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And yet while they may not have much in common, they have little choice other than to develop a good working relationship. The reason is not difficult to understand: for both countries, the resource trade is vital to continuing national prosperity and economic security. But despite the importance of the bilateral economic relationship, both countries have occasionally had their difficulties in maintaining cordial ties.
Whatever China’s policymakers do these days matters a lot, and not just to its own people. On the contrary, for better or worse what happens in China has a powerful and often immediate impact on the rest of the world. Any doubts about this idea have been put to rest by the recent volatility in global stock markets, which provided a stark illustration of just how important China is to the global economy.
We are, after all, still collectively engaged in one of the biggest economic experiments in history – ‘quantitative easing’, or printing money as it used to be known. This policy was embarked upon because it was judged to be in America’s perceived national interests. Its intention was to pump liquidity into a still-fragile economy and put downward pressure on the American dollar. Significantly, it was done with little regard for its possible impact on other countries, especially the potentially volatile and vulnerable emerging markets.
And yet given that China is trying to position itself as a central player in both the existing institutional order created by the US, as well as its own vision of an alternative regime with China at its centre, the decision to devalue its currency cannot have been taken lightly. Officials at the People’s Bank of China must have understood that their actions would attract great attention and have significant economic and political consequences.