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US-Chinese rivalry

Nov 17 2011 07:53 Reuters

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Honolulu - President Barack Obama's campaign to reassert the United States as a Pacific power, only days old, has triggered a sharp reaction from China, presaging tough times ahead as the two economic giants vie for influence.

Obama, beginning a nine-day Pacific trip, wielded rhetoric and promoted policies that seemed destined to generate friction with Beijing and test the limits of the two countries' on-again, off-again cooperation.

The growing rivalry between the United States, the Pacific's traditional military power, and China, its economic engine, could also complicate a delicate balancing act played by Asia's smaller nations.

While insisting he wanted stable ties with China, Obama in quick succession demanded it "play by the rules" of international trade, said its export-driven powerhouse "throws the whole world economy out of balance", and insisted it act like a "grown-up", rather than posturing as a developing nation.

China reacted with uncharacteristic speed, dismissing demands that it float its currency freely and saying it would abide only by trade rules that it helped negotiate.

"First we have to know whose rules we are talking about," Pang Sen, a deputy director general at China's Foreign Ministry, told a news conference not long after Obama spoke.

"If the rules are made collectively through agreement and China is a part of it, then China will abide by them. If rules are decided by one or even several countries, China does not have the obligation to abide by that."

Chinese leaders were not happy, either, with Obama's pressing of a Pacific free trade area sponsored by the United States which does not, for now, include Beijing.

Japan, Canada and Mexico each said they were interested in joining the United States and eight other nations in negotiating the Trans-Pacific Partnership (TPP), with a goal of completing the framework next year.

Balancing act

Asia's small and mid-size nations have long seen themselves caught between China's economic behemoth and the security blanket provided by US military forces spread from Hawaii to the Korean peninsula and beyond.

As China grows more aggressive in its territorial claims, some of those countries have edged closer to Washington for shelter.

This week, they seemed to cautiously welcome Obama's pledge to look more across the Pacific, after a decade of American foreign policy tied to the sands of Iraq and the mountains of the Hindu Kush.

China's Asian neighbours "gravitate to China as just about the only remaining hope for continuing economic growth, while looking quite anxiously to the US for strategic assurance," Simon Tay, chairperson of the Singapore Institute for International Affairs, wrote in a published commentary on the Today on Sunday news portal.

Singapore - a multiethnic, majority Chinese island state in Southeast Asia - epitomises the Asian balancing act of keeping close ties to both Washington and Beijing.

Speaking to business executives on Friday, Singapore Prime Minister Lee Hsien Loong voiced support for the US military in Asia, whose command headquarters are in Honolulu. "They help to keep the peace and we want them there," he said.

"I believe America understands what a big stake it has in Asia," Lee said. "But you are a hyper-power. You have interests all over the world - in Europe, in the Middle East, in Afghanistan.

"Asia is an important part of the world but it is not the only part of the world, so we have to share you with other preoccupations."

Thorny issues at Bali

Compounding the potential for friction is the fact that the Asia-Pacific Economic Cooperation summit here may turn out to be the easier of this month's two Asian summits. It focuses on economics, where countries agree on a lot of things, and eschews divisive political and security issues.

Those thorny issues will be taken up next weekend on another idyllic resort island - Bali - where Obama, Chinese President Hu Jintao, and largely the same cast of regional leaders will meet for the East Asian Summit.

"China's posture in the region is on everybody's mind, including the Southeast Asian nations and the United States - and this balancing that the whole region is doing is a defining element of the Asia-Pacific region today," said Jamie Metzl, executive vice president of the New York-based Asia Society.

Looming in Bali is the issue of the South China Sea.

Beijing claims that entire maritime region, which contains rich energy and fisheries resources, pitting it against coastal states like Vietnam and the Philippines in a test of wills that has seen violent clashes in recent years.

China's more assertive stance over the maritime dispute and a military expansion fuelled by double-digit economic growth means that for US-China ties "the trajectory at least has become much more volatile," said Nick Consonery, China analyst at EurAsia Group in Washington.

Obama and US Secretary of State Hillary Clinton will use the days between the Honolulu and Bali summits to visit formal American security allies in the region. Obama heads to Australia, where the two countries will unveil a beefed-up alliance. Clinton travels to the Philippines and Thailand.

Metzl sees the economic and security policies as complementary responses to China.

"Concern about the kind of role that China hopes to play is rising across the region and that's why you're seeing the countries joining with the United States on TPP and you're seeing the increased welcome of the US military," he said. 

china  |  us economy  |  yuan  |  trade  |  dollar
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