http://carnegietsinghua.org/publications/?fa=50720 As China’s new leader, Xi Jinping, and reelected U.S. President Barack Obama begin to build their relationship, the two leaders will be presented with a host of potential conflicts and areas to work together. In this new Q&A, Huang Ping, a U.S.-China scholar at the Chinese Academy of Social Sciences, explains the priorities for cooperation and the potential pitfalls that lie ahead. How is the U.S.-China relationship likely to develop in the near future? What areas present opportunities for the new Chinese leadership and the Obama administration work together? In what areas might cooperation between China and the United States prove difficult? What can the United States and China do to address these security issues? What possible changes in U.S. and Chinese foreign policy might develop under China’s new leader, Xi Jinping, and in the second Obama term? What is preventing the United States and China from deepening their investment relationship? How is the U.S.-China relationship likely to develop in the near future? Going forward, both China and the United States will need to be not only more realistic but also more rational in regard to the U.S.-China bilateral relationship. Both sides need to assess the actual challenges, problems, and opportunities to foster economic growth, encourage development, and ensure security, peace, and stability. That is a tall order. But I am optimistic about the future of U.S.-China relations. It will take some time for both countries to develop more realistic policies and for this to trickle down to junior levels as well. I do not agree with the claim of many U.S.-China relations experts that no matter who won the U.S. presidential election, the United States would have to return to a “normal relationship” with China. After all, Mitt Romney claimed he would immediately name China as a manipulator of the currency-exchange rate. If Obama had not been reelected, there is no guarantee that the U.S.-China relationship could have continued as before. In addition, the U.S.-China relationship has now become so complex that it is no longer what was once understood to be “normal.” What areas present opportunities for the new Chinese leadership and the Obama administration work together? The main challenge that both China and the United States face is the economy, and the two could certainly cooperate in this area. Both nations’ economies are facing a host of difficulties, and neither country can resolve them on its own. The question is how both countries will restructure their economies to maintain growth and employment. Nation-states are no longer the central focus here; economies should be integrated. The global economy is already quite transnational. The United States should therefore not simply accuse China of “stealing American jobs” or “manipulating the currency.” The issues go deeper than that and have to do with economic structure as well as economic resources, such as the labor force and legal regulations in both countries. The United States and China need to work together to address transnational problems such as financial regulation. Washington and Beijing can work together for more peace, order, and regional stability—this would be a win-win situation. In fact, China and the United States must also find a way to work together to address regional, global, and nontraditional challenges over the next four years. Regional security issues include the situations in North Korea, Pakistan, and Afghanistan, while security in the Middle East remains an area for potential cooperation. The two countries can also work together on climate change. This is not a challenge just for one state, country, nation, or government—everyone suffers from climate change. Dealing with it will require more than just national policies or international relations. In what areas might cooperation between China and the United States prove difficult? The United States and China have historically faced a number of problems in the areas of human rights and military development. These issues stem from World War II and the Cold War. Unresolved conflicts linger on the Korean peninsula, between mainland China and Taiwan, and between China and Japan. These tensions have been exacerbated recently. After 9/11, the United States turned its focus away from Asia toward Iraq and the Middle East. When the United States eventually resumed traditional relations with Thailand, the Philippines, Australia, South Korea, and Japan and sought to establish partnerships with Mongolia and India, China felt insecure. These are the traditional security issues on which China must deal with the United States. Washington is tied to a number of Asia-Pacific countries—including Taiwan, Japan, and the Philippines—through strategic or military treaties. This is the area in which China and the United States have the least trust. But the world is also entering a new age with new regional and global problems and challenges as well as nontraditional security issues that present potential areas for disagreement. Globalization has led to the development of many new agencies and nonstate actors as well as transnational economic activity. Countries, including the United States and China, need to work together to deal with these nontraditional security problems and challenges across all dimensions, from media and technology to politics and economics. What can the United States and China do to address these