I. Focus on the global economic transformation behind the financial crisis

From the perspective of the long-term business cycle, the current world financial crisis is, in essence, a crisis of the world business cycle. The world’s economic history shows that a global economic crisis has often been the drive and opportunity for major scientific and technological innovation and new industries. … Now that the period when the IT industry was the engine for economic growth has ended, there is a lack of new industry to be the economic growth engine. Thus the huge amount of capital accumulated during the high-tech period flew to the real estate and financial industries. Financial investors and real estate developers jointly created a deformed engine for U.S. economic growth: a virtual economy. From this perspective, the global financial crisis is essentially a business cycle crisis. As a result, our key strategy dealing with the financial crisis should be not simply to reconstruct the financial order, but to remake an industry in the real economy.

The looming new economy has the following three characteristics.

First, a new energy revolution is solving the problems of human civilization that could not be solved within the framework of the industrial economy. Energy and environment are global difficult problems that constrain sustainable growth of the industrial economy. … The new energy revolution, with renewable energy at its core, marks the birth of a new wealth manufacturing model and production method for human beings.

Second, new energy will enable a series of new industries and new technologies. … A leading industry should have three major characteristics: it affects the overall economy, its technology is universally adopted, and it constitutes the basic industry for economic development. The emerging new energy revolution has all of the above three characteristics.

Third, the incentive mechanism for the new energy revolution has matured. … Among the economic stimulus plans in response to the financial crisis, energy and environment have suddenly become the investment targets of developed countries. This is definitely not a consequence of the developed countries all of a sudden having raised their moral standard for protecting the environment. Rather it is an indication of the formation of an incentive mechanism for new energy and environmental industries. The reason why the financial crisis became an opportunity for the new energy revolution is that the economic crisis greatly damaged traditional industry and its incentive mechanism, bringing the advantages of a growing new industry to light, and ushering in opportunities for marginal industries, which can now enter  the decision making horizon for government and business investment.

II. Obama’s new policy aims to promote economic transformation and seize the new economic heights

First, the purpose for Obama’s new policy of developing new energy sources as its core strategy is to seize the new economic heights. The way the U.S. is responding to the financial crisis is to treat the financial crisis as a crisis of a hollow real economy, and to use the development of new energy as a way of reviving the U.S. economy and occupying the strategic high ground of the new economy.

Second, Obama’s new policy focuses on the long-term goals of economic development and structural adjustment, rather than immediate economic growth. Since Obama took office, his three-step plans are all about how to advance structural reform and strengthen economic competitiveness. The first step was the "American Recovery and Reinvestment Act of 2009," passed by Congress, with a 787 billion investment, which established developing new energy as the core of the revival of U.S. economic long-term goals. The second step was to stress test companies in crisis, so as to strengthen the U.S. economy’s microstructure function. The third step was, after six months of deliberation, the announcement of Obama’s Remarks on the 21st Century Financial Regulatory Reform, on June 17, 2009, at the White House. This started the financial system reform from the angle of system innovation, to create a positive financial environment for the new economy.

Third, Obama’s new policy raised the development of the ecological economy that combines high-tech and eco-focused concepts as a strategic priority to rebuild the U.S. image and to enhance its competitiveness. … The U.S., a country with innovative and adventurous spirit, can often make strategic decisions and choices during periods of major change. This is worthy of our research and study.

III. The lesson learned from the failure of the Japanese economic transformation during the 1980s
 
As early as the 1980s, having achieved huge success in its strategy of catching up with developed countries, Japan also experienced a period of world economic transformation similar to what China is facing today. In the 1980s, when the world economy went through a transformation from the electric economy to the information economy, Japan and the U.S. adopted two different strategies, resulting in two completely different paths of development after the 1990s. The failure of the Japanese economic transformation during the 1980s raised several issues that are worth consideration.

First, Japan did not realize the limitations of the model of "growth by following," but instead mistakenly viewed it as a growth model that creates miracles. The high speed economic growth in Japan after World War II is a typical model of "growth by following." Its advantage came from two aspects: first, after the introduction of Western technology, Japan gained technological advantages through second-round innovation, that is, innovation after its introduction from the West. Second, the cost advantage during the initial economic growth period helped it receive the industries transferred from Europe and the U.S. With these two advantages, Japan achieved high economic growth, catching up with other developed countries, and "squeezing" into the development space of the U. S. and Europe.
 
