Category: Business

China-USA Relationship

The relationship between the United States and China touches on the exceptionally broad range of issues from trade, security, economic issues, to the environment and human rights. The United States is faced by the question on the type of relationship it should have with China and how it should respond to the rise of China. After more than three decades of economic success, China’s economy has now turned to be the second best in the world in terms of size after the United States. With this success, China has developed significant global strategic clouts. It has engaged in ambitious military modernization including the development of extended range power projection capability in external surveillance (Foot, 1995). At home, China has continued to suppress all the perceived challenges to the communist party’s monopolization of power.

Previously, the rise of new powers resulted to conflict. The new leader to China, Xi Jinping, pressed hard on the United States commitment to new models of world leadership while the USA has opted to avoid such outcomes. In the past half a decade, the Obama administration has constantly assured Beijing that the US invites strong, prosperous, and successful China that has a greater role to play in the world affairs. It also states that the US does not seek to prevent China from becoming a great power. On its part, China vowed to follow the path of a peaceful development (Meredith, 2007).

However, issues of concern to America include the intentions behind the modernization of China’s military program. China has been reported to use its military and paramilitary forces in disputes with its neighbors over territorial claims in the East China Sea and South China Sea. In addition, it has continued threatening to use force to bring Taiwan under its control. With military-to-military ties between the US and China being fragile but improving, Washington has struggled to convince Beijing that the policy of the United States towards rebalancing the Asia Pacific has no intentions to contain China (Cohen, 2002). The two powers have cooperated though with mixed results to address the nuclear proliferation concerns related to North Korea and Iran.

Economic Role of China to Asia

The economic role of China in Asia is becoming broader with time and largely has been determined by its success in sustaining its long programs of economic reforms and openness for more than a decade. In the 1980s, China’s economic role in the region rose dramatically, and projections of the likelihood of the trend might continue. The substantial increase in the economic role of Asia in the 1980s reflected a sharp, high-level rise of trade in the Asia Pacific. China’s trade growth was more than twice the world trade growth, and thus, it also has happened to its trade share in the world market. China’s trade in various Asian countries rose impressively (Rodrigues, 2009). Its trade with Japan rose by half in the first half of the 1980s while that of Hong Kong rose by twelvefold. By the 1990s, China had a strong bilateral trade with South Korea and Taiwan. This trading bloc accounted for an increase on the growing trade between China and other Asian countries that threatened the United States’ penetration in the region.

PEST Analysis of China-US Relationship

PEST analysis describes a framework of the macro environmental factors that are applied to scanning major components of strategic management. It includes an analysis of political, economic, social, and technological factors (Starr, 1999).

Political factors account for the degree to which the government intervenes to the economy. These include tax policies, environmental laws, trade restrictions, tariffs and political stability. The Sino-American relationship has enjoyed a strong political environment especially on matters of the foreign policies. In 2011, President Obama and President Hu Jintao signed a joint agreement to have a shared commitment to positive cooperation and comprehensive US-China relationship. China welcomed the US as any other Asian Pacific nation to contribute to stability, peace, and prosperity in the region (Rodrigues, 2009). Thus, the future of the two countries appears bright as there has been a military-to-military contact reinstatement, which has opened important communication channels.

Economic factors entail interest rates, economic growth, exchange rates and inflation. The last two factors affect operations in business and decision-making process. Many analysts regard this relationship as complex and multifaceted because the two are neither enemies nor allies. The US does not consider China as an advent but a competitor on the economic matters. However, according to Scherer (2009), some American scholars think that one of the Chinese policies is to displace America from preeminent power of Western Pacific and consolidate Asia into an exclusionary trade bloc that strengthens Chinese economy and foreign policy interests.

Social factors include the cultural factors that affect health consciousness, growth of population, career attitudes, age distribution and emphasis on safety. The trends in social factors influence the production of the country’s goods and operation of foreign activities. The American missionary movements to China played a significant role in the history of the two nations. By establishing large numbers of medical, educational, and charitable institutions, the missionary society had a huge impact on China. It comprised a notable part of social and cultural relations, and religion was declared the thermometer of Sino-American relationship (Bernstein & Munro, 2007). Nevertheless, other factors remained even after the withdrawal of missionary ties between the two countries for the last half a century.

