The US has much stronger and longer-lasting, and far less contentious, trading relations with our neighbor to the North, Canada. Canada is the number one source of our imported oil, natural gas, electricity, wood, and much more. This is the most intense trading relationship in the world and yet most Americans are unaware of it. They focus too much on our relations with China, and often in a negative way. China is our number two trading partner, but Mexico, our neighbor to the south, is not far behind at number three. Then there is Japan, Germany, the UK and South Korea next in line. Our trade with the EU and our neighbors are far more important than our trade with China in dollar terms.

US direct investments abroad also do not focus on China as much as many people think. The place we invested in most as of by the end of 2008 is, drum roll please: The Netherlands. This is followed by the UK, Canada, Bermuda, Luxembourg, Ireland and so forth. Our investment positions in China in 2008 were tiny compared to these other investments. We invested a lot more in the islands of the Caribbean than we did in China. The Netherlands, the UK and Canada account for 1/3 of our overseas investment position. We have invested far more in Australia than we have in China. In Asia the place we have invested most in is tiny Singapore.

China has tiny inward direct investments into the US. The most important inward direct investments into the US by the end 2008 were from the UK, Japan, The Netherlands, Canada, Germany, Switzerland, and France and in that order. China is a blip on the screen compared to these. Japan is the biggest Asian direct investor in the US.

Indeed China holds the largest amount of any foreign country of our treasury securities. However, Japan is not far behind as number two. Then there are the UK, "Oil Exporters", "Caribbean Banking Centers", Brazil, Hong Kong and Russia. (One wonders why the US Treasury still has Hong Kong separated out.) If we added up, Japan, the UK, "Oil Exporters", "Caribbean Banking Centers", Brazil, and Russia they would add up to twice China's holdings. Is anyone talking about that?

We are bound in complex interdependences with many countries and those countries are bound in complex interdependences with each other and also with still yet other countries. The economic connections between the US and China are powerful, but we should not neglect the importance of our very friendly neighbors to the north and our now struggling, but very important neighbors to the south. We should also not forget our more quite, but far more long-standing relations with our European friends and allies, such as The Netherlands, The UK, Germany, France, Ireland, and many more. We also have less talked about, but still very important, trade and financial relations with Asian countries which are not China, such as Japan and Singapore. Then we have our good friends the Aussies. I suspect very few in the US understand how deep and important our economic and other relations are with this massive country in the South Pacific.

The largest economy in purchasing power parity terms is the EU. Then there is the US. Then there is China. However, in per capita terms China is way behind. Qatar is number one with $86,000 per year. The US is number six with about $47,000 per year. The PRC is number 100 at $5,900 per year and that is a stretch. China has about 250 million roving unemployed. It has massive income inequalities both within regions and especially across the rural-urban divide. There have been thousands of demonstrations related to economic and land issues. Even with the one-child policy China has big problems in keeping up with the growing costs of its energy, schooling, transport and other infrastructures. There are lots of cracks in the Chinese façade. The EU is far ahead of them on many issues as are Japan, Singapore and Australia, for examples.

All of this is not to minimize the importance of China. This is a giant country with a massive population, a giant military, nuclear weapons, and great clout in many parts of the world we are also involved with. It is building a blue-water navy. It is building its military and diplomatic clout by the day. It is a power to be reckoned with.

Should we tread smartly and carefully with the Chinese? The answer is: of course. Should be we build more cooperation on energy, water, environmental, economic and other issues. The answer is: of course. Should we show sensitivity to Chinese interests and goals in our meetings with them? The answer is: show sensitivity, but keep a steady eye on our own goals and objectives.

Should we magnify the power, might and threat of the Chinese? No. We need to get real and treat them as partners in a very complex economic, political, diplomatic, and, yes, military, relationship. But we should not do this to the neglect of our other allies, friends and competitors. There are many teams on these fields.

The US is far too focused on China, Iraq, Iran, and Afghanistan to the detriment of our other interests. These other interests deserve more time and effort, and some of our best and brightest. Draining our skills and talent pools, especially in the military and the State Department toward such limited visions may prove to be the generator of more tragic and costly mistakes in the long run, which is the time period that really counts. We also need to put more time and effort toward the future problems and powers, which can be found in Africa, Latin America, and other areas where the relative effort neglect seems astonishing at times. Then again, good relations could start in the neighborhood with our friends in Canada and Mexico. Our neighbors across the pond, the Atlantic, are also vital, and by that I don't mean just the EU, but also Africa.

