Tuesday, May 3, 2011

On international relations

Since the beginning of the New Year, we have read numerous articles about tensions between America and China. These issues tend to focus on the US accusing China of violating human rights, disagreements regarding currency politics, accusations of western companies being disadvantaged by ever changing economic policies and the ‘forced’ technology transfer in joint ventures with local companies in China. China, on the other hand, claims that international US economic policies are too protectionist.  These issues are to be viewed in an attempt of US to safeguard its position as largest economy and largest political power, while China wants to manifest itself as a major global economic power.

These tensions become more and more visible because China nowadays competes on more levels of the value chain with the western world. While having historic roots in low-cost manufacturing, Chinese companies are moving up in the value chain into more value added positions and are increasing their global presence, as witnessed by the acquisition of BorsodChem by Wanhua Industrial Group in Hungary.  And so many Chinese manufacturers are in direct competition with western companies. Next to this we are also seeing disagreements concerning access to natural resources as both countries attempt to safeguard their national interests.

This economic war, as it is lately often referred to, is detrimental for the global economy. The world would benefit from cooperation between the two countries pursuing mutual benefits and maintaining fair access to natural resources. Cooperation will not only balance the world economy, but it will also help enabling a more effective tackling of global issues such as climate change, terrorism and poverty.

The only way to accomplish such cooperation is in maintaining open international discussions. A ‘China vs. the world’ scenario can be avoided if China faces up to its responsibilities as an emerging global player and if the rest of the world learns how to adjust to China’s growing impact. 

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