The document discusses the growing economic power and influence of China compared to the United States and Europe. It notes that China's economy is projected to surpass the U.S. economy in size within the next 10-15 years. It also discusses increasing Chinese investment and trade with the U.S. and Europe, as well as cyber intrusions by China that cost the U.S. billions annually. The document argues that while relations between China and the U.S./Europe may become strained at times due to economic competition and strategic differences, a new Cold War is unlikely given their high level of economic integration. Cooperation between the countries is important to maintain stability in the global order.

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Keshav Prasad Bhattarai
A recent Heritage report says that America‟s total debt has reached $ 17 trillion that means $ 53,769 on
the head of every citizen. It is eating up $ 11,000 from the income of every American family - eliminating
opportunities for career advancement, paralyzing job creation, lowering wages and salaries and
according to President Obama‟s former Joint Chiefs of Staff Mike Mullen, it is the biggest threat to
security.
In 2012, United States imported $425.6 billion, in goods from China that is about one third of China‟s
total exports. However, total exports to China from United States in 2012 were just $110.6 billion.
According to Ian Bremmer, a terrific American political analyst, “United States now borrows about $ 4
billion per day, nearly half of that from China”. China, on the other hand has begun to express its anxiety
about the safety of its assets and U.S.‟s ability to pay back its debt. China holds some $1.2 trillion worth
of U.S. Treasury debt, about 8 percent of the total outstanding.
A country that was one of the poorest in world has become a lender to world‟s wealthiest and most
powerful country in just a period of 30 years.
Growing economic domination of a strong and rising China over American and European economy is not
an exaggeration. According to New York Times, annual investment from China to the European Union
was less than $1 billion before 2008, but now it is more than $10 billion. In United States, it has reached
some $ 7 billion, when in 2008 the figure was less than $ 1 billion. In 2012 Europe was the destination for
some 33 percent of China‟s foreign direct investment, the New York Times further has further stated. By
2020, China‟s foreign direct investment is projected to reach some $2 trillion.
China is buying huge American and European companies, building infrastructures all over the world
including Western Europe and Northern America. According to a study as referred by the New York
Times, “between 2009 and 2010, China was the world‟s largest lender, doling out $110 billion, more than
the World Bank”.
In less than a decade China will double its economy and will add another 100 million people above the
poverty line that on record scale has already lifted 500 million people out of poverty in the last 30 years.
In his thought provoking but controversial book – A Brief History of the Future, Jacques Attali -noted
French writer and economist, who had served as the advisor of President Francois Mitterrand - has rightly
termed internet as the “eighth continent” that largely has remained as an “American colony”.
As Attali predicted, the American colony is gaining autonomy. In his recent book- Every Nation for Itself
(2012), Ian Bremmer - has estimated that in every twenty-four hours, “about 100,000 Chinese log on to
the internet for the very first time”. This way joining among the 2.4 -billion cyber tribes of the modern
world, Chinese have become the single largest chunk and this inevitably is defining the global cyber
regime to the size of their economy and population.
Giving reference to a nonpartisan, US „Commission on the Theft of American Intellectual Property‟ the
Asian Correspondent of the Reuters Paul Eckert in his provocative report published on May 22 has

2. mentioned that such Chinese intrusion “costs the U.S. economy $300 billion a year” and some 2.1 million
jobs loss each year.
Including several independent study, Pentagon‟s annual report to Congress, ( May 6,2013) has explicitly
alleged that in 2012 “numerous computer systems around the world, including those owned by the U.S.
government, continued to be targeted for intrusions, some of which appear to be attributable directly to
the Chinese government and military.”
The reported Chinese cyber intrusions and stealing of industrial secrets took place in some more than
100 American companies. Cyber units of Chinese People‟s Liberation Army (PLA) were also accused of
stealing top secret blueprints of highly sophisticated weapons system- giving China billions of dollars of
benefit in research and development and a time advantage of some 25 years.