China could be a good and productive partner or it could be a significant competitor. Frankly, likely it will be both. Our relations may also be quite fluid and changeable at times. Such is life in the big leagues. We need to be prepared and trained, and thoughtful, skillful and clever.....just like China is expecting its people to be. If that means that both sides will need to play the complex games of give-and-take at many levels then so be it.

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Regarding Paul Starobin’s, “even though the Cold War ended more than fifteen years ago, there remains a vacuum, the absence of an ordering principle, in geopolitical life,” a very perceptive comment. But searching for an ordering principle may be the easier chore. Inducing or compelling obedience to it once found (and lets not kid ourselves: some degree of compulsion almost always is necessary) will be much harder than it has ever been.

In 2001 America was the G1. Now we say, G20. But what if another transfiguration is so underway as to be far gone?

Remember Bobbitt's "market state?" If Walmart were a nation-state, it would be China's 8th largest trading partner.

Maybe Bismarck's maps (and the nation-state elites that still exalt in their resplendent meaning) don't mean as much anymore.

Updated at 10:17 p.m. on Nov. 4.

Thanks to everyone who has sent in posts for this round. It is fair to say that there is a rough consensus among the bloggers that current talk about the Chi-America paradigm reflects a certain trendiness in geopolitical circles. Just as Japan was once widely seen as the ‘next big thing’ in the world, now China (and the Chi-America version of China’s rising role in the world) is often viewed in that light.

For what it’s worth, I have a quasi-cynical explanation for this and a substantive one. The quasi-cynical explanation is that there is a constant need in the geopolitical conversation, as in all aspects of discourse in our information-saturated society, to generate new paradigms. If not a continued American Century, if not a New Age of Japan, then why not Chi-America and books with action movie titles like “Superfusion?” (I say ‘quasi-cynical’ because this exercise can also be fun, and I’m not opposed to fun.) China is an especially good candidate for such speculation precisely because it is still so ill understood by so many in the West, even in expert circles, and also because its sheer size inspires fear. India, though approximate to China in population, and also a nuclear power, does not inspire a similar fear, at least in America—perhaps because India is a messy democracy (‘we’ get that).

Still, there are good substantive reasons for the China-inspired wave of speculation. First, as Jim Mann notes, something like an ‘economic G2’ of China and America does seem to be evolving as an anchor for the global economy. This could be—emphasis on could—a genuinely huge event for the world. Second, even though the Cold War ended more than fifteen years ago, there remains a vacuum, the absence of an ordering principle, in geopolitical life. So it is entirely reasonable, indeed I think necessary, to search for such a principle. It is also reasonable to search outside of Europe for the principle, since Europe cannot seem to make up its mind about how to exercise its power on the world stage. But in the end, for all the reasons Michael Brenner notes, it is just as easy to imagine friction as it is to imagine cooperation between China and America on big issues like resource supplies.

Christian Caryl suggested the G20 group, rather than any bilateral pairing, as the wave of the global future. While we’re at it—does anyone else want to put forward their own idea of the global paradigm to be? All suggestions welcome—paradigm away!

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China is important; it is every bit as much the rising power as it claims to be. Yet we should be careful not to overstate its importance relative to those of other countries, or, for that matter, the EU. Last month's Irish referendum in favor of the Lisbon Treaty gave the EU the green light to move forward toward more coherence, if not greater unification. As such, it will become an increasingly important force in international political, security and economic affairs, second to none in its importance to the United States .

India may not overtake China economically, but it too is a rising power, not to be ignored in the rush to crown China as America's next major partner. Its GDP growth has been impressive, and its military modernization program, which already benefits from leading edge development in conjunction with both Europe and Israel, will progress even further as it increases its technical cooperation with the U.S.

Brazil, already energy independent, is also one of the world's top agricultural producers. Indeed, major petroleum finds off the Brazilian coast may soon result in that country's becoming one of the world's top three oil exporters as well. Brazil has, in fact, weathered the financial crisis as well as any of the major devleoped nations.

Let us recall that it was not too long ago that Japan was seen as the next great American rival, a threat to buy up every major American asset. Japan's decades-long recession put paid to that threat, though not before several pundits made tidy sums selling Japan-bashing books that became best sellers.

Just as Japan hit an economic bump from which it has yet to recover, China too has the potential to run into trouble. Migration to the cities, as well as unemployment, remains a nightmare for the Beijing leadership. Global warming is rendering the Chinese north even more impoverished, and exacerbating the gap between the north and the prosperous south.China must remain on its economic growth treadmill, recording 8 per cent GDP growth or better, if it is not to face major internal dislocations.

