During the course of the 1990s, US policy towards China was assailed by a growing range of different interest groups, from the labour unions which, concerned about the huge increase in Chinese imports, criticized China ’s trade practices, to human rights groups that protested about the treatment of dissidents and the subjugation of Tibet. [1167] While China policy remained a presidential rather than a congressional matter, it was relatively invulnerable to the critics’ complaints. However, it should not be assumed that the present American position towards China will inevitably be maintained into the indefinite future. Until the turn of the century, China impinged little on the conduct of American foreign policy, apart from in East Asia, and that was largely confined to the question of Taiwan. True, China’s exports to the United States — combined with the lack of competitiveness of the US’s own exports — had combined to produce a huge trade deficit between the two countries, but this was mitigated by China’s purchase of US Treasury bonds, which fuelled the American credit boom, and the benefit that American consumers enjoyed from the availability of ultra-cheap manufactured goods from China. But as China began to spread its wings at the beginning of the new century — its economy still growing at undiminished pace, the trade gap between the two countries constantly widening, the amount of Treasury bonds held by China forever on the increase, Chinese companies being urged to invest abroad, the state-sponsored quest for a sufficient and reliable supply of natural commodities drawing the country into Africa, Central Asia and Latin America, and its power and influence in East Asia expanding apace — it became increasingly clear that China no longer occupied the same niche as it had previously: across many continents and in many countries, the United States found itself confronted with a growing range of Chinese interests and, as a result, a steady growth in the sources of potential disagreement and conflict between the two countries. [1168]

No sooner had the new century begun than two developments suggested that a major change in their relationship was likely, even though it did not appear immediately obvious that this was the case. First, the Bush administration abandoned the previously consensual multilateralist US foreign policy in favour of a unilateralist policy that, amongst other things, embraced the principle of pre-emptive strike. The US turned away from its previous espousal of universalism and towards a nationalism which denied or downplayed the need for alliances. The new strategy placed a priority on military strength and hard as opposed to soft power, a position made manifest in 2003 with the invasion of Iraq. The principle of national sovereignty was subordinated to the desirability of intervention for the purpose of regime-change. A new and aggressive America was born. [1169] In the event, an overwhelming majority of nation-states opposed the invasion of Iraq and, according to global opinion polls, an even more decisive majority of their citizens. As the occupation faced growing opposition and was perceived to have failed, the United States became unpopular to an extent not seen in the sixty years since the Second World War. [1170] Second, around 2003-5, the moment of China arrived, as global awareness of its transformation, and the meaning and effects of that transformation for the rest of the world, suddenly began to dawn. By accident, these two developments happened to coincide, thereby serving to accentuate their impact. [1171] It was widely acknowledged that China was on the rise and there was a slow dawning that the US was not as omnipotent as had previously been thought. There was a growing perception that the balance of power between the two countries was starting to shift in China ’s favour. [1172] The mood in the United States towards China grew more uncertain. [1173] James Mann, in his book The China Fantasy, challenged what he described as the ‘Soothing Scenario’, namely the consensus which holds that engaging with China through trade will be to the political and economic advantage of the United States and will ultimately result in a free-market, democratic China. Mann argued that, notwithstanding China ’s market transformation, it by no means automatically followed that China would become democratic. [1174]

The general mood of uncertainty and unease was accentuated by the credit crunch which started in summer 2007 and which a year later brought the American financial sector to its knees, with illustrious names like Lehman Brothers going bankrupt and the few remaining American investment banks forced to renounce their status — Goldman Sachs, the favoured bank of recent US administrations, amongst them. In an extraordinary volte-face, the government announced a huge bail-out of the financial sector, marking the demise of the deregulated neo-liberal regime which had been the calling card of American capitalism since the late 1970s. In a few spectacular weeks the Anglo-American model had imploded, plunging the Western economies into a serious recession. The fact that the US had been living well beyond its means — and relying on Chinese credit in order to do so — underlined both the fallibility of American prosperity and the shift in the centre of economic gravity from the United States to China.

GROWING CONFLICT

There are a number of issues that seem likely to shape US attitudes towards China and increase the possibility of conflict between the two countries.

The first concerns American attitudes towards globalization. In the 1990s globalization was seen in the US as a win-win situation, a process by which the US left its imprint on, and gained advantage in its relationship with, the rest of the world. In effect, it was something that the United States exported to the world and then reaped the benefits from at home. [1175] Now, however, globalization is seen more and more like a boomerang that is returning to haunt the US. [1176] Previously, the US was regarded as the overwhelming agent and beneficiary of globalization. Now the main beneficiary is perceived to be East Asia, and especially China. [1177] Through globalization, China has transformed itself into a formidable competitor of the United States, with its huge trade surplus, its massive ownership of US Treasury bonds, its consequent power over the value of the dollar, and the fact that it has undermined key sectors of American manufacturing industry, with growing numbers of workers being made redundant. The widening controversy over the value of the renminbi, the safety of Chinese exports such as food and toys, and the frequent accusations of ‘unfair’ competition, are a reflection of growing sensitivity towards China. [1178] This is not to suggest that the balance of American opinion has shifted significantly as yet. The winners, above all the US corporate giants that have moved their manufacturing operations to China and the consumers who have benefited from China prices at home, still considerably outnumber the losers and in any case enjoy much greater power. [1179] But this could change. The political consequences of spiralling commodity prices, especially oil prices, which were brought to a premature end by the credit crunch, could, if they had continued, have turned American attitudes towards China in a more negative direction. More pertinently, the threat of a serious and prolonged depression is already leading to growing demands for protection. [1180] It is striking that, even before the credit crunch, the number of Americans who thought that trade with other countries was having a positive impact on the US fell sharply from 78 per cent in 2002 to only 59 per cent in 2007. [1181]