GNlu | US-CHINA RELATIONS | SUBMITTED TO:Dr.Aruna Kumar Malik | | SUBMITTED BY :ABHISHEK CHATTERJEE |
REG NO :11A006

INDEX
Introduction Pg 2
US China Comparison Pg 3
Brief History Of US-China Relations Pg 5
Conclusion Pg 21

INTRODUCTION
Since the dawn of civilization there have been great nations, 5000 years back the Mesopotamian,Egyptian and Indus Valley Civilization were the super-powers,if not the only advanced civilization of their time,2000 years back we had the roman empire and the chineese,500 years back the mughal empire,the ottoman empire etc.
The world order keeps on changing, the end of the first world war saw the rise of America along the ranks of other European superpowers like the British Empire,France and Germany and saw the fall of 2 superpowers,the ottoman and the Austria-hungry empire.
The second world war ushered the modern world into a new world order. The United Nations was born and its membership suddenly grew. The United States brought about reconstruction of the war torn economies of Europe and Japan and ensured stable democracies for her new allies,now only two superpowers called the shots,the world was divided into two ideological camps,the first led by America,countries which followed the free market system and liberal democracies and believed in open markets and international were part of this group of nations.
The other faction was led by the Soviet Union it included states like East Germany,Poland,China and North Korea, this faction consisted of communist or socialist states whose economy was closed and centrally planned. This was the era of a cold war, both the super powers did not engage in direct warfare(Vietnam and Afghanistan did not involve these two powers fighting each other directly), they engaged in a war for supremacy for power, through major developments in technology and the economy.
This era saw a rise of weapons especially nuclear weapons,many countries had developed their nuclear weapons including india. The Cuban Missile Crisis was the closest the two powers came to a possible third world war.
Between 1989-91 the world entered into a new world order, with the fall of the berlin wall and the unification of Germany more soviet satellite states like Poland,hungary,Bulgaria etc broke away from the soviet union’s influence and started their own democracies. This period saw the fall of communism and the soviet union broke up.
The Soviet regime failed to fulfill the promises and hopes of the people who helped kick start it through the Russian revolution, the communist economies performed poorly, there was a lot of red tapism and these nations ruled with an iron hand, people had little to no freedom.
This era ushered the world into yet another uni-polar world order left as the only super-power,However this is changing in the 21st century,dipolomacy and economic supremeacy is seen as a more effective way to exercise power and china is starting to challenge America’s hegemony.

US-China Comparison | People's Republic of China | United States of America | Population | 1,347,350,000 (1st) (19.1% of the world population) | 314,256,000 (3rd) (4.46% of the world population) | Area (total area)(according to Encyclopædia Britannica) | 9,572,900 km2 (3rd)[6] | 9,526,468 km2 (4th)[7] | Population Density | 139.6/km² (363.3/sq mi) | 33.7/km² (87.4/sq mi) | Capital | Beijing | Washington, D.C. | Government | Socialist Single-party state | Federal presidential constitutional republic | Official languages | Standard Chinese | None English (de facto) | Main religions | 42% Agnostic or atheist, 30% Folk religions and Taoism, 18% Buddhism, 4%Christianity, 4% Ethnic minorities indigenous religions (including Vajrayana andTheravada), 2% Islam[9] | 78.4% Christianity, 16.1% non-Religious, 1.7% Judaism, 0.7% Buddhism, 0.6% Islam, 0.4% Hinduism[10] | Ethnic groups | 91.51% Han Chinese,[citation needed] 55 recognised minorities, 1.30% Zhuang, 0.86% Manchu, 0.79% Uyghur, 0.79% Hui, 0.72% Miao, 0.65% Yi, 0.62% Tujia, 0.47% Mongol, 0.44% Tibetan, 0.26% Buyei, 0.15% Korean, 1.05% other (SeeList of ethnic groups in China) | 74% White American, 14.8% Hispanic and Latino Americans (of any race), 13.4% African American, 6.5% Some other race, 4.4% Asian American, 2.0%Two or more races, 0.68% American Indian or Alaska Native, 0.14% Native Hawaiian or Pacific Islander | GDP (nominal) (2011 estimate) | $7.298 trillion (2nd) | $15.094 trillion (1st) | GDP (PPP) (2011 estimate) | $11.299 trillion (2nd) | $15.094 trillion (1st) | GDP (PPP) per capita (2011 estimate) | $8,382 (91st) | $48,386 (6th) | HDI (2011) | 0.663[13] (medium) (89th) | 0.910[13] (very high) (4th) | Currency | Renminbi (yuan) (¥) | United States dollar ($) | | | | Military expenditures | $143.0 billion | $711.0 billion [14] | Military Troops | 4,585,000 (about 1 military or paramilitary personnel per 294 persons) | 3,000,000 (about 1 military or paramilitary personnel per 105 persons) | Labour Forces | 780,000,000 | 154,900,000 |

Brief History Of US-China Relations
First Contact
After America became independent from the British Empire subsequently American trade was free from British control. American merchants exploited their newfound liberty, eagerly hunting all over the world for new ways to make a profit. Unfortunately for the Americans, the British, not wanting their former colonies to become a new rival in the already-existing Atlantic trade, had effectively closed their remaining Atlantic colonies, as well as those of other European nations, to American merchant vessels; British harassment or seizure of American ships trading with European Atlantic colonies was common. As a result, the American traders, now deprived of a trade that had been so essential to the American colonies before, were forced to search for ports that were less European-dominated. In their searches, they found the Chinese market.
