intense Western focus on China emerging as the second largest emitter of green house gases, Beijing could well demand greater access to green technologies. China’s bargaining could also extend to its other important foreign policy interests.

    For one, Beijing could insist that the United States gives less importance to its ties with Taiwan and desist from selling more arms to the ‘province’. It may be recalled that the American decision last year to sell arms (including guided missiles and helicopters) to Taiwan led to China’s decision to postpone and/or cancel a number of diplomatic visits. China could insist that at this critical juncture the United States should not upset bilateral ties as well as improving cross-Straits relations since the election of the KMT to power.

    Secondly, China could consolidate the crucial role it has been playing on the North Korean nuclear issue. On March 3, 2009, the new American envoy on North Korea visited Beijing in order to discuss ways and means of convincing Pyongyang to move forward on denuclearization. Progress on this issue has been contingent upon China’s willingness to exert pressure on the North Korean regime. Now, with America’s far more greater dependence on China in the economic realm, Beijing could well emerge as the indispensable power in Northeast Asia.

    Third, China could also seek to play a greater role in Afghanistan-Pakistan and in South Asia in general, the region which is the principal focus of the Obama Administration. China has important stakes in its all-weather friend Pakistan and has been steadily consolidating its ties with other countries of the region. Its greater bargaining power vis-à-vis the United States could well lead to efforts to further entrench itself in the region.

    India has indeed much to worry about, not just in terms of the jihadi threat emanating from Pakistani territory but also the silent consolidation of China’s influence in its neighbourhood.