China Rising: Small World, Big Stakes

The U.S. and China are intimately linked--for better or worse. Can we make room for each other?

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NELSON CHING / SIPA FOR TIME

Liu Li works at a factory in Kaiping which produces clothing for the American company Timberland.

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China's well-being is predicated on continuing that flood of exports, so the U.S. has some leverage over China's policies. But beyond that carrot, the U.S.'s tools have become limited. When Jiang Zemin, Hu's predecessor, visited the U.S. in 1997, Washington could still block China's accession to the World Trade Organization (WTO), of which it is now a member, campaign against China's hosting of the Summer Olympic Games (which will be held in Beijing in 2008) and tie access to the U.S. market to improvements in human rights (unlawful under WTO rules). Now, says Chu Shulong of Tsinghua University in Beijing, "the U.S. is no longer so important for China's national interest." (For those skeptical of that claim: between them, members of China's Politburo Standing Committee have made 36 trips to 77 countries since Hu took over; only one of those trips--by Premier Wen Jiabao in 2003--was to the U.S.)

China's position could certainly change. In the past six months, a series of rows with Japan have reminded Asians that the two giants, with a bitter shared history, have never been at ease with each other. Even more potentially worrisome is China's determination to bring Taiwan back into the fold. The island to which defeated Nationalist forces retreated at the end of the civil war in 1949 is now a thriving, culturally rich democracy--the freest society that Chinese people have known in their long history. But to Beijing, Taiwan's status is a constant memory of the years of foreign humiliation. The National People's Congress, China's docile parliament, recently passed a resolution authorizing military intervention if Taiwan declares formal independence, but the U.S. has pledged to defend Taiwan from unprovoked attack. In the past few months, relations between Beijing and Taipei have improved after a dangerously frosty winter, but the tensions across the Taiwan Strait will require constant--and subtle--engagement by the U.S. if they are not to flare up again.

Perhaps the greatest risk to China's continued rise--and to the way it behaves internationally--comes from within. The extraordinary changes in the past 20 years have brought prosperity to many, but to scores of millions, the wealth so evident in cities like Shanghai and Beijing is a prize continually being yanked out of reach. Economic reforms have reduced the entitlements to a steady job and basic health care that were enjoyed by earlier generations. "Life in China is much more uncertain now," says Li Yinhe, a sociologist at the Chinese Academy of Social Sciences in Beijing. "Economic instability can cause social instability."

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