Upon realizing that America was its own sovereign nation, the Chinese were convinced that the Americans would not interfere with pre-existing Anglo-Chinese trade agreements since American businessmen arrived as private traders without representation from the American government. This relatively open yet somewhat indifferent attitude towards American traders allowed them to gain a grip on the Chinese market.
Soon after 1784, an American Consul was established in Canton and functioned as a reporting agency on trade to the U.S. government.
The Burlingame Treaty and the Chinese Exclusion Act
In 1868, the Qing government appointed Anson Burlingame as their emissary to the United States. Burlingame toured the country to build support for equitable treatment for China and for Chinese emigrants. The 1868 Burlingame Treaty embodied these principles. In 1871, the Chinese Educational Mission brought the first of two groups of 120 Chinese boys to study in the United States. They were led by Yung Wing, the first Chinese man to graduate from an merican university.
During the California Gold Rush and the construction of the Transcontinental Railroad, large numbers of Chinese emigrated to the US, spurring animosity from American citizens. After being forcibly driven from the mines, most Chinese settled in Chinatowns in cities such as San Francisco, taking up low-end wage labor, such as restaurant and laundry work. With the post-Civil War economy in decline by the 1870s, anti-Chinese animosity became politicized by labor leader Denis Kearney and his Workingman's Party, as well as by the California governor John Bigler. Both blamed Chinesecoolies for depressed wage levels.
In the first significant restriction on free immigration in US history, Congress passed the Chinese Exclusion Act on May 6, 1882, following revisions made in 1880 to the Burlingame Treaty. Those revisions allowed the United States to suspend immigration, and Congress acted quickly to implement the suspension of Chinese immigration and exclude Chinese "skilled and unskilled laborers and Chinese employed in mining" from entering the country for ten years, under penalty of imprisonment and deportation. The ban was renewed a number of times, lasting for over 60 years.

Boxer Rebellion
In 1899, a group of Chinese calling themselves the Society of Right and Harmonious Fists started a violent revolt in China, referred to by Westerners as the Boxer Rebellion, against foreign influence in trade, politics, religion, and technology. The campaigns took place from November 1899 to September 7, 1901, during the final years of Manchu rule in China under the Qing Dynasty.
The uprising began as an anti-foreign, anti-imperialist, peasant-based movement in northern China. The insurgents attacked foreigners, who were building railroads and violating Feng shui, and Christians, who were held responsible for the foreign domination of China. In June 1900, the Boxers invaded Beijing, killing 230 foreign diplomats and foreigners as well as thousands of Chinese Christians, mostly in Shandong and Shanxi Provinces. On June 21, Empress Dowager Cixi declared war against all Western powers. Diplomats, foreign civilians, soldiers, and some Chinese Christians were besieged during the Siege of Beijing Legation Quarter for 55 days. A coalition called the Eight-Nation Alliance of Austria-Hungary, France, Germany,Italy, Japan, Russia, the United Kingdom, and the United States rushed 20,000 troops to their rescue. The multinational forces were initially defeated by a Chinese Muslim army at the Battle of Langfang, but the second attempt was successful because of internal rivalries among the Chinese forces.
The Chinese government was forced to indemnify the victims and make many additional concessions. Subsequent reforms implemented after the rebellion contributed to the end of the Qing Dynasty and the establishment of the modern Chinese Republic.

World War II
The outbreak of the Second Sino-Japanese War in 1937 saw aid flow into the Republic of China, led by Chiang Kai-shek, from the United States, under President Franklin D. Roosevelt.
American public sympathy for the Chinese was aroused by reports from missionaries, novelists such as Pearl Buck, and Time Magazine of Japanese brutality in China, including reports surrounding the Nanking Massacre.
United States formally declared war on Japan in 1941 following the Japanese attack on Pearl Harbor, which brought the Americans into World War II. The Roosevelt administration gave massive amounts of aid to Chiang's beleaguered government, now headquartered in Chongqing. Madame Chiang Kaishek, who had been educated in the United States, addressed the US Congress and toured the country to rally support for China. Congress amended the Chinese Exclusion Act and Roosevelt moved to end the unequal treaties. However, the perception that Chiang's government was unable to effectively resist the Japanese or that he preferred to focus more on defeating the Communists grew. Chiang did not like the Americans, and was suspicious of their motives. The American OSS, forerunner of the CIA, showed interest in a plot to seize control of Chiang's regime. Chiang ordered the plotters executed. Chiang felt no friendliness towards the United States, and saw the US as pursuing imperialist motives in China. Chiang did not want to be subordinate to either the United States or the Soviet Union, but jockeyed for position between the two to avoid taking sides and to get the most out of Soviet and American relationships. Chiang predicted that war would come between the Americans and Soviets and that they would both seek China's alliance, which he would use to China's advantage.
Chiang also differed from the Americans in ideology issues. He organized the Kuomintang as a Leninist-style party, oppressed dissent, and banned democracy, claiming it was impossible for China.
