The China Card

Last week, China unceremoniously pulled out from an EU summit after French President Nicolas Sarkozy agreed to meet with the Dalai Lama in Poland, a diplomatic blunder suggestive of the two regions’ increasingly distrustful relationship. The summit was to have clarified China and Europe’s fallout from the global financial crisis, and identified areas of common interest, like trade, Africa, and the environment.  Yesterday the US had more success, at least on the financial level: Treasury Secretary Henry Paulson kicked off the final round of his Strategic Economic Dialogue in Beijing, three days after the yuan experienced its biggest dip in three years.

According to Bloomberg, China will play a key role in America’s own economic recovery:

“The U.S. is China’s second-largest export market afterEurope. China, with the world’s largest currency reserves –poised to top $2 trillion — surpassed Japan in September tobecome the biggest foreign holder of U.S. Treasuries.

“Its role as a buyer of U.S. debt may only become moreimportant as the U.S. spends to revive an economy in recession.China’s own economic slowdown is deepening as exports dry up.”

Meanwhile,whether or not Europe or America ply their China “realism” cards, thereis the matter of China’s $100 billion investment in Africa this year(including financing a new $120 million headquarters for the AfricanUnion), surpassing the US for the first time.

“There are some people who argue that China has anevil design in terms of geostrategic gains,” said Wenran Jiang, apolitical economist at the University of Alberta.

Added BatesGill, a China scholar who directs the Stockholm International PeaceResearch Institute:

“The biggest issue right now is whether China is going to be anobstacle to the kinds of political transformations that the UnitedStates would like to see take place [in Africa] to greater stability,greater democratization and greater openness in societies.”