Monday, March 9, 2009



"There is a common interest in the US as well as in China in maintaining and strengthening the present economic linkages without lettingthem be damaged seriously by what a Chinese analyst has called the tumours in the otherwise healthy organism of Sino-US relations whichkeep appearing from time to time such as the Taiwan, the proliferation, the Tibet and the National Missile Defence (NMD) issues. Thepolitical leaderships and the business class in the two countries would see to it that these tumours do not become malignant. One saw thatduring the Clinton Administration and one would see that during the Bush Administration too. After the present phase of rhetoric andconfrontation, moderation would again set in at Washington as well as in Beijing. It would be unwise and short-sighted for India to think thatthe present confrontation would last for long and that it could strategically take advantage of it."

2.So I wrote on May 14,2001, in an article titled SINO-US RELATIONS: THE ECONOMIC ASPECT available at . That article was triggered off by a surge in US rhetoric in relation to China afterPresident George Bush assumed office on January 20,2001.

3. There has been no surge in US rhetoric vis-a-vis China after Barack Obama assumed office on January 20,2009. On the contrary, the focusof his advisers has been on identifying and expanding the mutual comfort features in the bilateral relations rather than on those features,which tended to cause friction in the past. The references from Washington DC to human rights issues---- whether they be in relation toTibet, Myanmar or the Chinese role in the Sudan--- have been muted. Mrs.Hillary Clinton, the Secretary of State, hardly mentioned them inpublic during her visit to Beijing from February 20 to 22,2009. She attended a Church service at Beijing apparently to underline continuingUS interest in the question of religious freedom in China, but avoided any comments on allegations that the Chinese authorities, whilewelcoming her visit to a church, took care to prevent any Christian dissenters from having interactions with her at the church. The normalexpressions of concern over China's military spending too were equally muted.

4. The focus was on the role which the US and China could play in jointly halting the unrelenting slide-down in the global economy and howthe two economies could sink together if they don't swim together. She underlined in benign words the increasing mutual dependence ofthe two economies----- with the Chinese dependence on the US consumers for a quick recovery of its exports-dependent manufacturingsector and with the US dependence on continued Chinese purchases of US Treasury Bonds to provide the cash flow to fund Obama'sstimulus packages.

5. The transformation of the US perceptions of the mutual economic dependence is remarkable if only one recalls that in the 1990s whenher husband, Bill Clinton, was the President, US policy-makers and many Congressmen lost no opportunity to express their concerns overthe increasing trade surplus in favour of China and over the national security implications of the Chinese cash flow for investment in the USTreasury Bonds and in US stocks. The advisers of Obama do not articulate these concerns. On the contrary, the concern now is, not that theChinese are buying the US Treasury Bonds, but that they are showing signs of slowing down their purchase because of their own economicdifficulties.

6. Mrs. Clinton did not hesitate to openly express the hope on more than one occasion that the Chinese would continue to invest in thebonds. Speaking at the US Embassy in Beijing on February 22,2009,shortly before her departure from China, she said: "By continuing tosupport American Treasury instruments, the Chinese are recognizing our interconnection.It would not be in China's interest if we wereunable to get our economy moving.We are truly going to rise or fall together. We are in the same boat and, thankfully, we are rowing in thesame direction." Responding to her comments separately , Yang Jiechi, the Chinese Foreign Minister, said that China wanted its foreignexchange reserves - the world's largest at $1.95 trillion - invested safely, with good value and liquidity. He said that future decisions onusing them would be based on those principles, but added that China wanted to continue to work with the US.

7. Mrs. Clinton's open acknowledgement of the benign aspects of the increasing economic inter-dependence between the two countrieswas music to the ears of the Chinese. The Chinese policy-makers chose to interpret it as indicating that the Obama administration did notview China as a potential adversary, but it viewed it as a potential partner. Mrs.Clinton said that she felt during her discussions in Beijing it was like the beginning of "a new era" of bilateral relations characterized by "positive cooperation". Addressing a joint press conference onFebruary 21,2009, Mrs.Clinton and Yang said that the two countries would build a "double-track" strategic and economic dialoguemechanism to discuss concerns of either politics or the economy. She added that she and Treasury Secretary Timothy Geithner would beinvolved in it. According to her, a decision on this was expected to be announced when Obama and Hu meet at the G20 summit in Londonin April. She also said that the US and China would build "an important partnership" to develop clean energy technologies and speed up thetransition to low carbon economies.