The Chinese intrusions according to report were focused on collection of US “diplomatic, economic, and
defense industrial base sectors that support U.S. national defense programs and was meant to benefit
China‟s defense industry, high technology industries, policymaker interest in US leadership thinking on
key China issues”. Chinese access over missile-defense technology, combat aircraft, and other
weaponries could give China‟s military planners build a clear picture of US defense networks, logistics,
and related military capabilities and that could be exploited during a crisis, the report admitted.
Ironically, United States borrows money from China to spend for its defense bill – that is mainly to meet
the challenges offered militarily from its stronger and assertive lender.
The world‟s most powerful military power, the world‟s largest economy, the world‟s most innovative
country, and the world‟s largest defender of democracy, freedom, and human rights depends upon the
loan of the world‟s largest one party communist regime. Its excessive defense spending and continued
failure to provide competitive edge to its economy, has paved the way not only for American financial
crisis, but also for its failures to build a strong national commitment in favor of freedom, democracy and
human rights.
Similarly, China with the advanced technology developed by United States wants to have it by any
means - legally if possible and illegally if not, and want to narrow the competitive edge tilted heavily in
favor of United States.
Michael Spence, a Nobel laureate in economics, writes in Project Syndicate “China‟s GDP is projected to
catch up to that of the US and Europe in 10-15 years, at which point (if not sooner) both Chinese and US
real GDP will exceed $25 trillion (in 2012 prices), more than three times China‟s current GDP. Each will
account for approximately 15% of global output.” Many studies have predicted that China will beat United
States as the largest economy before 2020.
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World‟s developed democracies are under tremendous pressures for their failing economies. Soaring
discontents of their people for continued loss of their jobs and uncertainty for their future has been eating
up the confidence of their elected governments. On the other hand, China has been experiencing some
most encouraging signs. While most successful democracies are experiencing hardest moral challenge in
favor of the system of governance they followed and ascertain the confidence of their people, China in
contrast, is making grand march with its authoritarian rule. The values of freedom and democracy and its
proclaimed ability to serve the cause, concern, and dignity of the people to ensure progress and
prosperity in the best way, were never challenged this way.
In the words of Lee Kuan Yew - the prime minister of Singapore (1959 - 1990),China‟s President Xi
Jinping, has “always a pleasant smile on his face”, but “has iron in his soul”. Smilingly and resolutely, this
man for the another 10 years will make the world understand how to survive with a non-democratic
country that has accumulated such a massive scale of power and influence - never experienced in
human history. When Xi will be working in full swing to reshape the world order on his way, the United
States will have two other presidential elections, and the man elected, will have to lead the world‟s most

3. powerful democracy, but most probably a country economically outperformed by a one party authoritarian
regime.
Xi Zhongxun, the father of Xi Jinping was one of the trusted colleagues of Mao. Xi Zhongxun, when made
an innocent remarks on Chinese politics, he suddenly fell from the grace of Mao during the Cultural
Revolution, was accused as a reactionary, imprisoned several times, and suffered numerous
humiliations. When father Xi was serving jail sentences, junior Xi in his teen age was sent to a remote
village to work on a farm that was used as a rigorous labor camp for such people. Millions of other young
people were also sent to such places.
Xi Jinping spent 7 years punishment in that village. On Xi‟s punishment Lee Kuan Yew in an interview
said, “With enormous emotional stability who does not allow his personal misfortunes or suffering affect
his judgment” he “would put him in the Nelson Mandela‟s class of persons”. (TIME, November 19, 2007)
Xi exhibited similar emotional stability in his recent summit with U.S. President Barrack Obama. Amid
deep distrust born out of cyber issues as mentioned above, including some prickly regional issues, Xi did
not wait for state protocol for Obama‟s visit to China, but decided to hold an unusual meeting with
American president on June 7-8 at Sunnylands, California. Unusual also in the sense that the two most
powerful leaders of the world sat, dine and drank together for two days, talked for hours and lived as two
close friends and not as two great competitive strategic powers. It was a rare event for a Chinese leaders
and an exceptional history for such two strategically rival figures.
To match Obama‟s “Asian Pivot”, Xi Jinping before his visit to United States, has announced his own
strategic principle - a new great power relationship - aimed to enhance mutual trust through broad
ranges of intense dialogue, deepen cooperation in traditional and emerging issues, manage the bilateral
differences properly and greater role for China in the region . The summit, as stated by the officials of
both countries was a great success.
