Untold Facts

US-China new strategic equation

What happens when country A owns $800 billion worth of bonds from an international rival, country B? Country A starts to call the shots.

Yes, there’s a strong mutuality about that position - neither can afford the deterioration of that financial equation. But if that ‘money talks’ analysis sounds a somewhat crude estimate of the outcome of President Obama’s visit to Asia it is nevertheless where we are at this juncture in the relationship.

Above all, the meetings illustrated all too graphically how the world landscape of power has been transformed by the banking crisis in ways that no one could have imagined even a year ago.

For the Americans the good news is that their current position internationally - with debilitating commitments in Afghanistan and Iraq - could well improve dramatically in the medium term if the right decisions are taken. But for the Chinese a myriad of contradictions could mean the gloss comes off their rise to greater power and influence.

The meetings and their outcomes were classically Chinese - developing themes and directions and obtaining commitments, however vague, which will inform the relationship over the coming decades. Indeed, at first blush, it is hard to see what Washington took away from the exchanges in terms of specific gains.

First of all the Chinese were looking for some kind of long-term strategic relationship. They would have liked a ’strategic partnership’ which, in their eyes, would have been virtually indistinguishable from an alliance. That they did not get but they achieved a commitment to a regime of ’strategic bilateral trust’ - a gloriously vague term which may be invoked by Beijing at any moment when they believe the Americans are becoming too intrusive in their area of influence.

It raises more questions than it answers. Would it, for example, mean that Washington would have to adopt the Chinese’ understanding of the word ’strategic’, the area it covered and what maintaining that trust would entail? Does it mean that Washington must cease and desist from commenting on what happens in Tibet because it is part of the Chinese landmass and does it mean that American plans to step up their trade, influence and, in some cases, military relationship not only with Laos and Cambodia but also Burma where Chinese influence is all-pervasive will be put at risk?

Anybody interested in trying to help blighted minorities in the Asian hinterland or even atempt to beter the lot of the imprisoned Burmese opposition leader Aung San Suu Kyi must begin to consider the visit potentially a retrograde step, never mind enhancing our ability to disentangle truth from propaganda in northwest China where the Uyghurs are variously seen as an Al Qaeda franchise or a disenfranchised Muslim minority whose rights mean nothing to Beijing policy makers. We are also left to wonder what all of this means for Taiwan should the Chinese get restive if the inevitable unification does not follow their time schedule.

For their part the Washington policy makers have agreed to recognise a ’strong and prosperous China’ and to do nothing to hinder its economic progress, not that there was any viable alternative for a nation which is already so in hock to its Pacific partner.

In return Beijing deigned to recognise the United States as a power with geostrategic interests in the Pacific, something that has been apparent to the rest of the world for some time now and which, in any event, is no great concession from a rising power to a declining one.

That recognition appears to acknowledge that the two nations have interests in common and that Beijing might be willing to support U.S. regional interventions in the area in the future. That, of course, could work two ways and it may be that the U.S. will be able to use its influence to moderate Chinese behaviour against American allies such as Japan.

The U.S. also agreed to cooperate in the fields of aviation, aerospace and environmental technology which some observers see as a precursor to the lifting of the arms embargo against China that has been in place since the dreadful events of Tiananmen Square in 1989.

Two areas where the U.S. and China see prospects for mutually beneficial co-operation are in Iran and Afghanistan, though the balance of benefits would surely fall to Washington should they agree to take practical cooperative measures in both countries. And therein lies the overall difficulty for the Americans: they need the Chinese more than vice versa.

In its Iranian policy the new American administration has elected to pursue the same policy of sanctions that was pursued so fruitlessly by its predecessor.

So far Washington has failed to get decisive traction with any of the countries which can actually affect the outcome on sanctions. China is one of their few remaining hopes, albeit a slender one. And one of the few surprises of the Beijing meeting between the two leaders was the apparent commitment of the Chinese to take a more active part in resolving the standoff over Iran’s determination to develop its nuclear capability.

China is heavily commited to trading with and developing the Iranian hydrocarbons sector. The Iranians are a key element of Beijing’s plans to import energy across the Asian landmass by pipeline well away from the potential interdiction of its supplies through the Indian Ocean.

Already this year China has signed $8 billion worth of contracts with Tehran to help expand two existing oil refineries and to develop the large South Pars natural gas field. The Iranian national oil corporation, meanwhile, has invited Chinese firms to participate in a $42.8 billion project to build seven oil refineries and a 1,600 kilometre trans-Iranian pipeline that will help it import fuel from the country.

China, then, certainly has an interest in the maintenance of stability in Iran but it is hard to see what the Chinese might do to sort out the nation’s domestic political conflicts or to influence national policy on such a sensitive issue. Still, America needs all the friends it can get on this front But if it is to benefit at all it needs to recognise the growing triad of energy interests that is fast developing between China, Russia and Iran. Whether it can be navigated in support of America’s punitive policy against Iran is another mater.

On Afghanistan the United States is in a bind over its approach to China.

Beijing has recently commited itself to the largest-ever inward investment into Afghanistan worth $3.5 billion. This is its down payment towards the development of the Aynak copper field which is said to contain some $88 billion worth of the precious metal, a value which is roughly twice the country’s gross national product

Not surprisingly, this has won the Chinese a lot of friends in the corridors of power in Kabul but it is galling to the Nato allies and the Americans to see their troops effectively policing and protecting a strategic Chinese investment when Beijing is taking no discernible risk. And Beijing clearly does not intend to since it has declared that it wants to see a setlement between the various tribal factions at the earliest opportunity.

So, do the Americans try and get the Chinese involved with troops on the ground as part of the price of geting their hands on all that copper? Perhaps, but then a litle bit of instability on the route to China’s Muslim ‘back door’ in Xinjiang is not entirely to Washington’s dislike. The new Asian dispensation between Beijing and Washington is clearly going to be a complex exercise.

Author: David Wats
Source: The New Nation