Perhaps China will maintain its economic balance, but we cannot be sure. And so we cannot as yet create a new Chinese-American bipolar world, although no doubt there will be many analysts whose vision of such a world will get them on the New York Times best sellers list for what will purportedly be non-fiction.

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One of the interesting parts about working with a British-American firm is listening to btoh sides speak of the "special realtionship" between the two countries. For the British, it is a special relationship. For America, not so much. Britain is the old girlfriend that we want to maintain a relationship, occasionally take out to dinner, but don't really want to go much further. They think Athens to Rome. We think they are Athens, Georgia.

So, what does this have to do with China. Every time I hear about some grand alliance of their interests with our, I cannot imagine it. We are hardly a supplicant at this point. And they are hardly a superpower. But, both sides -- Washington and Beijing -- will act in their own interests. Sometimes those interests will conflict lie over Taiwan and human rights. Sometimes they will converge like on North Korea.

That being said, we are in an interesting dance right now. Beijing is gaining economic power and some additional clout around the world. For the time being, we are a big fat debtor nation -- as we have done at many points in our history. We owe them a lot of money. I'll go with the old aphorism -- you owe the bank a little and you have a problem. You owe the bank a lot and you have a friend. For now, Beijing will do us no harm economically beside occassionally yank our chain about various policies.

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Updated at 10:06 a.m. on Nov. 2.

The Chimerica idea is sexy. China’s growth is dramatic; America’s current account deficits are scary. So it’s very exciting to focus on the relationship between the two.

But this paradigm leaves out just a bit too much to be really useful.

America’s biggest trade partner is not China but the European Union.

Japan holds almost as much Treasury debt as China. And there are quite a few other countries that are also racking up growth rates just as impressive as China’s, even if they aren’t quite in the same league as American trade partners – yet. In the second quarter of this year India recorded annualized GDP growth of 6.1 percent – not shabby at all. The world’s economy is much, much bigger (and messier) than the bilateral relationship between China and America.

China is, of course, a very important country. I don’t doubt that it will soon become the world’s number two economy and can imagine a day when it might well become number one. And yet I think the single-minded focus on its relationship to the US is deeply misguided.

We seem to forget that, as China rises, so, too, do countries like India, Indonesia, and Brazil. Many members of Washington’s power elite still seem to be fixating on a bygone age when a few leading nations – the US, Germany, Japan – called the shots. Today, by contrast, the global economy is becoming more diverse by the day, less concentrated rather than more. Against this backdrop all the talk of a G2 sounds misguided; as big as they are, not even China and America together can solve all the problems of a much messier world. The G20 is a far more accurate reflection of global realities. So it will be harder to get things done in a group with that many members? Get used to it. As far as China is concerned, Washington’s tone should be respectful, businesslike, and unemotional – nothing more, nothing less.

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Chimerica (ChiCom) Chimera?

Perhaps Homer and Hesiod is after all a good place to begin: A fantabuous creature that Billy Mumy might have cobbled together in the dark reaches of the Twilight Zone from the parts of multiple animals: the body of a lioness, a tail ending in a snake's head, the head of a goat rising from her back at mid-spine.

That would be Chimerica.

I write this looking back from the chiaroscuro terror of the early 1950s. A movie I must have seen at age 6 — Steel Helmet — existentially attuned me in my nightmares to a vision not so distant from Orwell’s 1984.

To Americans who lived through that dark sink of consciousness perhaps Chimerica seems truly chimerical. But then there are my little children, happily soaking up Ni Hao, Kai-Lan on Noggin — and the Chimera looks like Darwin intended — genetically counterintuitive.

This is of course is the now-way to see a Chimerica future.

What is Chimerica? Well don’t you know? It is all about us. Call it late modernity’s grandest and greatest co-dependency: They stuff Walmart and we let them buy our dollars. Pretty good deal.

Americans generally understand this symbiosis. Some see it as threatening — mostly in the United States Navy, desperate to rediscover a long-sunk Mahanian fleet to fight, requiting angst from losing its precious Samurai-warrior enemy so many years ago.

But consider actual reality. What is China? What is the United States? And please, try not to flow into the molecular “now-conversation.” Just try jumping into the not-so-distant future.

The United States and China are today’s anchors of humanity. This does not mean that they are somehow inclusive or even embracing, but rather simply that these are the two most effective centers of humanity at this time — and at this time may be an important data point.

I believe that humanity is heading, whether it wishes to see this or not, to a crisis of globalization. Climate change, a coming energy crunch, and the negative consequences of human activity worldwide (as in, dying, anoxic oceans) will in just a few years become the urgent agenda for all societies everywhere. Severe water shortage, famine, and pandemic: these are, like or not, our shared human future.