The Economist, rightly says, “For the newly installed Mr Xi, the decision to engage in unscripted
discussions spread over two days shows unusual confidence in his political grip and his mastery of a vital
and highly complex area of foreign policy”.
Had both Xi and Obama to wait to hold their first officially scheduled meeting in September during the G-
20 summit in Russia, the situation could have turned more serious and complicated for them. Already
tangled with many domestic issues, further mistrusts added in Sino- U.S. relations could limit Obama‟s
options to a dangerous level.
Xi, although was more secured in his country than Obama, might have problems in asserting and
consolidating his power base in the country within party and army – something that is most needed to
lead the world‟s largest population, lead their high hopes, modernize their country, and become the
largest economy during his leadership.
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Cold War was the result of economic isolation of Soviet Union with major western democracies. Instead
of smooth trade, they had thousands of nuclear missiles stationed between them and targeted against
each other.
The World can never have another Cold War because Europe and America are much more integrated
with China than they were with the former Soviet Union. The fear of the nuclear havoc was the single
reason that was joining them with Soviet Union, but with China, it is integrated trade and shared
prosperity. Therefore, they may compete with China in a way similar to Soviet Union. At times, it may be
stiffer, but they cannot fight with China and vice versa, because they are the part of the same economy.
An integrated shared economy does not allow its partners fight with each other.

4. In a modern economy, anyone can help someone to have a rise, but he alone can make decision to fall.
The elder Asian statesman Lee Kuan Yew - highly respected in United States, Europe and China says
that the U.S. cannot stop China‟s rise - no questions for any other country in the foreseeable future.
Instead, the U.S. and the World has to learn how to live with a bigger China, as no country has ever been
big enough to challenge its position, but China will be able to do so in 20 to 30 years.
For the size of China Mr. Lee says, “It is not possible to pretend that this is just another big player, this is
the biggest player in the history of the world.” ( Lee Kuan Yew: The Grand Master's Insights on China, the
United States and the World, a collection of interviews and other material by Graham Allison, Robert
Blackwill and Ali Wyne (2013),
So there is a strong China and will continue to be stronger, unless it decides to decline with some major
strategic fallacies. Therefore, Xi as the is head of the state, party and military, is the highest official of the
land responsible to lead the country to his dream and dream of Chinese people that in his words is - the
great rejuvenation of the Chinese nation. That according to the New York Times is explained as to
achieve “two 100s” – that means to become a fully developed nation by 2049 - the 100th anniversary of
the People‟s Republic.
The Chinese Dream as The New York Times states has four parts: first, politically, diplomatically,
scientifically, militarily and economically - a “Stronger China”, second, on the ground of equity, fairness,
culture, and moral standards - a “Civilized China”. Similarly, by the measure of social cohesion, the
dreams include - a “Harmonious China” that is its third part and environmentally - a “Beautiful China”, the
last one.
If China wants, it can make American economy collapse but in return may bring havoc to present day
world order and the cost of conflict with United States may be even higher for China - possibly more
serious than former Soviet Union. Indubitably, a few strategic miscalculations may turn it into a terrible
dream.
However, United States as a global leader has a bigger role to work with China. Therefore, Lee Kuan
Yew advises United States not to treat China as an enemy from the outset. “Otherwise, it will develop a
counterstrategy to demolish the U.S. in the Asia –Pacific. . . There will inevitably be a contest between
the two countries for supremacy in the western Pacific”, however it may not lead to a major conflict.
China and USA are unique in their relations - perhaps without any parallel in human history. Politically
they belong to opposite camps. Strategically they are the only two rival countries in present day world,
but economically they are integrated into a global economy. The major part of China‟s wealth, power,
glamour, and global status depends largely upon American market, American buyers, and American
investments.
United States undoubtedly is a single reigning super power and will continue to be so for another few
decades to come. However, China with its huge economic influence, highly effective intrusive cyber
capacity, growing military might and technological deep pockets in defense related matters, has
confirmed that it is the next super power that holds capacity to challenge United States on almost all
counts from economy to weaponries, but hardly both can engage in another Cold War.
