Regardless of what U.S. Treasury Secretary Jacob J. Lew and Chinese Premier Li Keqiang talked about yesterday in Beijing, both leaders face the reality that interdependence outweighs contention.
The CHART OF THE DAY shows how China’s portfolio of Treasuries first exceeded 30 percent of all holdings by foreign official institutions in September 2008, the month Lehman Brothers Holdings Inc. collapsed. The chart also shows that the U.S. supplied about 40 percent of China’s soybean imports since 2005, making American farmers crucial comrades to a nation that imports about 80 percent of the key animal-feed ingredient.
“Most but not all senior economic officials in both countries understand that the U.S. and China have a big stake in the each other’s economic success,” said David Loevinger, former U.S. Treasury Department senior coordinator for China affairs and now an analyst in Los Angeles at TCW Group Inc. “That’s why conspiracy theories that the U.S. is trying to contain China or that China holds the U.S. over a barrel because it could dump its Treasury holdings are far-fetched.”
The chart also shows Chinese accounted for 29 percent of foreign students at U.S. colleges and universities in 2012/13, double the proportion four years earlier, when India was the biggest classroom filler, according data compiled by the Institute of International Education. Another example of interdependence is China’s status as the fastest-growing source of tourists to the U.S. Chinese travelers also spend more per capita in the U.S. than any other nation’s, Loevinger said.
Meeting Li yesterday in Beijing, Lew pledged to strengthen ties with China. The two sides also announced that the annual Strategic and Economic Dialogue, where leaders discuss trade, intellectual-property rights and other issues, will take place in early July.
“The economic development of China and the U.S. are intertwined and cannot be separated,” Zhu said in a briefing after Lew’s meetings in Beijing. “The economic relationship between China and the United States have become increasingly integrated with each other and our economies have great impact on each others’ consumers. The economic growth in one country has direct influence on the other country’s growth.”