The United States — as part of North America — is well positioned to weather the storm. China is in a far more vulnerable situation. Yet China like the US today is the global center of innovation and creative thinking. Our economies are also inextricably intertwined.

If in the next twenty years China faces the terrible challenges of massive desertification, death of its rivers and seas, massive weather events, and the stress of water shortages as Himalyan glaciers disappear — plus the famine that follows — The Question is:

Will the United States step up to the plate and ensure the survival of China?

So you see, this is not about some replay of “The Great Game” — Cigar grand strategy in a Victorian Gentleman’s club — nor is this is about a recherché to rediscover the perfect — and all-giving — new bi-polar world.

To be honest — the question begs itself by implication — India will be just as critical and essential as China in our future — and if this is a truly stressed collective future, the incumbency is on the United States to help save literally a third of humanity. The 3 billion Chinese and Indians of 2030 are — in sacred terms from our own and still-surviving mythic national mission — Our charge.

However slowly it works its way into our day-to-day consciousness: Our world is transitioning right now from its ancient (which is to say Cold War) neuralgias … To something entirely different. Most visible are the “people movements” — the riotous proliferation of non-state groups and movements, like a global Petrie Dish — unfolding before us without respect to future earth shocks waiting in the wings.

All of this strongly suggests a new vantage for us. It is a challenge to step back a bit from national security neuralgias, but we must. Can you?

Only then can we even begin as American to get ready to be leaders of a future we did not anticipate — and yet which nonetheless faces us ferociously.

If on the other hand we cannot face this thing, then our historical marker will become, year-by-year, increasingly clear. What we shirk — starting with China — will become the testament of how, over time, we fail our own posterity.

And they will be our sternest jury, and also, our final judge.

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Sun Rise, Sun Set
 
The sun rising in the East continues its ascent even while we distract ourselves in Iraq and Afghanistan. The shadows that it is casting over the international scene are visible nearly everywhere. Here at home, they noticeably darken the outlook for the country’s troubled financial prospects. The challenge to thinking through the full implications of China’s growing strength and confidence lies at once in its immensity and in its pervasive effects on all manner of international affairs.

It makes sense to begin with the big picture. In historical perspective, there is reason to expect a clash between today’s dominant power (the United States) and its putative rival. That configuration has led to direct conflict at every historical juncture except one – the transition from pax Britannica to American predominance. That exception is generally understood in terms of unique affinities and few differences over core interests. The latter had something to do with geography. A simple extrapolation of the logic at work in other eras points to a Sino-American contest for being ‘king of the hill.’ Such a rough comparison is inadequate, though. For all other things in the equation are not equal. What has changed in the world is the twin phenomena of deep economic interdependence and material well-being reaching at the apex of peoples’ wants and desires. The apparent correlation of the latter with internal political liberalization offers further encouragement that a status /power sharing arrangement might be arrived at without bloodshed or other nasty confrontations.

This, of course, is pure Kant – not just as a superimposed intellectual construct but a logic supported by actual developments in the world we inhabit. A very large segment of world affairs, defined both sectorally and geographically, does represent a partial reification of the Kantian vision, objectively speaking. American strategic attitudes toward China for the past two decades have followed this logic and have been grounded on that perceived reality. It is a bet of historic dimensions made for high stakes – the future stability of the international system. To state its underlying precepts simply, they are: (1) economic development roughly along free market lines brings with it an attendant political liberalization, even if the lag time is unknowable; (2) countries whose political system makes leaders accountable to the populace – preferably directly, possibly indirectly too – are likely to be peaceable in their external relation; (3) countries that place the greatest importance on economic well-being are less likely to be aggressive because of both the financial costs and, above all, the disruption of the fruitful economic ties across national borders; and (4) therefore, the more extensively China, and its economy, can be enmeshed in global markets and multilateral institutions for maintaining them, the better the prospects that China’s mounting power will not manifest itself in military actions or expansionist, empire building projects generally.

The United States, at the same time, has kept a strong military presence in the Pacific and East Asia so as to reinforce this logic by maintaining disincentives for aggressive behavior. This containment component of American strategy aims to remove temptation, e.g. South Korea and Japan, and to create an existential counterforce to any Chinese illicit ambitions. Taiwan, needless to say, is the most ticklish issue. Sooner or later, China expects its integration with the mainland in some form or other. The question is whether the larger strategic context will induce China to extend the time frame and loosen the notion of what integration means.