China can be an economic challenge, but as experts say, it cannot become a military challenge to United
States for another few more decades. Therefore, China can be lured to take refugee at some
asymmetrical strategic means as cyber capability, but technologically more advanced United States if
resorts to similar options, this will hurt China much more than it can harm America.
Ultimately, major sufferer will be China‟s great dream to modernize its economy to the level of developed
countries and gain a respectable place among the global community.

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The geo-political edge U.S. attained as a paramount Atlantic and Pacific power, the global order it led
following to World War II, and largely the Euro- American political, cultural, and economic values that
have been dominating the human society since the last six decades, have been evidently challenged.
This will be much more pronounced in years to come if their economy continues to decline. Inevitably,
more than economic or military - China poses greater challenges to the very identity of western society that also
have been the values adopted by many developing countries - the pluralistic liberal political and cultural values.
This will be an historical watershed since the industrial revolution. A non-western country standing quite contrary to
liberal political values of the western democracies will be in a position to shake the values woven around the
economic, political, and military confidence of the developed and developing world as well.
A single European Union, Euro as a common currency and an unrestricted trade regime among European
countries could serve their purpose well, but they have found it rather easy to align with China and find out a way to
solve their economic troubles - rather than strengthening common economic regime binding them together. They
have thus failed to make the world believe that the political and economic values they have developed in their land
with the greatest sacrifice and sufferings of their people are not just European or American values but are human
values always high to promote and protect human dignity. However, when Europe and America fail to stand tall for
those values – then those great values that have never been defeated among human society and were burning at
the heart of millions of Asian, Africans and South Americans, may succumb to some kind of authoritarian or
communal values.
In the western democracies, Lee Kuan Yew is a highly respected politician. They feel proud to have a
meeting with him and seek his advice on global matters. However, he ruled his country with an iron hand
and never allowed other party to exist in Singapore than his People‟s Action Party. During his rule, he
gave his country probably the most effective and accountable government in the world. He was tough,
but exceptionally clean and dedicated to the cause of his people. The prosperity he attained for his
country with a visionary zeal and dedication was unparallel.
The stable political model he developed -the great economic success he attained and the active,
committed, disciplined, hard working and vigilant citizenry he inspired, has been an inspiration for all.
If Europe and America cannot make quick recovery from their economic problems, a Singapore model
can charm many vulnerable democracies and China may play a lead role in adopting Singaporean model
in redefining its political system – a safe way out for political reform in China.
According to Lee Kuan Yew China intends to become the greatest power of the world and unlike other
emergent countries wants to be accepted as China and not as an honorary member of the western club.
Obviously, for this reason China wants a non-western political model.
China knew it long before that; it cannot develop and prosper in isolation or by adopting communist
model of economy. However, it is living with structural contradictions - it cannot stick to communist party
rule in years to come if it wants to ensure its great dream. Neither can it adopt a liberal democracy – that
may open the floodgates of chaos and anarchy as was seen in Soviet Union.
Integration with global market, following market economy and facilitating mutually advantageous
economic relations with United States and other major economies has given China the honor and pride
that it has never experienced in history. Therefore, China wants to continue with that but also would
carve for a new political model that it wants to be insulated by the vagaries of some corrupt and socially
divisive practices - commonly experienced in many emerging democracies.
Besides, it is natural for a big and powerful country like China to aim to beat United States and claim as
number one power. Similar is the case with United States to uphold status quo, but they have no other
options rather than sharp diplomatic skill and greater statesmanship in enhancing their economy,
managing economic co-operation with each other and dealing with geostrategic rivalry. China has

6. everything to gain - the position America holds today - except the democratic credibility, accountability,
highly embracive society, confidence, and mandate of people to run the state.
A relevant quote from George Friedman‟s book – The Next Decade (2012) says, “United States has
become an empire not because it intended to, but because history has worked out that way. . . . Nations
become what they are through the constraints of history, and history has very little sentimentality when it
comes to ideology or preferences. We are what we are.” We have to wait and see how far the history has
worked out in favor of China.
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