The Future of Chimerica

Cover editorial, issue 404 2009-01-26
Original article: [Chinese]

Will Barack Obama stick to his promise of "change"? If so, what does it mean to China?

Two westerners have recently drawn attention for new opinions towards China.

At the one end, Ben Bernanke, the current Federal Reserve Board chairman, has said that China was the root of the financial crisis. 

At the other, Niall Ferguson, a historian, has popularized the term "Chimerica" to describe what he argues is the dominant force in the world economy for the past ten years--a hybrid of both China and the US.

Ferguson thinks that given their size and interlinkage, they are core of the global economic system. He points out that they amount to around 13 percent of the world's land surface, a quarter of its population, and a third of its gross domestic product. Between them, China exports while the US imports; China deposits money while the US consumes; and China lends money while the US borrows.

The US is China's largest export target and is also one of most important foreign fund sources for China. In turn, China is the US' second largest trade partner and the biggest holder of its treasuries. If there were no financial crises, the two countries would have undoubtedly continued their intimate economic cooperation and fuel their surging economic growth.

Conjecture on the Sino-US relationship has persisted for decades. In 1966, Samuel Huntington, a well-known US scholar who passed away late last year, projected  that the world system built by the US over the two decades would fall into decay and diversify in 2000. As European powers ecplipsed it, the US would decline over the last 25 years of 20th century, with other countries filling its vacancy. Among them, he said, China would play a prominent role.

We still talk about such topics today, and many have sought out a historical protagonist, hoping for another hero to emerge in its place. However, the world is more likely to embrace a new cooperative era, in which no single country could fulfill the duties and obligations such as safeguarding the international order, eliminating war, and leading the global growth.

This view supports the "Chimerica" idea. In economic terms, the two countries have become highly dependant on each other and in foreign affairs, China has played an increasingly influential role.

Although there is value in the notion that Chimerica will break apart, if this notion becomes mainstream, it will only hasten the process. But what this overlooks is the great force powering China's growth over the past 30 years: "opening up". This same force, which China studied from the US, is also what enabled the latter to flourish. The disintigreation of their relationship would deal a blow to both on par with what the financial crisis did to the US.

Both countries will continue to improve themselves. China won't give up its efforts to push domestic demand but it also won't give up on the opportunities brought by Chimerica. As long as extremes in irrationality do not tear them apart, they will continue to integrate economically.

It's not that China needs the US, or that the US needs China. It's that they both need each other. This simple reality is something that both Americans and Chinese need to recognize. If so, the world will continue to imagine the future of Chimerica.