China and the US: Destined to Cooperate?

Geography, economics, and energy will all push America and China closer together.
The 21st century will be defined by the relationship between the American superpower and rising
China. A new Cold War would threaten the world order while a mutually beneficial association could
bring all prosperity. The latter scenario is more likely. The geography, economies, and energy
resources of the U.S and China align their core interests.
First, geography. The U.S. is located on the most resource and capital-rich continent, North
America. The American Midwest consists of valuable arable land and is bisected by the worlds largest
navigable rivers, allowing the export of food and products at bargain prices. Nearby nations have
either historically been on friendly terms (Canada) or lack the ability to present a threat (Central
America and the Caribbean) without an external sponsor. This benign environment has allowed
America to focus on projecting power and dominating global merchant marine traffic. Since China lies
across an ocean dominated by the American Navy, neither directly threatens the other.
China, meanwhile, is a populous and vast land power with a long coastline. Yet Chinas focus has
historically turned inward, with only sporadic efforts to build a naval presence. Chinas heartland is
exposed to Russia from the north, Japan to the east, various fractious states to the west, and the rising
powers of Thailand, India, and Vietnam to the south. In other words, China is surrounded, and its
biggest threats are from other land-based powers, particularly Russia and India.
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China therefore cannot afford to antagonize America, since it would require American support or
tacit neutrality in any conflict with Russia or India. Geography ensures that China does not see
American naval dominance on its shores as a comparable threat. A Chinese move against American
interests would open it to aggression from its neighbors while simultaneously cutting off a needed
ally. No Chinese government is foolish enough to risk multiple high-intensity wars.
The geography of China and the U.S. dictate their core interests as mutually non-threatening
states, and make cooperation more likely since both have an interest in opposing Russia.
Secondly, the American and Chinese economies are destined to become more interdependent, and
integrated economies usually lead to geostrategic alliances. The U.S. follows a laissez-faire economic
model, entailing a boom-and-bust cycle that is harsher than in more planned systems. When the free
market dictates economic apportionment, at the height of the cycle resources are often applied to
unwise projects. During recessions, companies either downsize or go out of business, resulting in
short spurts of high unemployment. America tolerates these fluctuations because she long ago
decided to trade economic stability for higher long term growth. This has succeeded over the past
century. This growth, combined with other advantages, ensures the U.S. will endure as a superpower.
America utilizes its advantages to maintain a global maritime trade order in the form of
organizations like the World Bank, International Monetary Fund, and World Trade Organization,
resulting in economic growth for the world and a successful consumption-based economy at home.
Contrastingly, Chinas economy is a sort of state capitalism distinct from the European state
champion model. The economy is based around exporting finished manufactured goods to America,
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further integrating both economies. Chinas two-decade-plus surge in economic growth will soon end,
yet given the lack of progress in transitioning to a more consumption-based economy, China has not
achieved what its large population considers an equitable distribution of resources and benefits. Such
imbalances foster domestic tensions. The growth constraints facing Chinas economy will only create
additional problems with fewer new resources at Beijings disposal. The Chinese slowdown has
already led to political infighting, and this is likely to continue in the future. Addressing this
problem while transitioning to a consumption-based economy may reduce the ability of the ruling
Communist Party to project power abroad while retaining it at home.
Economically, America is strong in areas like food production, education, technology, and precision
industrial manufacturing. China, by contrast, is strong in areas like heavy industry, light
manufacturing, and cheap labor. This presents a recipe for complementary economic
interdependence.
Finally, both countries will move closer geopolitically due to their complementary energy interests.
Most of Chinas foreign policy centers on attempts to acquire new energy resources, particularly oil.
Over the following decades, China will seek to become more self-sufficient by expanding its
hydropower capacity and coal plants. America shares this goal, and with the shale revolution will
likely end up exporting energy to China, including oil and liquid natural gas. This gives America a
geopolitical lever over China by increasing economic interdependence.
The American situation on energy resources, particularly oil and natural gas, outclasses Chinas. Oil
is non-renewable, and OPEC nations will likely be unable to meet Chinas growing demand. However,
America now controls the worlds largest untapped oil reserve, the Green River Formation. This
formation alone contains up to 3 trillion barrels of untapped oil-shale, roughly half of which may be
recoverable. This single geologic formation could contain more oil than the rest of the worlds proven
reserves combined.
As Chinese demand rises, Beijing will likely become the top importer of this oil. No other oil source
can supply Chinas needs as efficiently. Eastern European and Russian oil shale reserves are smaller
and less politically and economically extractable than Americas emerging sources. If America invests
a comparatively small portion of its new energy-based wealth into a larger Navy to secure a Pacific
trade route to China, the economic integration of the two nations will be virtually irreversible. Already
foreign investments are pouring into the new Middle East of America and Canada, despite strong
opposition from the current administration. American control over future markets for natural gas is
almost as certain as for oil. The U.S. produces natural gas abundantly and is building the facilities to
export it to foreign markets, including China.
China imports roughly 56 percent of its oil and this number grows each year. Beijing plans to
increase reserves by acquiring new offshore resources and secure reserves abroad. Since between
60-70 percent of its imported oil originates in Africa or the Middle East, the only way to inexpensively
transport it is by sea. This makes China vulnerable to economic warfare from India, which can sever
much of its supply at will. This is a strategic concern and makes war with India more likely. China
doesnt have many other domestic energy options with the exception of coal, which carries high health
and environmental risks. Renewable energy is too expensive, hydraulic power creates instability in
rural areas, and social biases prohibit nuclear power.

For technical reasons, Chinas untapped oil shale reserves, though large, would be prohibitively
expensive to process. They are estimated to be economically recoverable at $345 a barrel, more than
triple the price of American oil shale. An American boom in natural gas cannot fully bail out China;
nonetheless it will certainly be part of the solution.
Domestic political pressures, environmental concerns and rising demand for portable fuels mean
the crux of Chinese foreign policy for the foreseeable future will be aimed at acquiring new oil supplies
and protecting existing supply lines across the Indian Ocean. The South China Sea is critical to
Chinas goals because most imported oil from Africa must cross it and the sea contains its own
marginal reserves close to China. Inadequate naval forces guarantee China will continue to depend
upon the American Navy to protect its oil trade. The dispute surrounding the Senkaku/Diaoyu Islands
does not change that. In any case, heightened regional competition for energy assets will diminish
as American reserves come online over the next five to ten years.
In the energy sector, America will ultimately transition to an energy and fuel exporter and China will
ultimately import American resources. This will further connect their economies and build strong
economic ties.
Both China and America hope for a mutually beneficial arrangement to meet their security and
development goals. Geographic, economic, and energy considerations ensure these two nations will
become more interdependent throughout this century.