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China seeks out European friends while Obama goes to Asia

By Eric Baculinao, NBC News Beijing Bureau Chief

 BEIJING – It seems like a perfect diplomatic dichotomy.

Philippe Wojazer / Reuters

France's President Nicolas Sarkozy welcomes China's President Hu Jintao as he arrives at the Elysee Palace in Paris on Thursday for the start of a three-day visit in France.

While President Barack Obama is setting off to Asia to expand America’s partnerships and alliances, China’s President Hu Jintao is on his own journey to expand China’s financial and business clout in Europe.
The simultaneous maneuvers come amid a crescendo of warnings in China’s state-controlled media that America is executing a new “containment” policy that seeks to use diplomatic, economic and military tools to curb China’s development, notwithstanding official denials from the United States.
“The U.S. wants to contain China through making use of the contradictions between China and some Asia countries and interfering in Asian affairs,” warned a recent commentary in the 21st Century Business Herald.

In light of the divergent trips and a surge in diplomatic spates over everything from currency valuation to rare earth minerals, China analysts weighed in on what may lie ahead for the rivalry between the world’s two economic superpowers.

China on lookout for more friends
While Obama will visit India, Indonesia, South Korea and Japan – but not China – and attend two international summits, Hu is visiting France and Portugal at a difficult juncture for those Eurozone countries.

On Thursday, Hu inked billions of dollars worth of business deals during his state visit to France and was greeted with full military honors by President Nicolas Sarkozy. The deals included $14 billion for Airbus planes, which could seriously erode Boeing’s lead in the China market, as well as telecom and nuclear investments. 

Hu heads to Portugal Saturday where he will reportedly offer to buy government bonds that will be “conducive” to economic recovery and growth, according to one Chinese official. Portugal is faced with the danger of a Greek-style debt crisis.
For China to court Europe is a natural thing, according to Francois Godement, senior policy fellow of the European Council of Foreign Relations.  “It’s China’s first market and it also needs to hedge some of its resources, too much is invested in dollars,” he told NBC News.
By investing in European public debt, which commands higher interest rate, China is “indirectly helping to maintain the unity of the Eurozone,” Godement added. “In the process, China will also represent to these countries – Greece, Spain, Italy and perhaps Portugal – that its support is also political, and requires some payback.”

“It’s time to help the Europeans, especially because the Eurozone is going through some difficulties,” said Victor Zhikai Gao, director of the China Association of International Studies and former interpreter for the late leader Deng Xiaoping, who led China in opening up to a market-based economy.
“China certainly wants to be friends with Europe,” Gao said in a telephone interview from London. “China is always concerned about not having as many friends as possible in this world.” 
Nurturing U.S.-China ties
China also wants to be friends with the U.S., according to Gao, but the relations will need “nurturing, care and incentives.”

“China’s economy will likely quadruple again in the coming two decades, meaning it will overtake and become bigger than the U.S.” Gao predicted. “How the U.S. comes to terms with the prospect of China growing and overtaking the U.S. is a major issue.” He noted that since World War II there has never been as much of a possibility that another country could overtake the U.S. as the world’s superpower as now.

Gao argued that China’s ascendancy could be a boon for the U.S., if they work together.

“If the U.S. and China can view each other as friends and partners, then there will be no insurmountable difficulties in this world,” he said, citing the global issues of terrorism, extremism, fundamentalism, nuclear  proliferation and anti-Americanism as requiring China-U.S. cooperation.
“But if the U.S. views China with suspicion and tries to ‘contain’ China, then not only will ‘containment’ not succeed but the real enemies of the U.S. will congratulate themselves,” he argued.

When asked about how China views U.S. involvement in the region, Gao said that China has never denied that the U.S. has legitimate interests in that part of the world.
“What China objects to is the projection of U.S. forces to interfere in China’s internal affairs, like on Taiwan,” he explained.
“It is true that China has territorial disputes with Southeast Asia countries – Vietnam, Japan, India – but it is much better to let the countries involved sort things out,” he suggested. “If the U.S. sides with some countries, the U.S. creates disincentives for improved relations between the U.S. and China.”

“The better strategy is to incentivize China and leverage China’s potential,” he added.
‘Pessimistic on balance’
For Richard Betts, director of the Saltzman Institute of War and Peace Studies at Columbia University in New York, the issue of “containment” is a strategic choice.
“If other powers like the USA want to keep China from developing a stronger strategic role in East Asia as it becomes wealthier, that will amount to ‘containment,’” he said.
Asked about the prospects of a U.S.-China confrontation, Betts conceded he was “pessimistic on balance …  An optimistic outcome is quite possible, but it will not be the natural default option.”
“To avoid confrontation, one of three possibilities will have to” play out, he added: “ China’s rise falters and the country suffers a reversal of fortunes and does not rise to superpower status; China rises but gives up the normal ambitions of a great power to control events that affect its interests; or other countries, especially the USA, Japan, Russia and India, concede China’s dominance in East Asia and do not contest its preferences for resolving the status of Taiwan or the Spratly and Diaoyu/Senkaku islands.”
“Any of these options is possible, but none seems likely at the moment,” he said.
“The West cannot have its cake and eat it too, meaning have amicable relations with China but simultaneously keep China in a subordinate position in the balance of power and block China from resolving disputes in its favor,” Betts added.

Time will tell how the various diplomatic dances play out.