Manish Tewari | The Chinese ascendancy and America's dilemma

As the Prime Minister heads to Washington DC amidst the stand-off with China on the Line of Actual Control (LAC) that is now three years in running, it would be instructive to take a broad overview of the US-China relationship.

The US outreach to China was initiated by President Richard Nixon who in 1967,  two years before he became President of the United States of America, wrote a seminal  piece in the Foreign Affairs magazine advocating that China should not be forever left out of the comity of nations. However, the real objective was to create a counterweight to the erstwhile USSR taking advantage of the lingering tensions post the Sino-Soviet split in the 1960s that culminated in the seven-month border war between the two from March 1969 onwards.

After becoming President, Nixon tasked his national security adviser Henry Kissinger to be the pointsperson for the initiative qua China. On July 9, 1971, Henry Kissinger made a secret visit to Bejing from Islamabad. The US-China rapprochement was facilitated by President Yahya Khan who was personally requested by President Nixon in October 1970. This was the reason why, notwithstanding the terrible atrocities being committed by the West Pakistani army in then East Pakistan, the US chose to turn a Nelson’s eye to those egregious excesses.

After President Richard Nixon’s visit to Bejing in the February of 1972, the US-China relationship notwithstanding Mao Zedong’s death in 1976 took on a positive trajectory that got further consolidated into a deep economic relationship after Deng Xiaoping opened up the Chinese economy to foreign investments in 1978. For forty five years now the US is heavily invested in China.

Cut to the present, US-China trade in goods hit a record high in 2022. Total imports and exports grew 2.5 per cent year-on-year to touch $690.6 billion breaching the previous pre-Covid-19 high of $658.8 billion in 2018. The US trade deficit with China also increased by 8.3 per cent year-on-year to reach $382.9 billion in 2022.

US imports of goods from China grew by 6.3 per cent year-on-year to touch $536.8 billion. This is just below the ceiling of $538.5 billion touched in 2018. Meanwhile, exports to China also increased by 1.5 per cent year-on-year to reach $153.8 billion. 

China was the US’s third-largest trading partner in 2022 after Canada and Mexico. China continues to remain the largest source of imports for the United States. According to the Custom authorities of China US remained its largest single-country trading partner. 

China accounts for 30.6 per cent of all foreign students studying in the United States. A number of top tier American universities and think tanks receive substantial amount of Chinese funding. Many of them had to face criminal indictments for not revealing money received from the Chinese government through its various instrumentalities engaged in influence operations in the United States. A bill is pending consideration in the US Congress called  ‘‘Countering the Chinese Government and Communist Party’s Political Influence Operations Act’’ aims to proscribe Chinese influence.

In July 2022, the Office of the Director of National Intelligence, specifically the National Counter Intelligence and Security Centre, issued a stark advisory underscoring the risk to “leaders at the US state, local, tribal, and territorial levels risk being manipulated to support hidden PRC agendas. PRC influence operations can be deceptive and coercive, with seemingly benign business opportunities or people-to-people exchanges sometimes masking PRC political agendas. Financial incentives may be used to hook US state and local leaders, given their focus on local economic issues.In some cases, the PRC or its proxies may press state and local leaders to take actions that align with their local needs, but also advance PRC agendas, sometimes over national US interests”.

Myriad US-based companies encompassing mega-conglomerates like Procter & Gamble and General Motors remain unswerving in their commitment to China’s 1.4 billion-person market. Tesla CEO Elon Musk, during a visit to China in May, characterised the US-China relationship as “conjoined twins” that cannot be separated. This is notwithstanding the fact that Twitter is banned in China and even he was not able to tweet while he was there.

Other US business leaders like the CEO of JP Morgan Chase Jamie Dimon also ruled out a full “decoupling” of the United States and China. He opined “it’ll take years for this thing to take place, but it won’t be a decoupling and the world will go on”.

Corporate America is, therefore, not willing to give up on China notwithstanding whatever may be the predilections of political America.

Moreover, foreign countries held a total of 7.4 trillion U.S. dollars in US treasury securities as of January 2023. China held the highest amount corresponding to 859.4 billion US dollars in US securities.

Notwithstanding the Quad, AUKUS and myriad other nomenclatures, including the US commitment to preserve and protect the independence of Taiwan as well as the desire to enforce a rules-based order predicated on the freedom of navigation in the Indo-Pacific, the US-China relationship is a complex, nuanced, intertwined, vexed and yet a symbiotic dependence of mutual synergies. Chinese penetration of US policy making structures is deep, pervasive, sustained and well resourced.

The US secretary of state, Antony Blinken, is slated to make his oft-postponed visit to Beijing on June 18 just ahead of Prime Minister Modi’s visit to the American capital. The call comes after a range of discussions between US officials and their Chinese counterparts at various levels after the spy balloon saga.

While the US would obviously seek to balance the Sino-Russian bonhomie as well as the growing belligerence of China no longer confined to the South China Sea now, it must be kept in mind that the US would also be in full election mode by the end of 2023 with presidential elections scheduled for the November of 2024. Corporate America like all corporates elsewhere plays a very important role in the US electoral sweepstakes.

It is but logical that there would be pressure on all sides of the aisle not to look at the US-China relationship only through the geostrategic prism. Moreover, even the US strategic community understands that an uncalibrated, off-the-charts confrontation with China would be like the proverbial loose cannon on the deck of global stability.

While a close relationship with the United States is definitely in India’s interest, it is the finetuning and the nuance that is critical given that India does not have the luxury of being separated by two oceans from our ‘frenemies’ with whom we have to live cheek by jowl.