(From the New Yorker)
By Evan Osnos
The name conjures an image of such stately dullness that it would drive an adman to despair: the Seventh Round of the U.S.-China Strategic and Economic Dialogue. But Chinese and American officials now meeting at the State Department, for two days of talks that began on Tuesday, have the task of preventing the world’s most important relationship from drifting to what both sides increasingly acknowledge is a dangerous level of distrust.
More than four decades after Nixon met Mao, the relationship between the U.S. and China has reached a pivotal moment. To date, even as China has become more powerful and present in our lives, Americans have generally found it to be an unsatisfying “enemy.” For most of the past decade, the number of Americans who reported having a favorable view of China hovered around fifty per cent, according to the Pew Research Center. But, in the past three years, the favorable number has declined to thirty-five per cent, and the unfavorable has risen to fifty-four per cent. In China, favorable views of the U.S. are at a similar level, around fifty per cent—neither firmly in favor nor opposed.
Viewed one way, relations between the world’s two most powerful countries, the U.S. and China, should be a rare point of calm in a world aflame, from Syria to Ukraine. The Chinese and American economies have never been more interdependent: in the past six years, rich Chinese companies and plutocrats have increased direct investment in the U.S. fivefold, spurring the creation of new jobs and surpassing, for the first time, the amount that Americans invest in China. Moreover, one of Capitol Hill’s longtime concerns—that China was suppressing the value of its currency in order to make its exports cheaper than its rivals’—has been resolved; the yuan is no longer undervalued, according to the International Monetary Fund. (The Chinese government has allowed it to appreciate, in order to curb inflation at home and encourage the use of the yuan as a global currency.) Even the old fears about China holding a mountain of U.S. debt have eroded, as the U.S. Federal Reserve has amassed a larger share of U.S. treasuries and China has reduced its holdings. Earlier this year, Japan finally surpassed China as the largest foreign holder of U.S. debt. Read more