US-China Conflicts:

Encirclement Of China, All steps in the process of Encirclement.

World has always seen Major powers striving to become Superpowers,
becoming superpowers and then their decline as well. Currently, the
world has grew into a multipolar nature where US is at its position of
being the sole Superpower yet some of the other world powers are not
lagging behind in their endeavor(employing effort) to become the
superpower. Of those Major powers China is the one that is growing at
such a faster rate that is horrifying for US. US does not want China to
replace it as a Superpower. Though China is growing more economically
and is not having military presence all over the world yet it is increasing
the concerns of its enemies because of its rapid economic growth and
large military buildup. In order to create a deterrence for China and
contain its power US is in a continuous endeavor to have either good
relations or military presence in almost all those countries that border
China or are nearer to China. It is pursuing an ‘Encirclement Policy’.
People's Liberation Army Major General Lu Yuan, well known for his
hawkish views once commented,
"China has not provoked U.S. interests, so what are you doing running to
Asia to encircle China?"
It is evident from several US actions, agreements, defense deals and
pacts with the countries surrounding China that US has the intentions to
encircle China.

In 1971, Japan and the US signed the Okinawa Reversion Agreement,

which arbitrarily included the Diaoyu Islands in the territories and
territorial waters to be “handed back” to Japan. The Chinese
government has condemned such backroom deals between Japan and
the US. US, together with Japan and other of its allies, is trying to contain
China’s rise.

US Secretary of State Hillary Clinton currently made visits in the mid of

2012 that were a clear manifestation of the phenomenon US is pursuing.
From Japan to Mongolia then to Vietnam, Laos and Cambodia, Clinton
mainly focused on three things: backing Japan, Vietnam and the
Philippines in disputes with China over maritime territorial sovereignty,
balancing China’s economic influence in Asia by enhancing trade and
economic ties with Southeast Asian countries, and promoting support
for democracy and human rights as the core of US Asian strategy while
attacking China’s development model.

The countries that are on the US list of interests consist of Japan,

Myanmar, Taiwan, Vietnam, Philippines, Laos, Cambodia, Mongolia,
North Korea, India and Pakistan. Among these countries North Korea,
Myanmar and Pakistan being the close friends of China are being
pursued by US diplomatically and economically, endeavoring to enhance
trade ties with these countries and keep them under the US umbrella so
that China may be weakened.
With each of these countries US is having either a defense treaty, or
economic ties and many of them are NATO members as well. This gives
an easy understanding of what US I doing in Asia-pacific. Chinese
strategists and defense analysts firmly believe that all these US moves
are nothing but an attempt to contain Chinese rise.

SOUTH CHINA SEA:

China and US are at daggers drawn on the issue of South China sea. It is
the tension creating issue between China and USA where both the states
are having their own claims. China, being the sovereign, claims that all
the territorial waters belong to China and the imaginary nine dotted
line, that is found on Chinese maps of the sea, belongs to China
according to its domestic law. Hence, any country that wants to use the
waters for navigation of ships and trade purposes must have the
consent of China and China must be informed through the proper
channel about any sort of movements and transportations in the sea.
China is having tensions with Philippines and Vietnam on the issue
whereas America seems to be opposing China up to the maximum
possible extent. This issue has got US in a fix where she can not force the
mighty China to disregard its stance on the issue while the allies of US
want her to oust China and assure the protection of their territorial
waters. In addition to the territorial waters, it is an endeavor to get the
energy resources that lie beneath the islands of the sea. At this point of
time, it is not wise for US to have any kind of tension with China nor can
she afford having a limited or total war with China, the weakened
economy of US doesn’t allow that. On the other hand, if there is lack of
action from the superpower, its credibility, as the protector of its allies
and their interests, will be decreased.
Hillary Clinton, in a statement, said, “US is not taking sides in Manila-
Beijing standoff yet it wants free navigation be ensured”.
However the gestures of US clearly depict that US is not going to tolerate
China in the South China Sea. The US-Vietnam combined navy exercises
in the sea and the flights of F-16 were an illustration of that.
Similarly, ASEAN countries have deep concerns over the issue, as
member states are parties to the dispute. The members seeking alliance
of US in the issue has been a question on ASEAN’s efficiency in the
region and the member states consider it as their weakness if any of the
members has to look towards US to seek security in any circumstances.

Currency War:

World is shifting from the dominance of military power to the

domination of economic power. Though the victors have always been
those who strengthened their economy but the fact has been realized
after having experienced by some major powers. Fall of USSR, for
instance, is the greatest example of importance of economics in order to
pursue strategic interests. Current world is focusing on enhancing
economies and improving standards of livings of the people. In addition
to that states want to have better economies so that they may be ready
to tackle any potential threats. In this era of competition, US and China
seem to be arch rivals of each other in spite of both having great
interdependency upon each other. Though they are having economic
relations but both want to outweigh the other in the economic race.
While US is having a greater economy currently, China is projected to
have a growth rate twice more than that of US in 2020 A.D.

In order to understand the economic conflict, the basic understanding of

the currency system and its implications is very necessary.

The concepts of Fixed, Flexible and Floating exchange rates of

Currency are very important to understand, in this regard.

China, by keeping its exchange rate fixed at a lower level, is increasing

its exports to the international markets and hence decreasing the trade
of US comparatively. On the other hands, it is also influencing the flow of
US currency in the international markets, which has again an indirect
influence over the economy of US, bringing further inflation in the
country and elevating the value of Dollar against Yen. It can be predicted
that China is pursuing its policy of replacing Dollar as international
currency by Yen, which is yet at third number- first and second being
Dollar and Euro respectively. US has been protesting against these
tactics of China but China rejects any allegations and pursues its policies
without taking any pressure. The reason why US can’t impose any
sanctions on China is that She is greatly independent on China in her
economic policies and any harm to the Chinese economy is an indirect
harm to the US economy. Some analysts have called the process ‘Mutual
Assured Economic Destruction’ which is explained ahead.

MAED (Mutual Assured Economic Destruction):

Short of a nuclear exchange, the greatest damage from any conflict with
China is likely to come in the economic realm. Massive and mutual
economic harm would indeed result from any significant Sino-U.S.
armed conflict, even if the two sides eschewed employment of economic
weapons. The two economies are linked with each other and with the
rest of the world in a manner unparalleled in history. This mutual
dependency can be an immensely powerful deterrent; in effect a form of
mutually assured economic destruction. At the moment the balance of
advantage rests with the United States, but even the winner in such a
contest will wish it had been avoided.

The operation of MAED is somewhat different from classic mutual

assured destruction (MAD). It is at least theoretically possible to limit
the escalation of a military clash to the sub- nuclear level. It is not
possible to so limit the economic consequences.