Chiang manipulated the Soviets and Americans during the war, at first telling the Americans that they would be welcome in talks between the Soviet Union and China, then secretly telling the Soviets that the Americans were unimportant and their opinions were to be left out. At the same time, Chiang positioned American support and military power in China against the Soviet Union as a factor in the talks, keeping the Soviets from taking advantage of China with the threat of American military action against the Soviets.
After World War II ended in 1945, the hostility between the Republic of China and the Communist Party of China exploded into open civil war. General Douglas MacArthur directed the military forces under Chiang Kai-shek to go to the island of Taiwan to accept the surrender of Japanese troops, thus beginning the military occupation of Taiwan. American general George C. Marshalltried to broker a truce between the Republic of China and the Communist Party of China in 1946, but it quickly lost momentum. The Nationalist cause declined until 1949, when the Communists emerged victorious and drove the Nationalists from the Chinese mainland onto Taiwan and other islands. Mao Zedong established the People's Republic of China (PRC) in mainland China,[28]while the Republic of China remains in Taiwan and other islands to this day.
People's Republic of China
The United States did not formally recognize the People's Republic of China (PRC) for 30 years after its founding. Instead, the US maintained diplomatic relations with the Republic of China government on Taiwan, recognizing it as the sole legitimate government of China.
As the People's Liberation Army moved south to complete the communist conquest of mainland China in 1949, the American embassy followed Chiang Kai-shek's Republic of China government to Taipei, while US consular officials remained in mainland China. However, the new PRC government was hostile to this official American presence, and all US personnel were withdrawn from mainland China in early 1950. In December 1950, the PRC seized all American assets and properties, totaling $196.8 million, after the US had frozen Chinese assets in America following China's entry into the Korean War in November.[32]
Korean War
Any remaining hope of normalizing relations ended when US and PRC forces began fighting against each other in the Korean War on November 1, 1950. In response to the Soviet-backed North Korean invasion of South Korea, the United Nations Security Council was convened and passed UNSC Resolution 82, condemning the North Korean aggression unanimously. The resolution was adopted mainly because the Soviet Union, a veto-wielding power, had been boycotting UN proceedings since January, protesting that the Republic of China and not the People's Republic of China held a permanent seat on the council.[33]
Two years of continued fighting ended in a stalemate that lasted while negotiations dragged on, until the Korean Armistice Agreement was signed on July 27, 1953. Since then, the Division of Korea has had an important role in Sino-American relations. The entry of the Chinese in the Korean War caused a shift in US policy from marginal support of Chiang Kai-Shek's Nationalist government on Taiwan to full-blown defense of Taiwan from the PRC.
Vietnam War
The PRC's involvement in the Vietnam War began in 1949, when mainland China was reunified under communist rule. The Communist Party of China provided material and technical support to the Vietnamese communists. In the summer of 1962, Mao Zedong agreed to supply Hanoi with 90,000 rifles and guns free of charge. After the launch of the American "Rolling Thunder" mission, China sent anti-aircraft units and engineering battalions to North Vietnam to repair the damage caused by American bombing, rebuild roads and railroads, and perform other engineering work, freeing North Vietnamese army units for combat in the South. Between 1965 and 1970, over 320,000 Chinese soldiers fought the Americans alongside the North Vietnamese Army, reaching a peak in 1967, when 170,000 troops served in combat.

Relations froze
The United States continued to work to prevent the PRC from taking China's seat in the United Nations and encouraged its allies not to deal with the PRC. The United States placed an embargo on trading with the PRC, and encouraged allies to follow it. The PRC developed nuclear weapons in 1964 and, as later declassified documents revealed, President Johnson considered preemptive attacks to halt its nuclear program. He ultimately decided the measure carried too much risk and it was abandoned.
Despite this official non-recognition, the United States and the People's Republic of China held 136 meetings at the ambassadorial level beginning in 1954 and continuing until 1970, first in Genevaand later in Warsaw.
China Shift in policies
The end of 60s brought a period of transformation. For China, when American president Johnson decided to wind down the Vietnam war in 1968 , it gave China an impression that the US has no interest of expanding in Asia anymore while the USSR became a more serious threat as it intervened in Czechoslovakia to displace a communist government and might well interfere in China. .[38]
This became an especially important concern for the People's Republic of China after the Sino-Soviet border clashes of 1969. The PRC was diplomatically isolated and the leadership came to believe that improved relations with the United States would be a useful counterbalance to the Soviet threat. Zhou Enlai, the PRC premier foreign minister, was at the forefront of this effort with the committed backing of Mao Zedong.
In the United States, academics such as John K. Fairbank and A. Doak Barnett pointed to the need to deal realistically with the Beijing government.Mainland China's market of nearly one billion consumers appealed to American business.
Nixon believed it necessary to forge a relationship with China, even though there were enormous differences between the two countries. He was assisted in this by his. Domestic political concerns also entered into Nixon's thinking, as the boost from a successful courting of the PRC could help him greatly in the 1972 American presidential election.
Communication between Chinese and American leaders was conducted with Pakistan and Romania as intermediaries.
In 1969, the United States initiated measures to relax trade restrictions and other impediments to bilateral contact, to which China responded. However, this rapprochement process was stalled by US actions in Indochina.
