Posted by: bklunk | December 14, 2006

Today’s Theme Seems to Be China

It’s taken over 50 years but what should we make of the fact that conflict between the US and China is no longer a shooting war in Korea, but tension over exchange rates?

China and the U.S.

China’s Growing Impact in the US

    For my last blog entry, I decided on focusing on the country of China. China is one of the world’s fastest growing economies and a catalyst for this is the World Trade Organization. The front page headline for the USA Today on Monday focused on China’s impact on the U.S. Five years ago, China joined the WTO, and since reaped the benefits. Free trade has opened China up for bilateral trade especially with America. Over $328 billion dollars flows between China and America each year in bilateral trade. This allows American companies to thrive and profit from the Chinese workforce. U.S. Corporations are able to outsource many jobs to China and pay cents compared with the dollars it had to pay before. This has left its mark in the American people. U.S. consumers pay less for items but have to compete for jobs with people overseas.

    China’s growing economical impact has caused U.S. Treasury Secretary Henry Paulson to travel to China to open up new “strategic economic dialogue” between the U.S. and Chinese governments. The American economy is slowing and analysts predict that there could be a recession as soon as next year. China on the other hand has a rapidly growing economy and its economy is on par with countries such as Japan and Germany.

    China’s economic growth has allowed it to invest in many American companies. Chinese companies are purchasing many U.S. companies causing for the bulk of China’s reserves to be in the form of U.S. dollars. China will attempt to keep expanding and growing and it is nearly impossible to hold them back.

    China’s growth as a nation makes it a threat to become the new hegemonic power. But a lot of things are holding China back. The gap between the rich and poor in China is vast, and it could never hold the world’s power if the gap doesn’t change. But America needs to do something to keep itself as and undisputed hegemon.

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  1. What an interesting outlook. America needs to do something to maintain hegemonic power. I can’t help but cringe when hearing this perspective, but at the same time, how can I deny it? It is scary, however, to think that some people are actually shaping policy, conducting business interactions, and writing academic papers with that theory in mind.
    WE need to maintain hegemonic power.
    WE need to win, OTHERS need to lose.
    I have recenly been struggling with the simplistic way in which many try to characterize internaional politics. I suppose theory and metaphors are necessary to understand the larger implicatoins of what is going on in the world, but to the extent that we study political theories, it feels like there is very little recognition of the complexity of each situation.
    The statement that America needs to do something to maintain its hegemony is understandable, but it does not look critically at more than one issue. America has a military dominance over any other country. There is no way that any other state will be able to match the US military capabilities within the next 50 years. The US is no longer an economic hegemon. We are vulnerable to fluxes in the world market and the economic decisions of the rest of the world. Why else would we be so reluctant to reduce trade subsidies in exchange for free market principles? It just might destroy our economy.
    Therefore, our military hegemony exists, but our economic hegemony has expired, and out political outwardness is now widely criticized around the world. If China becomes stronger in the international political realm, we might lose some of our economic edge or our international political influence, but if we maintain strong connections with China, does that necessarily harm our society?

  2. From the point of view of an American who takes advantage of America’s hegemonic power, I agree that our government must act to do ensure we dont lose it. As China grows economically, there will be a transfer of wealth from us to them. It is already happening. We borrow so much money from the Chinese government that they have to loan us more money so we can pay the interest. China’s low wage work force forces American companies to manufacture prodects in China because are workers can’t compete with people making a fraction of American minimum wage. You can’t deny that we are losing some of our economic power to China. And with that, the quality of life for the average American is going to fall. You already see that with the shrinking middle class.
    That being said, when you look at the situation from a neutral point of view, this is a good thing for the world. Under both realist and liberal theory, this should lead to peace. On the realist side, the pathway for peace if a distribution of power. On the liberal prespective, it is economic and political integration between governments which make it too risky for countries to go to war with eachother. While this may not be the best situation for the average American, it is the best case for the world as a whole.

  3. We haven’t always had hegemonic power. Walter Russell Mead, a leading US foreign policy thinker, has argued US foreign policy has only recently turned to high politics. Before the end of WWII, when we entered the high political arena, he argues, our foreign policy was mainly focused on economics.

    I would argue that the institutions set in place at Bretton Woods and thereafter were set in place to avoid WWIII, for such a war would have a large chance of being Armageddon. Concordantly, said policies created a global economic order that would tie countries together in such a fashion that war would be unthinkable.

    Kegley and Raymond point out the fact that although China has a large investment in the USA via treasury bills, the demise of the US would be drastic for China, since the US is their number one export market. Consequently, in a world where market forces ultimately rule the political decisions of states, there need not be a global hegemon.

    However, as Professor Rohlf, a Chinese historian, has argued, China wants to assert their “rightful” role as the global hegemon. This kind of scares me, and makes me think that the US should try to maintain its hegemonic position.

    However, I also believe that high politics have led to nothing but bloodshed. Many criticize low politics (economics) as doing the same, only through exploitation and income-gaps. I say the evidence points to the contrary, too much of which exists to rebut in this reply. Despite the hostilities during this infantile century, I would argue that it has been relatively peaceful given the bellicose history of man, our modern destructive capabilities, and global integration to the point where everyone is our next-door-neighbor.

    I would argue that state hegemony can only be debunked by low politics.

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