Even an optimistic view of Chinese power/influence progression cannot elide the many places and instances where there will be frictions. It is worthwhile to delineate them. Before doing so, it is useful to highlight a couple of features of Sino-American relations that will be omnipresent background factors. By far the most significant is that China is now and, as far as the eye can see, will be the United States’ creditor. The latter’s chronic budget deficits, trade deficits and currency value can only be managed with China’s benign assistance. It is incontrovertibly true that mutual dependence on stable global finance creates something of an economic Mutual Assured Destruction situation. None the less, this pronounced asymmetry cannot fail to exercise some constraint on American behavior toward China. For there are easy ways by which China’s action in the financial realm could generate immediate pressures on the American economy. The psychological effect, barely visible today, can be expected to grow down the road.

The second background factor derives from history. China traditionally has not been in the empire building business. It feels neither compulsion to achieve glory nor confirmation of its national mission by controlling directly other places and peoples. As noted back in May:

“China mtches the United States in the depth of its belief in its own exceptionality. Historically, China as Heaven’s Middle Kingdom was felt to stand at the summit of earthly attainments. There is a basic difference between the two countries’ self image, however. The United States’ sense of exceptionality and uniqueness is closely tied to its sense of mission as model and agent of world progress. Others are presumed to emulate the United States in aspiring to its achievements. The Chinese by contrast have no sense of mission. After all, to their way of thinking, no other people is capable of matching them. This may be a good thing in that there is no inevitable clash between two proselytizing nations.”

Against this background, here is a notation of foreseeable points of friction that one can envisage.

• Resource conflicts – especially over dwindling energy supplies. Consequences are already evident in Central Asia, Iran and the Gulf, Africa, and the South China Sea where politics intersects economics. Less charged competition for minerals is also evident.

• Multilateral interventions for humanitarian, peacekeeping or peacemaking missions.

• International monetary matters. Recent Chinese initiatives are the harbinger are more serious efforts to reduce the role of the dollar as the international transaction and reserve currency of choice.

• Power shares in multinational organizations – above all the International Monetary Fund for reasons indicated above.

Perhaps the greatest challenge the United States faces is the diplomatic one. This refers not only to direct dealings with China but also dealings with those issues where China will be a party one way or another. That means most matters of consequence. Incorporating the diplomatic factor into our foreign policy making never has been an American forte – especially where we do not control the field of action. We are strongly inclined to take our own counsel, make judgments and then declare our policy with the expectation that most will see the virtue of how we approach affairs and what we want to do about them. Consider policy-making on Iraq and Afghanistan. Contrast it to policy-making on Iran where the slighting of others is a big liability and where we have encountered difficulty in orchestrating an international strategy.

In short, China already is beginning to change just about everything.

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The talk of “Chi-America” is the popular version of the ongoing policy debates about whether the United States and China should team up as a “G-2” to try to coordinate their policies around the world, in a way that would place China above other countries or groups of countries (Europe,Japan, Russia, India) in strategic importance.

As a practical matter, I think that over the past year we have already seen the first signs of an “economic G-2.” The U.S. and China worked closely together to stimulate their economies after the Wall Street upheavals of 2008, at a time when other major countries were far more reluctant to do so. This economic cooperation has been heralded as a success and worked in some ways, but it has not produced any significant change in the value of the undervalued Chinese renminbi. During the 2008 campaign, then-candidates Barack Obama and Hillary Clinton both denounced China for holding down the value of its currency – and as soon as they took office, they changed their tune. And so for American factory workers (or unemployed former factory workers), the “economic G-2” hasn’t been working out too well.

When you go beyond economics to security and other issues, I think the concept of “Chi-America” or a G-2 is way off base. This idea is not anything close to a reality, now or anytime soon. China isn’t giving the United States the help it wants in resolving the disputes over the North Korea and Iran nuclear programs, for example. On security issues, I don’t think the Obama administration has been pursuing a “G-2” with China. For example, while seeking better relations with China, the Obama administration is also working hard to forge new strategic relations with India.

I think it was a mistake for Obama to postpone the meeting with the Dalai Lama. The administration was taking a step backwards, seemingly out of deference to Beijing. I think the administration was wrong, as a matter of principle. I also think this was a mistake as a negotiating tactic. If the administration got anything in exchange for the delay, we certainly haven’t seen it. Think about how this dispute will play out now. When he goes to Beijing, the president may inform Chinese leaders that he plans to meet with the Dalai Lama at some point after the trip. The Chinese will probably try to extract some other favor or concession in exchange for the eventual meeting.

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