Beijing’s Perspective: Sino-U.S. Relations and the 2008 Presidential Election

Publication: China Brief Volume: 8 Issue: 18

Americans will decide in November whether a Democrat or Republican will become the 44th president of the United States, and the whole world is weighing how the two political parties’ platforms and presidential candidates’ persona of “change” will impact the orientation of the world’s superpower and the new world order. China, as an emerging power, is no exception in keenly following the Democratic and Republican tickets for the 2008 American presidential election. The Chinese Communist Party (CCP) even sent Ma Hui, director for the Americas at the CCP Central Committee’s International Department, to observe the Democratic National Convention (DNC) at the invitation of the National Democratic Institute (NDI), marking the first time that the CCP participated in an American political party convention (Wen Wei Po, August 30).

Numerous government-affiliated think tank reports in China have repeatedly stated that Sino-U.S. relations are the single most important bilateral relations for Beijing (CICIR Report, October 23, 2002). Since Deng Xiaoping initiated China’s economic reforms, the United States has facilitated China’s opening and development by providing capital and technology as well as an immense market for Chinese exports. In 2006 U.S. foreign investment in China reached $22 billion, more than twice the amount four years earlier (New York Times, June 19). Outsourcing by U.S. businesses has propped up China’s growing labor market while generating more taxable income, which in turn promotes social stability—and by extension the government’s legitimacy in the eyes of the Chinese polity. These are facilitating factors that have accompanied the transition of the Chinese economy from a centrally planned to a more market-oriented system. Respondents to a recent survey published by the Chinese Academy of Social Sciences (CASS) Institute of Sociology revealed that 75 percent agreed that China was stable and harmonious—although the same study expressed concerns over the possibility of increasing conflict between the masses and government officials (Xinhua News Agency, September 12).

The Chinese view of its government’s relations with the United States is primarily based on economic terms and is shaped around the premise that sees China as a newly developing economy that offers opportunities to American investors to expand their wealth. According to The 2008 Pew Global Attitudes Survey in China, 55 percent of Chinese respondents think China’s economy has a positive effect on the economies of other countries (Pew Global Attitudes Survey, July 22). Low cost Chinese manufacturing helps save $70 billion for American taxpayers annually (Reference News, July 19, 2007), which provides credit for the United States to spend additionally elsewhere where needed. Beijing provides support to the currency of the U.S. government by investing heavily in U.S. Treasury Bonds and government-backed sub-prime mortgages at some one trillion dollars in total (The Associated Press, September 5). According to Ha Jiming, the chief economist for China International Capital Corp, it is estimated that China holds up to $400 billion in Fannie Mae and Freddy Mac securities (China Daily, September 12).

Parallel to this trend toward greater interdependence on the economic front, Beijing has been the host of the Six-Party talks since 2003. Beijing has—in measures proportionate to its evolving security interests—joined Western-led international sanctions against Iran’s nuclear proliferation. In reciprocal measures China expects the United States to curtail Taiwan’s move toward de jure independence. Beijing cannot accept Washington’s intervention in a resolution of the Taiwan Strait through its continued arms sale to Taiwan. Thus China has been augmenting its military to render its threat to Taiwanese independence more credible.

China as an Election Issue

China policy has been a major bone of contention in the past two U.S. presidential elections, especially after the end of the Cold War as the United States fundamentally needed to remap and redefine its security environment and national interests respectively. Former President Bill Clinton, when campaigning in 1992, vowed to sweep away repressive regimes from Baghdad to Beijing. President George W. Bush came into power in 2001 with the belief that China would be the United States’ “strategic competitor.”

In the 1992 and 2000 elections, it was more relevant for Beijing to watch who would be elected in Washington, given the stark differences of the candidates’ China policy. Beijing tended to lean toward the side of the governing party: it was Clinton who challenged the China policy of George H.W. Bush, and it was the latter’s son who was hostile to the China policy manifested in Clinton’s second term that emphasized engagement with China. When welcoming Former Chinese President Jiang Zemin to visit Washington in 1997, Clinton even called U.S. relations with China a “constructive strategic partnership toward the 21st century.” Compared to the 2000 election, the salience of China as a contentious issue in the 2008 presidential campaign has been much less pronounced in the race for the White House between Senator John McCain and Senator Barack Obama (AMCHAM-China’s China Brief, October).

This demonstrates to the Chinese that, within the past decade, there has emerged a nascent bipartisan consensus on China in the United States: That with U.S. cooperation, China has successfully embarked upon economic reform and is effectively shaping Chinese institutions. When coupled to the success of the Beijing Olympics, these reforms have generated a great amount of Chinese enthusiasm and productivity, as well as wealth that enrich both Chinese and American. China’s opening has made the country far more connected to the international community, both strengthening the nation while exposing its vulnerability due to increasing global interdependence.

The 2008 Presidential Election

Sino-U.S. relations are stabilizing, and it has been less critical to base Chinese assessments on the ideology and personality of the candidates. After all, Beijing and Washington have managed to overcome the fall out from the collision between a U.S. Navy EP-3 Reconnaissance aircraft with a Chinese jetfighter in 2001. President Bush has since visited China four times including his most recent participation in the Beijing Olympics. Yet Beijing is still keenly observing U.S. electoral politics as the policy priorities of the different presidential candidates may still diverge.

The United States is now China’s number one export destination; China’s exports to the United States in the first six months of 2008 totaled $116.79 billion, up 8.9 percent from the same period last year. Furthermore, China’s export volume to the United States stood at $232.7 billion in 2007, representing an increase of 14.4 percent over the same period in 2006 (China Daily, August 15) [1]. In peacetime, the Chinese government will first consider domestic economic development, measured primarily at this stage by production and export, though often at the cost of environmental and ecologic degradation.

The United States faces immense economic volatility, especially with the sub-prime mortgage crisis coupled by the spike in oil prices as well as the weakening dollar. Due to globalization, China’s economy is now increasingly intertwined with the rest of the world, in particular with the United States. A decline in the U.S. economy would undercut America’s ability to consume, hence reducing its demand to import from China.

Senator Obama appears firm in advocating a value-based international trade system, urging negotiations with the EU on a trade arrangement that will take labor and environmental factors into account. Obama has suggested revising NAFTA to allow similar considerations. Though he has not said much about China, Obama has indeed indicated that his administration will “use all the diplomatic avenues available to seek a change in China’s currency practice” to balance U.S. economic relations with China. Overall, Senator Obama appears to take a tougher position on China regarding issues of trade, currency, and environment/climate as well the protection of intellectual property rights (IPRs).

Senator McCain has also stressed the need to keep China committed to international trade rules, protecting IPRs, reducing tariffs of manufacturing industries, and honoring the promise for a market-oriented currency exchange rate. In the meantime, he has noted that to assure U.S. leadership, America shall seek international cooperation rather than isolation, and global free trade rather than national protectionism. He has also suggested that the United States should provide necessary low-carbon-emission technology to China and India because it would benefit America.

Whether Americans elect Senator McCain or Senator Obama as the next president of the United States, there is likely to be less volatility in bilateral relations and fewer concerns in Beijing that there will be any major policy shift in U.S.-China policy compared to previous elections.

Notes

1. The U.S.-China Business Council, US-China Trade Statistics and China’s World Trade Statistics, http://www.uschina.org/statistics/tradetable.html.