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.