Chinas Economic Statecraft in Sino-American Relations
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2017 World Scientific Publishing Co. Pte. Ltd. The Sino-American bilateral relationship is the single most important economic and diplomatic relationship for the United States and for China. 'The United States is China's second-largest trading partner, after the European Union (EU), and China is the fourth-largest trading partner for the United States (after the EU, Canada, and Mexico)'. This mutual interdependence extends beyond trade alone. Chinese ownership of US national debt and the growing pools of outward direct investment (ODI) capital from China suggest that both states share abiding common economic interests as well. In many of these aspects of Sino-American relations, it may seem like the United States is disproportionately dependent upon its Chinese partner. However, the United States is no less indispensable to China. The Sino- American bilateral relationship is the single most important economic and diplomatic relationship for China. From the diplomatic and security perspective, the United States continues to be the world's sole superpower. This unique position in international affairs means that successfully managing the relations with the United States is crucial for China to rise to great power status. But the centrality of relations with the United States for China extends beyond the realm of grand strategy alone. China's exportdriven growth model has been highly dependent on the world's largest consumer economy. Of China's net exports, about a quarter goes to the United States - more than any other nation. In addition to China's 'flow' dependence on the United States, China also has a 'stock' dependence on the United States. The large portion of China's foreign exchange reserves that are held in dollar-denominated assets means that China has a significant portion of its national wealth now inextricably linked with American monetary and fiscal policy. At the end of 2013, China held US$1.27 trillion of its US$3.82 trillion foreign exchange reserves in US debt. China's total 2013 GDP was about US$9.4 trillion. By 2015, China's GDP had grown to US$14 trillion while China still held about US$1.2 trillion of its US$3.33 trillion of foreign exchange reserves in US debt.
