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Updated 10:00 AM February 2, 2009
 

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New wrinkles could test U.S.-China relations

One of the most critical issues demanding President Barack Obama's attention is the United States' relationship with China, says Kenneth Lieberthal, a professor at Stephen M. Ross School of Business. The solid foundation set between the nations in recent years will be tested by such pressing issues as the global recession and climate change, he said.

Lieberthal presented "U.S.-China Relations in the Obama Administration: Continuities and Changes" during the 42nd William K. McInally Memorial Lecture Jan. 27 at the Ross School's Blau Auditorium. The Chinese government, he said, may be "one of the very few in world sad to see George W. Bush leave office and is nervous about his successor."

Lieberthal is the William Davidson Professor of Business Administration at the Ross School, the Arthur F. Thurnau Professor of Political Science at the University and a distinguished fellow of the William Davidson Institute. He currently is on leave as a visiting fellow in foreign policy studies at the Brookings Institution in Washington, D.C. During the Clinton administration, Lieberthal served as special assistant to the president for national security affairs and was the National Security Council's senior director for Asia. He also was a consultant for the Department of State during the Carter and Reagan administrations.

The United States has the world's most extensive bilateral trade relationship with China, and China holds the largest amount of U.S.-dollar-denominated debt instruments. As a result, the two countries are "joined at the hip at this point," Lieberthal said.

But issues exist that could create a rocky road moving forward. First, the Chinese government is unfamiliar with Obama and his team, so there's some natural wariness on the Chinese side, he said. Also, neither Obama nor Secretary of State Hillary Clinton can claim much experience dealing with the nation.

In terms of climate change, Obama's view on environmental stewardship is the polar opposite of Bush's, Lieberthal said. And while climate change hasn't been at the forefront of the U.S.-China agenda, it will move there very fast. It's likely that a central piece of Obama's environmental policy will be a cap-and-trade system, in which carbon emissions are capped but could be traded on an open market.

The United States and China have bilateral relations, but they haven't been serious partners on truly global issues, Lieberthal said. "I think if this gets going, it will be a major bridge to the future. But I have to say the opposite is also true," he said.

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