In July 1971, Henry Kissinger feigned illness while on a trip to Pakistan and did not appear in public for a day. He was actually on a top-secret mission to Beijing to open relations with the government of the PRC. On July 15, 1971, President Richard Nixon revealed the mission to the world and that he had accepted an invitation to visit the PRC.
This announcement] caused immediate shock around the world. In the United States, some of the most hardline anti-communists spoke against the decision, but public opinion supported the move and Nixon saw the jump in the polls he had been hoping for. Since Nixon had sterling anti-communist credentials he was all but immune to being called "soft on communism." Nixon and his aides wanted to ensure that coverage of the trip emphasized the bold initiative and offered dramatic imagery documents, and interviews. Nixon was particularly eager for strong news coverage.
Within the PRC there was also opposition from left-wing elements. This effort was allegedly led by Lin Biao, head of the military, who died in a mysterious plane crash over Mongolia while trying to defect to the Soviet Union. His death silenced most internal dissent over the visit.
Internationally, reactions varied. The Soviets were very concerned that two major enemies seemed to have resolved their differences, and the new world alignment contributed significantly to the policy of détente.
America's European allies and Canada were pleased by the initiative, especially since many of them had already recognized the PRC. In Asia, the reaction was far more mixed. Japan was annoyed that it had not been told of the announcement until fifteen minutes before it had been made, and feared that the Americans were abandoning them in favor of the PRC. A short time later, Japan also recognized the PRC and committed to substantial trade with the continental power. South Korea and South Vietnam were both concerned that peace between the United States and the PRC could mean an end to American support for them against their Communist enemies. Throughout the period of rapprochement, both countries had to be regularly assured that they would not be abandoned.
From February 21 to February 28, 1972, President Nixon traveled to Beijing, Hangzhou, and Shanghai. At the conclusion of his trip, the US and the PRC issued the Shanghai Communiqué, a statement of their respective foreign policy views. In the Communiqué, both nations pledged to work toward the full normalization of diplomatic relations. This did not lead to immediate recognition of the People's Republic of China but 'liason offices' were established in Beijing and Wahington.[45] The US acknowledged the PRC position that all Chinese on both sides of the Taiwan Strait maintain that there is only one China and that Taiwan is part of China. The statement enabled the US and PRC to temporarily set aside the issue of Taiwan and open trade and communication. Also, the USA and China both agreed to take action against 'any country' that is to establish 'hegemony' in the Asia-Pacific.[45]
The rapprochement with the United States benefited the PRC immensely and greatly increased its security for the rest of the Cold War. It has been argued that the United States, on the other hand, saw fewer benefits than it had hoped for. Both China and the United States backed combatants in Africa against Soviet and Cuban-supported movements. The economic benefits of normalization were slow as it would take decades for American products to penetrate the vast Chinese market.
Liaison Office, 1973–1978
In May 1973, in an effort to build toward formal diplomatic relations, the US and the PRC established the United States Liaison Office (USLO) in Beijing and a counterpart PRC office in Washington, DC. In the years between 1973 and 1978, such distinguished Americans as David K. E. Bruce, George H. W. Bush, Thomas S. Gates, and Leonard Woodcock served as chiefs of the USLO with the personal rank of Ambassador.
President Gerald Ford visited the PRC in 1975 and reaffirmed American interest in normalizing relations with Beijing. Shortly after taking office in 1977, President Jimmy Carter again reaffirmed the goals of the Shanghai Communiqué. The United States and the People's Republic of China announced on December 15, 1978 that the two governments would establish diplomatic relations on January 1, 1979.

Normalization to Beijing
After the announcement of the establishment of diplomatic relations with the PRC on the 15th of December 1978, the President of the Republic of China, Chiang Ching-Kuo immediately condemned the USA for its actions. This was followed by rampant protests in both the ROC and the US; despite this, Carter proceeded to forge relations with the PRC.
In the Joint Communiqué on the Establishment of Diplomatic Relations, dated January 1, 1979, the United States transferred diplomatic recognition from Taipei to Beijing. The US reiterated the Shanghai Communiqué's acknowledgment of the Chinese position that there is only one China and that Taiwan is a part of China; Beijing acknowledged that the American people would continue to carry on commercial, cultural, and other unofficial contacts with the people of Taiwan. The Taiwan Relations Act made the necessary changes in US domestic law to permit such unofficial relations with Taiwan to flourish.
Vice Premier Deng Xiaoping's January 1979 visit to Washington, DC initiated a series of important, high-level exchanges which continued until the spring of 1989. This resulted in many bilateral agreements, especially in the fields of scientific, technological, and cultural interchange, as well as trade relations. Since early 1979, the United States and the PRC have initiated hundreds of joint research projects and cooperative programs under the Agreement on Cooperation in Science and Technology, the largest bilateral program.
On March 1, 1979, the United States and the People's Republic of China formally established embassies in Beijing and Washington, DC. In 1979, outstanding private claims were resolved and a bilateral trade agreement was completed. Vice President Walter Mondale reciprocated Vice Premier Deng's visit with an August 1979 trip to China. This visit led to agreements in September 1980 on maritime affairs, civil aviation links, and textile matters, as well as a bilateral consular convention.