8. As I had been pointing out in the past, whereas Mao Zedong believed that power grew out of the barrel of the gun, Deng Xiaoping believedthat power also grew out of the money purse. Money speaks as eloquently as the gun, if not more eloquently. The bulging Chinese purse ata time when the rest of the world is facing a cash flow problem spoke repeatedly during Mrs.Clinton's visit. Good-bye to the Dalai Lama andAung San Suu Kyi, Hail Hu Jintao----- that is the message from the Obama administration .

9.A spokesman of the Chinese Foreign Ministry announced in Bejing on March 7,2009, that Yang Jiechi would pay a working visit to the US from March 9 to 13, 2009, as a guest of Hillary Clinton. The spokesman added that the two sides would exchange views on the growth ofSino-US relations in what he described as the new phase and on regional and global issues of common concern.

10.The visit comes less than a month after the visit to Beijing by Mrs. Clinton, which has given immense satisfaction to Chinesepolicy-makers as marking the beginning of the process of the US coming to terms with the reality of a four-polar world----with the US, China,the Europen Union and the developing world constituting the four poles of the new world order as seen by China. In the Chinese perception,India's place in this four-polar world is as an important member of the developing world but not as a power by itself on par with the US andChina. Japan has no prominent place in this new world order. China projects itself as a developing country despite its galloping economyand huge foreign exchange reserves. At the same time, it views itself as a newly-emerged world power on par with the US and the EU.

11.This Chinese perception of itself and the world became evident in the articles and commentaries of Chinese analysts on the strategicsignificance of the US economic melt-down and of the US dependence on China for preventing an economic collapse. An article by the"People's Daily" of February 23,2009, said: "China has grown to be a new heavyweight player and stepped into the limelight on the worldstage. And its role in salvaging the plummeting world economy from hitting bottom looms large and active, as the U.S. Secretary of StateHillary Clinton said during her just wrapped-up Asian tour, 'the U.S. appreciates the continued Chinese confidence in the U.S treasuries.' Ifthe Cold War was 'a tug of war' between East and West, and a showcase of hard power, what we have today, for the first time in history, is aglobal, multicivilizational and multipolar competition, and a display of smart power. To be the winner, one has to seek more cooperationrather than confrontation."

12. The two defining characteristics of the Obama administration are opportunism and pragmatism. Its main priorities for some time to comewill be restoring the economic health, preventing another 9/11 in the US homeland by going after Al Qaeda's sanctuaries in Pakistan's tribalbelt and any kind of peace in Afghanistan which would avert a Vietnam type disastrous withdrawal of the US forces from Afghanistan. Forachieving these objectives, the US relations with China and Pakistan would have greater importance for Obama than its relations withIndia.

13. It should not, therefore, be a matter of surprise that India figures less and less in the short and medium-term strategic calculations of theObama administration. The only interest of the Obama Administration in India will be in ensuring that it does not take any military actionagainst Pakistan for its continued sponsorship and use of terrorism against India.

14. The Obama Administration is not going to be interested in building up India as a counter to China. In continuing to develop the USA'smilitary-military relationship with India to which the Pentagon continues to attach importance, it will avoid features which could causeconcern to China just as the Kevin Rudd Government in Australia is doing.

15. All India can expect from the Obama Administration is soothing words from time to time to tickle India's vanity. Nothing more. After theeuphoria created by the policies of the Bush Administration among policy-makers and in the community of wishful-thinkers in New Delhieuphemistically called strategic thinkers, we are in for a mood correction. (10-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. He is also associated with the Chennai Centre For China Studies. E-Mail: )