Twin peaks in Sino-US relations 2015-2020
- By Dan Steinbock
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E-mail China.org.cn, January 19, 2015
In China, real GDP growth is likely to remain at 7.3 percent in 2014 and around 7 percent in 2015. As President Xi Jinping will govern China until the end of the 2010s, GDP growth will decelerate to 5.5-6 percent. At the same time, fiscal balance will decrease to less than -2 percent, whereas trade surplus will remain over 3 percent.
In a precarious balancing act, Premier Li Keqiang seeks to manage the housing market volatility, while continuing deleveraging in the local government. Currently, China's national debt is about 25 percent. Add the local debt and the total remains around 45 percent.
Post-Obama pressures
In the U.S., the critics of bilateral Sino-U.S. understanding argue that the new strategic trust is driven by new Realpolitik realities, particularly the rebound of the U.S. economy. In reality, the bilateral relations are supported by President Obama's effort to leave behind a legacy of bilateral success and President Xi's attempt at a "new model of major country relationship."
China continues to enjoy solid growth and is deleveraging. In contrast, America's growth is fueled by foreign investment, U.S. dollar as the de facto global currency, and a rising debt burden. In the latter half of the 2010s, this overstretch will come under increasing pressure, however.
Consequently, it follows that, in the post-Obama era, Beijing must prepare for more confrontational policies in Washington.
Dr. Dan Steinbock serves as research director of international business at the India China and America Institute (USA) and is a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see http://www.chinausfocus.com/foreign-policy/twin-peaks-in-sino-us-relations-2015-2020/
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