As a consequence of high-level and working-level contacts initiated in 1980, New York City and Beijing become sister cities, US dialogue with the PRC broadened to cover a wide range of issues, including global and regional strategic problems, political-military questions, including arms control, UN, and other multilateral organization affairs, and international narcotics matters.
High-level exchanges continued to be a significant means for developing US-PRC relations in the 1980s. President Ronald Reagan and Premier Zhao Ziyang made reciprocal visits in 1984. In July 1985, President Li Xiannian traveled to the United States, the first such visit by a PRC head of state. Vice President Bush visited the PRC in October 1985 and opened the US Consulate General in Chengdu, the US's fourth consular post in the PRC. Further exchanges of cabinet-level officials occurred between 1985 and 1989, capped by President Bush's visit to Beijing in February 1989.
In the period before the June 3–4, 1989 crackdown, a growing number of cultural exchange activities gave the American and Chinese peoples broad exposure to each other's cultural, artistic, and educational achievements. Numerous mainland Chinese professional and official delegations visited the United States each month. Many of these exchanges continued after the suppression of the Tiananmen protests.
Tian'anmen to September 11th, 2001
Following the PRC's violent suppression of demonstrators in June 1989, the US and other governments enacted a number of measures to express their condemnation of the PRC's violation of human rights. The US suspended high-level official exchanges with the PRC and weapons exports from the US to the PRC. The US also imposed a number of economic sanctions. In the summer of 1990, at the G7 Houston summit, Western nations called for renewed political and economic reforms in mainland China, particularly in the field of human rights.
Tian'anmen disrupted the US-PRC trade relationship, and US investors' interest in mainland China dropped dramatically. The US government responded to the political repression by suspending certain trade and investment programs on June 5 and 20, 1989. Some sanctions were legislated while others were executive actions. Examples include: * The US Trade and Development Agency (TDA): new activities in mainland China were suspended from June 1989 until January 2001, when President Bill Clinton lifted this suspension. * Overseas Private Insurance Corporation (OPIC): new activities have been suspended since June 1989. * Development Bank Lending/International Monetary Fund (IMF) Credits: the United States does not support development bank lending and will not support IMF credits to the PRC except for projects that address basic human needs. * Munitions List Exports: subject to certain exceptions, no licenses may be issued for the export of any defense article on the US Munitions List. This restriction may be waived upon a presidential national interest determination. * Arms Imports - import of defense articles from the PRC was banned after the imposition of the ban on arms exports to the PRC. The import ban was subsequently waived by the Administration and reimposed on May 26, 1994. It covers all items on the Bureau of Alcohol, Tobacco, and Firearms' Munitions Import List. During this critical period, J. Stapleton Roy, a career US Foreign Service Officer, served as ambassador to Beijing.
In 1996, the PRC conducted military exercises in the Taiwan Strait in an apparent effort to intimidate the Republic of China electorate before the pending presidential elections, triggering the Third Taiwan Straits Crisis. The United States dispatched two aircraft carrier battle groups to the region. Subsequently, tensions in the Taiwan Strait diminished and relations between the US and the PRC improved, with increased high-level exchanges and progress on numerous bilateral issues, including human rights, nonproliferation, and trade. President Jiang Zemin visited the United States in the fall of 1997, the first state visit to the US by a PRC president since 1985. In connection with that visit, the two sides came to a consensus on implementation of their 1985 agreement on Peaceful Nuclear Cooperation, as well as a number of other issues. President Clinton visited the PRC in June 1998. He traveled extensively in mainland China, and had direct interaction with the Chinese people, including live speeches and a radio show which allowed the President to convey a sense of American ideals and values. President Clinton was criticized by some, however, for failing to pay adequate attention to human rights abuses in mainland China.
Relations between the US and the PRC were severely strained for a time by the NATO Bombing of the Chinese embassy in Belgrade in May 1999, which was blamed on an intelligence error but which some Chinese believed to be deliberate. By the end of 1999, relations began to gradually improve. In October 1999, the two sides reached an agreement on humanitarian payments for families of those who were injured or killed, as well as payments for damages to respective diplomatic properties in Belgrade and China.
In April 2001, a PRC J-8 fighter jet collided with a US EP-3 reconnaissance aircraft flying south of the PRC in what became known as the Hainan Island incident. The EP-3 was able to make an emergency landing on PRC's Hainan Island despite extensive damage; the PRC aircraft crashed with the loss of its pilot, Wang Wei. It was widely believed that the EP-3 recon aircraft was conducting a spying mission on the Chinese Armed Forces before the collision. Following extensive negotiations resulting in the "letter of the two sorries," the crew of the EP-3 was released from imprisonment and allowed to leave the PRC 11 days later. The US aircraft was not permitted to depart Chinese soil for another three months, after which the relationship between the US and the PRC gradually improved once more.
Bush administration
Sino-American relations changed radically following the September 11, 2001 attacks. Many PRC citizens died in the September 11, 2001 attacks on the World Trade Center, and mainland Chinese companies and individuals sent expressions of condolences to their US counterparts. The PRC offered strong public support for the war on terrorism. The PRC voted in favor of UNSCR 1373, publicly supported the coalition campaign in Afghanistan, and contributed $150 million of bilateral assistance to Afghan reconstruction following the defeat of the Taliban. Shortly after 9/11, the US and PRC also commenced a counterterrorism dialogue. The third round of that dialogue was held in Beijing in February 2003.
