USA and China – the future of the World


The USA and China are midway through their two dogs sniffing phase. While they spent many years eyeing each other up but with little impact on each others daily issues, this started to change after China entered the WTO, and China became a growing economy of note. Now they have sniffed each other and are deciding if they are friends or foe.


China affected the USA in the early part of this century and irritated because it did not accept pressures. As China grew further towards becoming the second largest economy, the USA was still mainly preoccupied with post Lehman and dealing with Russia, Iran and the smouldering Middle East.


But in the USA’s third pivot to Asia, President Obama turned significant military and diplomatic pressure on China, starting in 2011. China responded firmly with its positions in the South China Sea. Not surprisingly the two face each other, directly but more through surrogates like Japan and the Philippines.


The outcome is not clear.


The meetings between American leaders and Chinese in Beijing this week, seem to have gone quite well with understandings over access to each other’s markets, on steel and how to handle North Korea.


On the other hand the South China Sea will boil up in the next few weeks. Arbitration requires both parties to accept the principle of arbitration. This is a faulted process as there is no agreement to arbitrate.


The USA asks, perhaps insists, that China accept a ruling from a body that it does not accept itself – the underlying treaty – Unclos – has never been ratified by the USA.


So the idea that there is some Rule of Law notion underlying this does not stand examination.


Clearly some Asian nations are taking cover behind the USA military and diplomatic cover as they express their resistance to the growth of China. But China will not back down on the question of sovereignty.


So we can expect a ruling, and then much rhetoric, and nothing will happen except a battle of words and some skirmishes between ships and planes. It is unlikely that either nation will allow military contact but it could happen. China is going to be under pressure on its economic development changes and regional relationships. The Western media will have a field day.


So can the USA and China find their ways forward? Can the USA accept China as the regional prime partner, much as Germany is in Europe? They are similar. They both have the largest economies in their continents and both have the most focused and dynamic economies. The USA and Germany bump up against each other, usually on matters beyond the borders beyond the EU, and the same can be said of China and the USA.


The more important China’s economy becomes to the USA, the more the potential for a good outcome. And this is what happened in Beijing this week.


We will see how things go. It will grow in form over the next 6-12 months and the peace before the storm may appear forceful. But let us not forget 1971 and 1992. At both those times the USA and China were quite pitted against each other over Vietnam and then other matters. But then behind closed doors, and quietly, the two nations hammered out a deal to progress with each other.


So look beyond the headlines and remember that both nations have much to gain from freedom of navigation and a developing Asia. But it may get a lot darker before getting better. And who knows maybe the forces of darkness can cross all our doors.


We know that any use of conflict to achieve national eminence is too risky for the world now. 100 million died in the last century from war. A horrendous figure. But anything like the level of conflict seen then in the present century would take that figure towards 1 billion and demolish the global economy.


No the downside of conflict is too great and political leaders, whilst using feints, must be resolute in going for global and regional security and sustainable development. Whilst the USA is not a member of the AIIB, there is no doubt the world’s best development project – the New Silk Roads – is the best stimulant to the American economy over the next 30 years than anything else. China, spending its reserves on the New Silk Roads, would be a great stimulant to the American economy.


The $50 trillion of development over the next 30-50 years will produce huge opportunities for the USA, because they are the worlds technology leaders by a huge margin. The New Silk Roads can happen without the USA but what short sighted leaders would let that happen.


And lurking in the background is Democracy with Chinese Characteristics and an Asian compact which enables economic development, peace and balance. There may not emerge an Asian NATO, but an Asian compact based upon China, Japan and India and Iran is virtually costless to the USA while achieving its objectives.


Let us hope that Europe and Russia can find just such an outcome. It is not difficult if Europe grows and again the USA is a beneficiary of that.


May require some serious statesmen and women to get there on both continents but the benefits are huge. Growth. Real growth. And peace.




8th June 2016

Categories: Uncategorized

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