Powers on the Mend

There have been a lot of alarming headlines for U.S.-Chinese relations of late — and not for no reason. Recriminations over claims of cyberaggression, trouble for U.S. companies in China, and a worrying security environment in East Asia — especially around North Korea — have generated a lot of press. It’s vitally important that the U.S. and Chinese leaderships become directly involved in keeping bilateral ties, the world’s most important, on track.

But there’s an important good news story here as well; one that won’t draw as much attention because it points down a less provocative and more promising path. Yes, China is rising; but, surprise, so is America — and given the deep economic interdependence that both governments acknowledge, that’s a recipe for a more constructive longer-term relationship.

First, the good news from this side of the Pacific. A financial crisis and the deepest recession in decades enveloped Americans in gloom, and even after the recession ended a tepid recovery and surging national debt looked to some symptomatic of a superpower in decline.

Yet several economic and political factors are now reviving talk of America the Resilient, both at home and abroad. A technology-driven U.S. energy boom may be the biggest surprise of all. Resignation over dependence on foreign oil and natural gas has given way to debate over how to best to profit from a glut of new supply. The revolution in production of tight oil and shale gas has fueled U.S. job growth, created conditions for a revival of low-cost U.S. manufacturing, and now offers Washington the chance to use energy — both exports and technology — as a tool of foreign policy. Add a housing market turnaround, and these changes set the stage for a dynamic U.S. recovery.

Better still, the political class seems to accept the need to stand out of the way. Even as the sequester and its spending cuts weigh on near-term growth, Congress has mostly abandoned the fiscal brinksmanship of the past two years and is on track to pass comprehensive immigration reform in 2013, providing medium- and long-term economic benefits. And despite President Obama’s renewed focus on climate change, his “all-of-the-above” energy policy will allow for continued growth of tight oil and shale gas production.

As the United States recovers at home, it becomes a more attractive partner abroad. Asian nations are eager to partner with the United States as an alternative to China, and Europeans are eager for U.S. trade and investment to help lift their economic malaise. The U.S. energy boom has added additional appeal, offering America’s friends and allies an alternative to less predictable energy exporters like Russia.

The administration has also set forth an increasingly ambitious trade policy. The Trans-Pacific Partnership and its nascent trans-Atlantic counterpart have the ability to create a trade, investment and regulatory framework to establish free market principles as the bedrock of 21st-century global economics and get beyond the deadlock of the need for universalism in the World Trade Organization.

The other piece of this puzzle is that — in contrast with the other BRICS, which are all facing trying times — China’s rise continues apace, providing that country’s new leadership the self-confidence it needs to build a more constructive relationship with Washington. Yes, the pace of China’s expansion has slowed, but its economy, still the star performer among the BRICS countries (Brazil, Russia, India, China and South Africa), grew by a robust 7.8 percent last year. Over the longer term, China’s reform challenges are extraordinary and its future remains uncertain. But the near-term forecast remains sunny and the country’s charismatic new president is charting a confident course.

Why is this good news for the relationship? Because U.S.-China is no zero-sum game. There is no new Berlin Wall separating the two countries’ fortunes — and both sides know it. Given the volumes of trade and investment between them, Washington and Beijing will rise or fall together, and neither side has much to gain from the other’s weakness and insecurity.

While the U.S. economy looked to be stuck in a ditch, China partly succumbed to the temptation to be a bit more aggressive in asserting its interests — in East Asia and around the world. But this assertiveness actually diminished China’s reputation, and a strengthening United States gives Beijing a clearer incentive for cooperation, particularly since China will still need a strong U.S. commitment to help make the world safe for the flow of global commerce, and perhaps to help China exploit its own considerable domestic reserves of tight oil and shale gas.

Make no mistake: This relationship can’t run on its own. There are political constituencies in both countries that can bolster their domestic positions with a more hostile approach to the other side. Cybersecurity, in particular, remains a wildcard to watch. Direct engagement from Presidents Obama and Xi Jinping are needed to give U.S.-Chinese relations the importance and urgency they deserve.

Yet there are already positive developments worthy of note. Beijing acted as a good faith partner on tough U.N. sanctions against North Korea, and for the first time, the Chinese Navy has agreed to participate in naval exercises with the United States and other countries in the Pacific.

These signs give the two leaders something to work with.

Ian Bremmer is president of Eurasia Group and author of Every Nation for Itself: Winners and Losers in a G-Zero World. David Gordon is head of research at Eurasia Group and former director of policy planning at the State Department.

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