In the United States, the terrorist attacks greatly changed the nature of discourse. It was no longer plausible to argue, as the Blue Team had earlier asserted, that the PRC was the primary security threat to the United States, and the need to focus on the Middle East and the War on Terror made the avoidance of potential distractions in East Asia a priority for the United States.
There were initial fears among the PRC leadership that the war on terrorism would lead to an anti-PRC effort by the US, especially as the US began establishing bases in Central Asian countries like Uzbekistan and Tajikistan and renewed efforts against Iraq. Because of setbacks in America's Iraq campaign, these fears largely subsided. The application of American power in Iraq and continuing efforts by the United States to cooperate with the PRC has significantly reduced the popular anti-Americanism that had developed in the mid-1990s.
The PRC and the US have also worked closely on regional issues, including those pertaining to North Korea and its nuclear weapons program. The People's Republic of China has stressed its opposition to North Korea's decision to withdraw from the Nuclear Non-Proliferation Treaty, its concerns over North Korea's nuclear capabilities, and its desire for a non-nuclear Korean peninsula. It also voted to refer North Korea's noncompliance with its International Atomic Energy Agency obligations to the UN Security Council.
Taiwan remains a volatile issue, but one that remains under control. The United States policy toward Taiwan has involved emphasizing the Four Noes and One Without. On occasion the United States has rebuked Republic of China President Chen Shui-bian for provocative pro-independence rhetoric. However, in 2005, the PRC passed an anti-secession law which stated that the PRC would be prepared to resort to "non-peaceful means" if Taiwan declared formal independence. Many critics of the PRC, such as the Blue Team, argue that the PRC was trying to take advantage of the US war in Iraq to assert its claims on Republic of China's territory. In 2008, Taiwan voters elected Ma Ying-jeou. Ma, representing the Kuomintang, campaigned on a platform that included rapprochement with mainland China. His election has significant implications for the future of cross-strait relations.
China's president Hu Jintao visited the United States in April 2006. Clark Randt, U.S. Ambassador to China from 2001 to 2008 examined "The State of U.S.-China Relations in a 2008 lecture at the USC U.S.-China Institute.
Obama administration
The 2008 US presidential election centered on issues of war and economic decline, but candidates Barack Obama and John McCain also spoke extensively regarding US policy toward China. Both favored cooperation with China on major issues, but they differed with regard to trade policy. Obama expressed concern that the value of China's currency was being deliberately set low to benefit China's exporters. McCain argued that free trade was crucial and was having a transformative effect in China. Still, McCain noted that while China might have shared interests with the US, it did not share American values.
Barack Obama's presidency has fostered hopes for increased co-operation and heightened levels of friendship between the two nations. On November 8, 2008, Hu Jintao and Barack Obama shared a phone conversation in which the Chinese President congratulated Obama on his election victory. During the conversation both parties agreed that the development of US-China relations is not only in the interest of both nations, but also in the interests of the world.
Other organizations within China also held positive reactions to the election of Barack Obama, particularly with his commitment to revising American climate policy. Greenpeace published an article detailing how Obama's victory would spell positive change for investment in the green jobs sector as part of a response to the financial crisis gripping the world at the time of Obama's inauguration. A number of organizations, including the US Departments of Energy and Commerce, NGOs such as the Council on Foreign Relations and the Brookings Institution, and universities, have been working with Chinese counterparts to discuss ways to address climate change. Both US and Chinese governments have addressed the economic downturn with massive stimulus initiatives. The Chinese have expressed concern that "Buy American" components of the US plan discriminate against foreign producers, including those in China.
As the two most influential and powerful countries in the world, there have been increasingly strong suggestions within American political circles of creating a G-2 (Chimerica) relationship for the United States and China to work out solutions to global problems together.
The Strategic Economic Dialogue initiated by then-US President Bush and Chinese President Hu and led by US Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi in 2006 has been broadened by the Obama administration. Now called the US-China Strategic and Economic Dialogue it is led by US Secretary of State Hillary Clinton and US Secretary of the Treasury Timothy Geithner for the United States and Vice Premier Wang Qishan and Chinese State Councilor Dai Bingguo for China. The focus of the first set of meetings in July 2009 was in response to the economic crisis, finding ways to cooperate to stem global warming and addressing issues such as the proliferation of nuclear weapons and humanitarian crises.
US President Barack Obama visited China on November 15–18, 2009 to discuss economic worries, concerns over nuclear weapon proliferation, and the need for action against climate change. The USC US-China Institute produced a digest of press comments on this visit and on earlier presidential trips.
In January 2010, the US proposed a $6.4 billion arms sale to the Republic of China. In response, the PRC threatened to impose sanctions on US companies supplying arms to Taiwan and suspend cooperation on certain regional and international issues.
On February 19, 2010, President Obama met with the Dalai Lama, accused by China of "fomenting unrest in Tibet." After the meeting, China summoned the US ambassador to China, Jon Huntsman, but Time has described the Chinese reaction as "muted," speculating that it could be because "the meeting came during the Chinese New Year... when most officials are on leave."