Technological factors include aspects of research and development, automation, incentives in technology and the rate of technology change. These factors can determine barriers to entry, the minimum efficiency production level, and the influence of outsourcing decisions. In addition, technology shifts are some of the factors that affect costs, quality and the other aspects of innovation. The technological relationship between China and the United States has been marred with stiff competition with China’s low production cost reducing to catch up with the dominance of the United States.

China-Australia Relationship

This section refers to the relationship between the People’s Republic of China and the Commonwealth of Australia. According to Albinski (1995), this relationship has grown considerably over time, and both countries have actively engaged in cultural, economic, and political activities, such as organizing APEC, East Asia Summit and G20. In 1972, the diplomatic relationships between the two countries were established (Fitzgerald, 1972). By 2012, China formed the biggest Australian trading partner with the largest foreign reserve in Australia and high investment on Australian mining companies.

Politically, China and Australia have been maintaining their diplomatic relations for over three centuries. In 1972, the diplomatic relationships between the two countries were established (Fitzgerald, 1972). By 2012, China formed the biggest Australian trading partner with the largest foreign reserve in Australia and high investment to Australian mining companies. The joint efforts of the two countries have streamlined the bilateral relationship for people and the government to trade.

Economically, China is the biggest trading partner for Australia mainly due to China’s strong demand for liquefied gas, iron ore, and coal. Exports to China helped Australia escape the worst effect of the global economic meltdown of 2011. Many Australian mining companies rely heavily on China and some emerging big economies like India.

The social set up of the two countries is that it was originally dominated by the aborigines and some Europeans who went back during world wars. While economic partnership between Australia and China has increased significantly, the parties has enjoyed relative period of political stability. Under the leadership of Howard government, Australia appeared to be reluctant to pursue a closer military and political tie with China in order to maintain its role with George Bush in the Asian Pacific region.

In the socio-cultural set up, the two countries enjoy a lot of gamers in addition to its large population. This allows them to make products that target such customers. Chinese domestic market is strong enough as it forms a significant percentage of the market of the country’s products and the positive nature of trade between the two countries. Technologically, both China and Australia enjoy a significant level of technological development which supports the efforts of industrialization and commercial activities.

Opportunities and Threats to the Sino-Australian Relationship

The opportunities present in the Sino-Australian relationship are the impacts of neutralizing the American monopoly in the region. China has assisted Australia in developing its infrastructure and extracting its minerals. Foremost, the relationship has no hidden terms and conditions other than economic terms will prevail (Bernstein & Munro, 2007). However, despite this, other powers will perceive a power shift perpetrated by China. This can be a strong trigger for tension and eventual regional war.

As related in the previous section, the diplomatic relationships between the two countries have been maintained. This can be considered as an opportunity as through it a significant trading partnership has been formed. With trading partnerships established, it follows that each country is able to acquire goods and services, which they do not produce locally. For instance, Australia could easily acquire goods and services which it does not produce but available in China.

While this is so, the trading partnership emerged between the two countries can result to volume-oriented barter trade. This, according to Balnave (2007), can be seen in a case where barter trade is carried out between the two countries. For example, Australia produces such goods as cash crops while China manufactures machineries in plenty. In the process of their partnership, there is likelihood that Australia will export much of its cash crops, whereas China will only chip in an insignificant volume or percentage of its machinery in order to settle the trade.

Implications of the Australian-China Relationship

The new assertiveness of China affects its relationship with countries other than the United States. Any change in this relationship has remarkable impacts to Australia. Bilaterally, China’s presence in Australia is clearly felt in the United States. The recent financial crisis in America, which growth has dramatically slowed, has hurt its economy considerably. In contrast, China’s growth has remained strong, and its financial institutions have come through the financial crisis largely unscathed. China holds so much foreign exchange reserves most of which are in the US treasury bonds (Balnave, 2007). Chinese investment increased significantly as the international manufacturers has moved to invest in the land.

While Australia has been a major beneficiary of the United States international order in Asia, it has taken a safe stand on its relationship with the two powers. Australia has appeared to shape the international environment in a manner that it has appeared to suit its development. Leaders of American government have made several attempts of persuading America that it would be of everyone’s best interest to relinquish the primacy of Asia (Ata, 2009). At the same time, the country remains an active member of collective leadership by staying in Asia for the sake of balance and not to dominate. In its attempt to maintain links with the two powers, Australia recommended the United States to seek a concert of power with China and other recognized great powers so as to avoid a conflict.

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