Amid the unprecedented earthquake and tsunami tragedy in Japan, and Moammar Gadhafi and other dictators’ bloody last gasps to cling to power in the Middle East, the global power dynamics, too, are realigning, as new monikers such as G2 or “Chimerica” imply. 

U.S.-led world affairs such as U.N. Security Council resolutions, the U.N. Climate Change Conference, the WTO Doha Round or G20 financial reforms have had to contend with China’s “Great Wall” for some time now and will continue to in the future.

Few doubt that China’s share in the world’s economic pie is increasing. As 2010 IMF data indicates, the U.S. occupies 20.5 percent, while China and Japan comprise 12.5 percent and 6 percent, respectively, of world GDP based on purchasing power parity. China’s GDP per capita income of $7,500 is, however, still far behind that of the U.S. at $47,000 and Japan at $34,000.

According to SIPRI, China’s military budget, the second-largest in the world, has also been increasing at a double-digit rate for more than two decades. Doubtless, China’s $98.8 billion, or 6.6 percent of the world’s total military expenditure in 2009, is still about 1/7 of that of the United States with $663 billion, or 46.5 percent.

What does the rise of China mean to the Chinese, the U.S. and the rest of the world?

For China, its inherent contradictions of one-party politics and market economy will be further exacerbated. The income gap between the wealthy coastal regions and the hinterland will widen. So will the chasm between rural and urban areas or among agricultural, industrial and service sectors. Ineluctable, too, will be the increasing demand for political freedom by a better fed, better educated and especially IT-smart younger generation.

To the United States, China is unlike the former Soviet Union, Japan or West Germany during the Cold War era. It is neither like the present post-Mubarak Egypt nor Libya. It is a totally different behemoth.

Two fundamental differences in the present U.S.-China relations are noteworthy.

First, the former Soviet Union was the United States’ ideological and security adversary, while China is now deeply entrenched in U.S. and world trade, finance, investment and resource markets. Security issues remain on the backburner for both. Their bilateral defense coordination, military maritime consultation and space cooperation are at an inchoate stage.

Second, during the financial and economic crises in the early 1970s and ‘80s, the U.S. was able to manhandle its security allies, particularly the rising Japan and West Germany. It used the security burden of defending its allies against the Soviet-led communist threats persuasively to make them comply with its terms.

The United States’ financial “free-ride” for its allies’ security “free-ride” prevailed much to the latter’s chagrin. Nixon’s 1971 unilateral annulment of the U.S.-dollar-gold convertibility and Reagan’s successful push for 1985 Plaza Accord were cases in point. Even during the 1997-98 Asian financial crisis the U.S.-led IMF bailout plans worked out, more or less, in American terms.

The 2008 global economic panic, triggered by the U.S. subprime mortgage crisis was different. The two-way security for finance-free-ride tacit trade-off of the past is not applicable to nuclear China, now the world’s second-largest economy.

Worse, China is presently the United States’ biggest creditor nation. The most recent estimates reveal that China holds about $1.7 trillion in U.S. government debt. It owns about $1.16 trillion in U.S. treasury securities alone. This is the crux of U.S. economy-cum-security dilemma and one of its biggest challenges in the coming years.

In the past the U.S.-led G5, G7 and/or G8 had managed global economic crises, big and small, within the post-war Bretton Woods system through occasional tinkering and minor repairs. Now, however, the abovementioned U.S.-led global agenda or U.S.-China bilateral forums such as the Strategic and Economic Dialogue and the Joint Commission on Commerce and Trade must overcome China’s Great Wall. Put bluntly, America’s “Japan bashing” worked, but “China bashing” will not. Euphemistic stopgap measures such as quantitative easing I and II, for instance, may not cure the fundamental malaise of the U.S. debts and deficits.

There is, for example, a stark contrast between U.S.-China Summit Statement this January and the U.S.-Japan Security Statement marking the 50th anniversary of the U.S.-Japan security treaty last January.

The 2011 U.S.-China Summit Joint Statement is basically a declaration to recognize each other’s sovereignty and territorial integrity and to “build a cooperative partnership” on the basis of “mutual respect and mutual benefit.” Its lengthy 41 paragraphs explicate how the two nations should manage their bilateral relations, regional and global issues and challenges, as if they were the world’s co-CEO.

At a closer look, however, none of the issues it raised, such as the Taiwan question, the denuclearization of the Korean Peninsula, the ratification of the Comprehensive Nuclear Test Ban Treaty and China’s human rights or its renminbi revaluation are easy to resolve.

By contrast, the 2010 U.S.-Japan security statement is a reformatted extension of the half a century-old alliance, which is “rooted in … shared values, democratic ideals, respect for human rights, rule of law and common interests.” It reaffirmed alliance as the foundation of their security and prosperity for the last half century and its “indispensable role” in meeting the challenges of the 21st century.

What do these differences and contrasts in the Sino-American relations in particular reference to the U.S.-Japan relations imply for them, for the Asia-Pacific region and the world? An answer could be summed up in two key words ― “gap” and “mismatch.” The gap in culture, civilization and history between China and the U.S. is still vast. The mismatch in their political leadership, political systems, stages and levels of economic development and strategic and policy priority settings is also huge, though not altogether insurmountable and incompatible.

One thing is self-evident: Narrowing this gap and mending the nearly intractable mismatch will not be a fly-by-night affair, but a “long march.” This should be a humbling realization for the U.S., China and all of us.

By Yang Sung-chul

Yang Sung-chul is a former ambassador of the Republic of Korea to Washington and a distinguished professor at Korea University in Seoul. ― Ed.