In 2012, the PRC criticized Obama's new defense strategy, which was widely viewed as aiming to isolate China in the East Asian region, for assuming a provocative and threatening posture in the Pacific and escalating America's containment strategy. Obama is looking to increase US military influence in the area with a rotating presence of forces in friendly countries.
In March 2012 China suddenly began cutting back its purchases of oil from Iran, along with some signs on sensitive security issues like Syria and North Korea, showed some coordination with the Obama administration.
New Cold War In the Cyber Age
In February 2013, The Daily Telegraph reported that a People's Liberation Army unit which is based outside Shanghai has been responsible for more than 100 attacks on United States government departments, American companies, and journalist website. The report is based on a 60-page study by an American computer security firm, Mandiant; according to the New York Times a national intelligence estimate by multiple American intelligence agencies concur with the report. The Associated Press reported that a White House official said that the United States will be "more-aggressive" in responding to cyber warfare and cyber espionage conducted by the Chinese government. Cyber espionage originating from China has also been reported by companies in France and Germany. China responded by saying that the accusations of hacking are flawed and unreliable, and accused the United States of being the origin of attacks against Chinese military websites.
In March 2013, the US and China agreed to impose stricter sanctions on North Korea for conducting nuclear tests, which sets the stage for UN Security Council vote. Such accord might signal a new level of cooperation between the US and China.
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Theoretical Economic Forecasts
The World Bank's chief economist Justin Lin in 2011 stated that China, which became the world's second largest economy in 2010, may become the world's largest economy in 2030, overtaking the United States, if current trends continue. Challenges include income inequality and pollution.] The Standard Chartered Bank in a 2011 report suggested that China may become the world's largest economy in 2020. A 2007 OECD rapport by Angus Maddison estimated that if using purchasing power parity conversions, then China will overtake the United States in 2015.] James Wolfensohn, former World Bank president, estimated in 2010 that by 2030 two-thirds of the world's middle class will live in China.
Official PRC Perspective on US Economy
China is a major creditor nation and the largest foreign holder of U.S. public debt and has been a vocal critic of U.S. deficits and fiscal policy. China has repeatedly appealed for the safeguarding of Chinese investments in U.S. treasuries and called for policies that maintain the purchasing value of the Dollar. Responding to S&P's downgrade of U.S. credit rating, China was scathing in its criticism of U.S. fiscal policy. It advised that U.S. must stop its "addiction to debt", urged the U.S. to use "common sense" in pursuing fiscal balance and "learn to live within its means", and warned that "the US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone".
In August 2011, when Standard & Poor's downgraded the U.S. government's credit rating, the New China News Agency, which served most of the media in China, editorialized: "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets." Currency dispute
Monetary policy has been one of the biggest issues surrounding relations between the United States and China within the past decade. At the heart of the issue is the question of whether or not each country’s currency is at the proper value. Each country has placed the blame with the other. Most monetary and trade experts agree that China’s currency has been and is still undervalued, but an article by Business Insider argues that China raising the value of their currency would have a large effect on the trade balance between the two countries.
Domestic leaders within the United States have pressured the Obama Administration to take a hard line against China and compel them to raise the value of their currency. The United States Congress currently has before it a bill which would call on the President to impose tariffs on Chinese imports until China properly values its currency. Many Congressional members from states with large manufacturing sectors are leading the push to retaliate against China. The Chinese state newspaper has criticized the United States for unfair monetary policies as well. Both countries have sought out other international partners to side with them.
Military spending and planning
The PRC's military budget is often mentioned as a threat by many, including the Blue Team in the United States. The PRC's investment in its military is growing rapidly. The United States, along with independent analysts, remains convinced that the PRC conceals the real extent of its military spending. According to the PRC government, China spent $45 billion on defense in 2007. In contrast, the United States had a $623-billion budget for the military in 2008, $123 billion more than the combined military budgets of all other countries in the world. Some very broad US estimates maintain that the PRC military spends between $85 billion and $125 billion. According to official figures, the PRC spent $123 million on defense per day in 2007. In comparison, the US spent $1.7 billion ($1,660 million) per day that year.
The concerns over the Chinese military budget may come from US worries that the PRC is attempting to threaten its neighbors or challenge the United States. Concerns have been raised that China is developing a large naval base near the South China Sea and has diverted resources from the People's Liberation Army Ground Force to the Peoples Liberation Army Navy and to air force and missile development. Even still, China's military spending is only a fourth of US spending.
Andrew Scobell wrote that under President Hu, objective civilian control and oversight of the PLA appears to be weakly applied.
On October 27, 2009, American Defense Secretary Robert Gates praised the steps China has taken to increase transparency of defense spending. In June 2010, however, he said that the Chinese military was resisting efforts to improve military-to-military relations with the United States. Gates has also said that the United States will "assert freedom of navigation" in response to Chinese complaints about United States Navy deployments in international waters near China. Admiral Mike Mullen has said that the United States seeks closer military ties to China, but will continue to operate in the western Pacific.
A recent report stated that five of six US Air Force bases in the area are potentially vulnerable to Chinese missiles and called for increased defenses.
Meanwhile, the Bulletin of the Atomic Scientists wrote in a 2010 report that the Chinese continue to invest in modernization of their nuclear forces because they perceive that their deterrent force is vulnerable to American capabilities and that further improvement in American missile defenses will drive further Chinese spending in this area.
