China, the US and the Security Dimensions of Financial Interdependence.

For the past decade, China has been experiencing phenomenal rates of economic growth. Its continuing development, however, is closely tied to its ability to keep its goods competitive in the international market. Thus, China has kept the value of its currency comparatively low by exporting many of its profits to the industrialized world. In particular, China has used some of its excess financial gain to purchase American treasury instruments and other American dollar assets. This has helped to finance the growing American national debt. China is one of the United State?s major creditors. At the same time that China is helping to artificially maintain the American economy, the US is engaging in security policies which seem to cast China as a threat to American hegemonic power. Considerable time and energy has been spent in the US in evaluating China as a potential threat, and a great deal has been written on how and when the US should respond to this perceived threat. The paradoxical relationship between the US and China is the subject of this paper. In particular, the paper evaluates the mutually-reinforcing economic relationship of the two countries and attempts to evaluate how this affects the evolving security relationship. Theoretically, the paper compares realist and liberal approaches to these questions with more complex constructivist arguments. The paper argues that the US perception of itself as the premiere world power is coming into conflict with the China?s perception of itself as a relatively weak country that is only now starting to attain the level of global prominence that it deserves. These self-identities strongly influence the operation of economic and security factors when the two states assess how to deal with each other. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]