Building bridges

[MA XUEJING/CHINA DAILY]

This year marks the 50th anniversary of former US president Richard Nixon's visit to China. Since then, China has transformed from an economic backwater to the most connected component in the world--in part thanks to China's entry into the World Trade Organization in 2001, with support from the United States among other partners.

When Nixon arrived in China, 90 percent of Chinese people were living on less than $2 dollars a day, while in 2021, China eliminated absolute poverty. Decades after Nixon's visit, the two economies have converged in size if not in wealth, and in global impact if not in political systems. In this new economic age of knowledge and information, China is now on equal footing with the US when it comes to the ability to turn innovative technology companies into valuable global enterprises.

China may no longer be regarded as a "strategic partner" of the US as in the Bill Clinton era, but the two countries' economic interlinkages and common goalposts are still what bind them together. The trade war between them starting in 2018 did not lead to an economic disengagement. Instead, US direct investment into China continued to grow.

And in 2020, China became the top destination for foreign investment for the first time. Although some multinationals have used the rising tensions as an excuse to move out of China and make forays into its neighboring countries, the reality is that many US businesses are doubling down on the Chinese market--where the likes of Starbucks, Tesla and Apple are seeing their fastest growth. And China's commitment to open up its financial sector and to allow majority or sole foreign ownership of securities, asset management, insurance and other types of financial firms has enticed US financial companies with more opportunities in China. Apart from direct investment, portfolio inflows of onshore Chinese equities and bonds are also surging, a 50 percent increase between 2019 and 2021.

For all their political differences and rivalry, China and the US need to actively seek space for collaboration, especially where their need for each other is obvious, as it is in the arenas of climate crisis mitigation and the advancement of peaceful resolution to disputes between nations. As the pandemic is crippling economies and causing financial ruptures especially in the developing countries, it will take both China and the US to repair the international monetary and financial systems, and prevent the global economy from suffering a freefall. China played a stabilizing role in the global financial crisis in 2008, and now more than a decade later, it is able to do much more given its financial heft more telling and economic size substantially larger. For the US, mounting debt burdens and deficits along with a declining relative share in the world economy mean that it can no longer be the sole provider of global liquidity and stability.

Whether the world's two leading economic powers can peacefully and cooperatively accommodate each other is the key question for the 21st century. To this end, both countries will have to figure out not only what the other wants but also what is realistic to achieve. China will not actively seek conflict. Nor will it seek convergence, knowing full well that the gulf that divides these two nations in terms of values, beliefs and systems will never fully close. But it does not aspire to be the world's only "shining city on a hill", nor does it harbor ambitions for exporting its ideology or foisting its development model on the rest of the world.

Success in collaboration and finding a collective purpose depend critically on understanding each side's perspective. Knowing where differences arise, and why, will help dispel suspicions of the other, particularly when they arise from unexamined biases, of which they may not even be aware. Even when governments cannot always see eye to eye with each other, most exchanges take place between individuals, rather than between states, as we see in the active collaboration between businesses, universities, research institutions and think tanks, covering both natural and social sciences. The open flow in exchange of students paves the path for a long-term relationship based on mutual understanding. It's far less likely that one nation has all the answers than that the best answers will come from a variety of sources.

Today, a sensible approach calls for both nations to look after their own security while respecting each other's needs and desires. Keeping an ongoing dialogue on addressing global challenges will help reduce reproachment and gradually bring the two nations closer together.

A rampant animosity should not make the two nations cringe with loss of hope for something better to look forward to. The silver lining has not phased out over the last 40-plus years of mutual investment, trade, personal exchanges, and official cooperation. It is the mutual benefit, rather than the wishful thinking of some people not in their right minds, that is dictating the present bilateral economic relationship.

Many of the most visible consequences of conflict have slipped into the background of history, the memories of which are all but forgotten. We are often reminded of the price paid by the vanquished, but it's easy to overlook the cost to the victors--in human lives lost, years of diminished expectations, and colossal amounts of money that could have been diverted from military spending to social programs, or to eradicating disease around the world. What is not visible is no less significant. Former US secretary of state Henry Kissinger recently warned against conflict between two major countries with comparable military and technical power by saying that "a victor is not possible without a risk of destroying humanity". We must not succumb to the irresponsible hawkish view of a transactional world view of winners and losers.

On the brighter side, fears and prejudices make people blind to a deeper truth: we the people have much more in common than we realize. For one, we all want a brighter future for our children. To make that happen, the two nations will have to adapt to and harmonize with new realities--together.

The author is an associate professor of economics at the London School of Economics and Political Science. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily. Contact the editor at editor@chinawatch.cn