Chinese defense minister Liang Guanglie has said that China is 20 years behind the United States in military technology.
Vladimir Dvorkin of the Russian Academy of Sciences has said that the USA's missile defense systems pose a real threat to China's nuclear deterrence.
The International Institute for Strategic Studies in a 2011 report argued that if spending trends continue China will achieve military equality with the United States in 15–20 years.[119]
China and the United States have been described as engaging in a military and technological race. Expansion and development of new weapons by China has been seen as so threatening as to cause planning for withdrawal of US forces from close proximity to China, dispersal of US bases in the region, and development of various new weapon systems. China is also developing capacity for attacking satellites and for cyberwarfare.
In order to facilitate China's "growing global role", the United States has invited a team of senior Chinese logisticians to discuss a logistics cooperation agreement.
Professor James R. Holmes, Chinese specialist at the U.S. Naval War College, has said that China's investments towards a potential future conflict are closer to those of the United States than may first appear, because the Chinese understate their spending, the internal price structures of the two countries are different, and the Chinese only need to concentrate on projecting military force a short distance from their own shores. The balance may shift to the advantage of the Chinese very quickly if they continue double digit yearly growth while the Americans and their allies cut back.

Republic of China (Taiwan)

The Republic of China remains a source of tension in relations between the United States and the People's Republic of China. Although the PRC has never governed Taiwan, the PRC claims Taiwan as a 23rd province and has repeatedly threatened to take it by force. The United States exports large amounts of weaponry to the Republic of China and there is a great deal of sympathy for Taiwan partly because it, unlike the PRC, has transformed into a pluralistic, liberal democracy and because of residual sympathy over the Republic of China's anti-communism during the Cold War. Any accession to the PRC may also change the balance of power in that region in both political and military terms. This potentiality has been of increasing concern to Japan, a traditional ally of Taiwan and an ally of the Republic of China since its relocation to Taipei.
Officially, US policy is governed by the Taiwan Relations Act (text), the Six Assurances, and the Three Communiques. It has stated a commitment to a One China Policy in which it acknowledges the PRC's position that Taiwan is part of China, but does not indicate whether it agrees with that position. The strength of that commitment and the relationship between these policies, which may seem contradictory, changes from administration to administration.
In Taiwan, there is a general public consensus in favor of the status quo. However, some supporters of Taiwan independence, such as Lee Teng-hui, have expressed the idea that Taiwan must act quickly to formally declare independence because the long-term trends favor increased Chinese economic and military power. Given the PRC's threats to invade if Taiwan formally declares independence, and the United States' commitments to Taiwan in the Taiwan Relations Act, such a declaration would put the US in a difficult position. In several cases in which the administration of Chen Shui-bian appeared to be moving away from the status-quo and toward de jure independence, the United States asked for and received assurances that the Republic of China remains committed to the "Four Noes and One Without" policy.
In the last months of the Bush administration, Taipei reversed the secular trend of declining defense spending at a time when most Asian countries continued to reduce their military expenditures. It also decided to modernize both defensive and offensive capabilities. Taipei still keeps a large military apparatus relative to the island’s population: defense expenditures for 2008 were NTD 334 billion (approximately US $10.5 billion), which accounted for 2.94% of the GDP.
On January 30, 2010, the Obama administration announced it intended to sell $6.4 billion worth of antimissile systems, helicopters, and other military hardware to Taiwan. This move, expected under the American Taiwan Relations Act, drew a forceful reaction from Beijing. In retaliation, China warned the United States that their cooperation on international and regional issues could suffer over the administration's decision to sell arms to Taiwan.[124] China further announced that it might penalize some of the companies involved in building the hardware for Taiwan, includingBoeing, Lockheed Martin, and Raytheon.
A 2008 report by the RAND Corporation analyzing a theoretical 2020 attack by mainland China on Taiwan suggested that the US would likely not be able to defend Taiwan.
Influence in Asia
China's economic rise has led to some geo-political friction between the US and China in the East Asian region. For example, in response China's response to the Bombardment of Yeonpyeong by North Korea, "Washington is moving to redefine its relationship with South Korea and Japan, potentially creating an anti-China bloc in Northeast Asia that officials say they don't want but may need." ] For its part, the Chinese government fears a US Encirclement Conspiracy.[136]
In response to the increased American attacks on Pakistan during the Obama administration, the PRC has offered additional fighter jets to Pakistan.
South East Asian nations have responded to Chinese claims for sea areas by seeking closer relations with the United States. American Defense Secretary Leon Panetta has said that in spite of budget pressures, the United States will expand its influence in the region, in order to counter China's military buildup

Conclusion
China and the United States seem to have a love hate history, Although the diplomatic relations between the two powers seem to have little hiccups and they vary vastly in their method of governance, ideology and culture they seem to keep the partnership going. The game theory can effectively explain this relationship. China and America need each other to survive and so does the world. America is the biggest consumer of Chinese goods and China is a great destination for investment for corporate America. China and America have proved how major issues can be tackled through diplomacy rather than Direct war.
The future seems bright and peaceful because although the two giants often seem hostile they are not likely to go to war and face the possibility of their and the world’s economic and security collapse.