security issues? Deng Xiaoping’s proposal is still the most realistic for dealing with major disputes between China and the United States. He argued that issues like Taiwan or East China Sea territorial disputes should be set to the side to work on larger issues. As Mao said when former U.S. president Richard Nixon visited China in 1972 and wanted to discuss Taiwan, “Taiwan is small. The world is big.” Major traditional security issues are not new and cannot be solved immediately. Moreover, compared with economic cooperation, diplomatic disputes and other major challenges are not all that urgent or important. So the United States, China, and Japan should try to put aside their traditional territorial disputes, for instance over Diaoyu/Senkaku Islands and the South China Sea, and work collaboratively on urgent nontraditional security issues. China, the United States, and other countries will all benefit. In particular, China and the United States need to stop working in the Cold War paradigm and forming exclusive alliances with specific countries. Instead, both countries need to work together to ensure regional security. There will be a way to resolve these traditional challenges eventually. Patience is necessary. The next generation will be smarter. If the U.S.-China relationship is the most important bilateral relationship in the world, then trust between U.S. and Chinese leaders is crucial. If the U.S. leadership continues to sell weapons to Taiwan, meet with the Dalai Lama without notifying China first, or stick with its Cold War alliances, China is bound to perceive these situations in a negative light. Misunderstanding must be addressed by the new leaders. Progress is of course possible in these areas. For example, Taiwan used to be a very sensitive issue between the United States and China, but it is gradually becoming less and less contentious. The same applies to territorial disputes over the Diaoyu/Senkaku Islands between China and Japan. This issue may be sensitive among the masses and the media, but the economic recovery in the two countries may take priority. What possible changes in U.S. and Chinese foreign policy might develop under China’s new leader, Xi Jinping, and in the second Obama term? I think President Obama’s second term will be easier than his first term. In 2009, he was a new president and had not worked at such a high level before. He also had to contend with the financial crisis immediately after he entered the White House. Now, in his second term, Obama has four years of experience and knows the problems and issues as well as other world leaders. He can be more realistic and rational with his agenda. It is unlikely that there will be any significant discontinuities in Obama’s policy toward China and Asia. This is not a new Cold War between China and the United States; there is no need. There just needs to be some adjustment. Obama needs to communicate more with Asian powers, both big and small. Obama should adjust what the pivot to Asia actually means. When the United States announced the pivot, it sent the wrong signal to countries in Asia. They were faced with the dilemma of which side to stand with—the United States or China. Obama needs to work on this during his second administration. There has already been some explanation of the move and readjustment. Even the term “pivot” has been changed to “rebalancing,” giving the military term a more economic and diplomatic dimension. For China’s new leadership, I think relations with neighboring countries in Asia, such as Japan, Russia, and India, will be emphasized. I feel China realizes the importance of the U.S.-China relationship but has not necessarily done enough to maintain good relations with its neighboring countries. China’s foreign policy should be more balanced, coordinated, and more comprehensive within the Asian region. What is preventing the United States and China from deepening their investment relationship? Part of the reason the United States is not investing more in China is that its tendency has been, recently, to be more inward looking and even protectionist. The United States needs to be more open in terms of both investment and technological cooperation. Doing so will help the U.S. economy and unemployment, and technological cooperation with China will help improve the trade balance between the two nations. Additionally, foreign companies are still learning how to do business in China. Some U.S. investments in China—as well as Japanese or German investments—are successful, some are not. The reasons for these difficulties are sometimes technical, but the Chinese market, local culture, and Chinese people’s tastes are all very different as well. How to do business in China is an issue that foreign businesses must deal with. It is difficult for many Chinese companies to invest in the United States because they are young and new, so they don’t know how to navigate world markets. Chinese companies need more time in the U.S. market to get used to the investment climate there, but that requires that the U.S. government does not reject Chinese investments. Both China and the United States need to adjust. Currently, there is no framework for handling Chinese investments in the United States and U.S. investments in China—investments are handled on a case-by-case basis, which is not ideal for such big countries. Huang Ping is a scholar and director at the Institute of American Studies, Chinese Academy of Social Sciences.>>>>>>