What does the future hold for US and China?

On January 19, 2011, U.S. President Barack Obama and Chinese President Hu Jintao issued a joint statement at the end of Hu’s visit to Washington. It proclaimed their shared commitment to a “positive, cooperative, and comprehensive U.S.-China relationship.” Each of these nations gave reassuring statements that their main concern was to contribute towards peace, stability and prosperity.

The two governments have been busy focusing on strategic and economic issues. However, what is clearly evident is an underlying game for supremacy, with both sides trying to “check-mate” at the very opportunity they get. However, it did not start off this way. Post the Cold War, the China-U.S. relationship was reinforced by growing economic and trade ties. In 1991,China-U.S. bilateral trade volume amounted to $25.3 billion. In 2012, the figure went up to $500 billion. Tremendous growth of China-U.S. economic and trade cooperation proved to be a solid foundation for our bilateral relationship.

However, the changing times and the changing environment conditions brought about several frictions and competition amongst the two countries as survival of the fittest had come into play. Also, China and the U.S. differ on a range of issues, such as the South China Sea, cyber-security, trade disputes, human rights and intellectual property rights. China and the U.S. have different histories, cultures and political systems and are at different stages of development. Naturally, they may have differences. In 2010, Chinese GDP overtook that of Japan to become the second-largest economy in the world. Thus, then it became a competition between an established power versus a rising power. However, given the importance of China-U.S. relations to world peace and development, both countries realize that co-operation at some level would be required to advance this relationship for the betterment of other nations also.

Therefore, the most pressing agenda in 2016 between the two nations remains: economy. One of the areas where things need to speed up is the bilateral investment treaty, which has been under consideration for 8 long years. A BIT is a government-to-government agreement that establishes binding rules covering the treatment of foreign investors and investments from each country. the BIT includes the legal rules that guarantee non-discriminatory access to the Chinese market and fair treatment of investments once established. BITs provide substantive legal obligations that protect investors, such as protections against expropriation without compensation, protections from discriminatory or other arbitrary treatment, allowing investment-related capital to be freely transferred in and out of the country where the investment is made, and fair and equitable treatment of investments. China has entered into over 100 BITs. But the U.S.-China BIT will break with China’s traditional BIT model in at least two significant respects. First, in its negotiations with the United States, China has agreed that it will negotiate on the basis of a “negative list.” By agreeing to a “negative list” approach, China has signaled its willingness to allow foreign investment in all industries and sectors of its economy, except as specifically carved out. This leads to much broader coverage generally, since China has to “opt out” of protections, rather than “opt in.” Second, China signaled its willingness to allow non-discriminatory access to its market at all stages of investment. This would protect pre-investment activities and is expected to open the China market to more U.S. companies and afford greater certainty for investments in various sectors. These are serious and important advances that will benefit U.S. Investors. The U.S.-China BIT presents the most significant opportunity for U.S. companies to address barriers in the Chinese market since China’s accession to the World Trade Organization.

Secondly, they need to work together to ensure the success of the G20 Summitscheduled for Sept. 4-5 in Hangzhou. China-U.S. cooperation can play a crucial role in making this summit a success, which is very important to boost confidence and stimulate growth. It takes two to tango, and China and the U.S. Have to take every opportunity to strengthen cooperation in the economic areas for the benefit of the two countries and the global economy. As the world economy is still haunted by sluggish recovery, weak growth and market volatility, many are pinning hopes on the upcoming summit of the G20, which accounts for some 85 percent of gross world product, 80 percent of world trade and two-thirds of the world population.

The U.S. and China are the two largest economies in the world and interdependent in abounding ways. But as leaders from both countries start annual high-level talks in Beijing, disagreements over how China does business are creating some trust issues in the relationship. America is growing extremely weary of China's increasing popularity on the world podium as it sees its position slipping.