Foreign Policy of China: China - US Relations

• US has a huge trade deficit (trillion dollar) – should’ve been devalued but wasn’t

  • More import than export

  • didn’t get devalued, because it is the global currency - special case

  • during import, currency flows out of the country – but a huge part of dollars in this case goes back to the US through investments in dollars

• China has a ship-building capacity that is 200 times bigger than the US’s

• Dollar is overvalued – so what they export is more expensive – less competitive

  • current goal: to devalue it – to balance out the trade deficit – bcz export would be more competitive

  • wants to relocate industry into the US – but still it’s cheaper in Asia

  • millions of jobs reenter the US (but that would mean a millions of migrants coming into the country)

    → the economic goals contradict the social goals

• US consumption is much higher than what they produce

• China produces way more than what they consume

  • that’s how they have been working together

  • 33% of global industrial output

  • their consumption won’t grow

  • rebalancing would take a decade and would lead to economic stagnation or recession – so China refuses to do that

  • Trump: China is gaining from the economic situation of the US (he is right in this), but he’s wrong in saying China made the US do this

• US goal: get rid of the American deficit,  re-balance, re-industrialize - forcing China to also rebalance

Sino-American relations and the hegemonic cycles

• hegemonic cycles - long-term cycles of economy – Kondratieff Wave (40-60 years) – end and start with huge economic crises (start with Great Depression, end with 2008)

Details of the Sino-American relations

• 1844, Wangxia Treaty

  • rented extra-territorial rights, fixed duties, the right to buy and possess land in China (for Americans)

• 1860, Tianjin Treaty

• ·         1868. Burlingame Treaty – Chinese-American friendship

  o   huge inflow of Chinese migrants into US – transcontinental railway was mostly built by these Chinese workers

  ·         1882. Chinese Exclusion Act – prohibited the further inflow of Chinese migrants into the US

  ·         1900. Eight-Nation Alliance – Qing court had to flee Beijing bcz of the attach of eight nations, China paying reparation money – thousands of tons of silver – the US actually spent this money on founding Tsinghua University – America still trying to be more benevolent

  ·         1911. Acknowledgement of the Republic of China

  ·         1937. American support against Japanese – support for Kuomintang

  ·         1950. US leaves China (PRC)

  ·         1955. Sino-American Mutual Defense Treaty – with Taiwan – US troops on the island

  ·         1950-53. Korean War – American troops directly fighting Chinese troops (“volunteers”)

  ·         1969. softening of American trade sanctions (against USSR)

  ·         1971. ping-pong diplomacy, secret visit of Kissinger to Beijing

  ·         1972. Nixon visits Beijing

  o   Shanghai Communiqué – liaison offices and One China Principle

  ·         1979. establishment of official diplomatic relations (transfer from Taipei to Beijing) + Taiwan Relations Act (protecting Taiwan from invasion)

  ·         1989. Tiananmen Square event – deterioration of relations

  ·         1996. Taiwan Strait Crisis – 2 China policy