The advantage of the model of "growth by following" is to catch up with others while learning, instead of leading the trend through original innovation. … But Japan has not recognized the limitations of the model of "growth by following." In fact, Europe and the U. S. have also been confused by an illusion about such a temporary high growth model. … During the late 1980s, there was a widely recognized view of a “Japan threat” in the U.S., triggering competition between Europe, the U. S., and Japan. Today when we look back, this is clearly a misunderstanding: Japan cannot become a threat to Europe or the U.S. using the model of "growth by following."

Second, when facing global economic transformation, Japan did not respond strategically, but rather continued along the traditional thinking. … Under pressure from the U. S., Japan mistakenly chose the expansion of domestic demand as its strategic plan for new economic growth. They lost sensitivity to the global economic transformation with the satisfaction of economic achievement. To ensure continuous growth, Japan’s strategic focus remained on the existing traditional industries, channeling the huge capital surplus accumulated during decades of economic growth into domestic consumption. A large amount of capital entered into real estate and the stock market, leading to the bursting of the real estate bubble, and the financial crisis, which dragged the Japanese economy into a downturn for more than a decade. At the same time, the U. S. reallocated its social resources to the new high-tech economy as a strategic priority, resulting in the U. S. being the biggest winner in the information economy in the 1990s.

Third, Japan mistakenly attributed its economic recession to the failure of its monetary policy. … Throughout the 1990s when the Japanese economy was in a predicament, Japan did not reflect upon its growth model, but blamed the financial crisis, following the Keynesian theory and monetary theory. Japan failed to fundamentally reform its unique institutions such as the government-led economy, the monopoly of large business, and lifetime employment, which inhibited innovation. Japan’s economy has thus been lingering in a low growth path because of adopting the model of “growth by following.”

IV. Breaking through traditional thinking: some thoughts on promoting China’s strategic transformation
 
China has three advantages that support its transformation: First, we have begun to realize the limitations of importing growth models. Although we have not yet recognized such a limitation at a model level, people have begun to realize it from the perspective of transition in growth modes. Second, we are very sensitive to the new energy revolution and ongoing global economic transformation. Third, China’s cost advantage will continue to play a role in the new economy. At the same time, we are also facing three major obstacles: First, obstacles from vested interest groups. The 21st century has seen the Chinese economy enter a phase of heavy industry. Two vested interest groups were formed in the process of wealth accumulation, namely monopolistic business groups and local governments at various levels. As the monopolistic business groups are the source of tax income for the local governments, the two groups relied upon each other, forming an obstacle to strategic transformation decisions. Second, the obstacle of success-led habitual thinking. The success of China’s reform has achieved world acknowledgement. In the face of this success, we may be repeating the scenario Japan experienced during 1980s. We may gain strong self-esteem amid the views of the “China threat theory,” making the mistakes Japan made during 1980s, and forgetting the limitations of importing growth models. With the habitual thinking of simply applying our past experiences to the future, China’s economic transformation would be an empty word. Third, the obstacle of lack of motivation for transformation. Major economic transitions often come from opportunities created by major economic crises, as a crisis provides motivation for change. China is one of the least impacted countries in the current financial crisis, and is generally considered the first country to walk out of the crisis. This is obviously a good thing, but it has also formed an obstacle for China to meet the challenges and opportunities of global economic transformation. We may lose motivation to transform in our satisfaction with good growth momentum.

To this end, I hereby propose some thoughts on promoting China’s strategic transformation.

First, we must strengthen our awareness of the limitations of importing growth models. We should reflect upon the limitations of China’s reform model, and the successes and lessons from past transformation during the new China’s 60 year history from the perspective of responding to the world and China’s economic transformation. Without the transformation of China’s economy and society from a politics centered policy to an economy centered policy, starting in 1978, we would not have achieved the economic success we have today. Similarly, if we fail to achieve the transition of the growth model, we will not have a better tomorrow. We should strengthen the sense of crisis among all party members.

Second, policies should change direction from assuring growth to facilitating transition. Macroeconomic data from the first half of the year shows that China’s economic growth began to stabilize and recover. This indicates that the growth oriented policies in response to the economic crisis have achieved their goal. In such a situation, China’s strategy should change from assuring growth that helps recovery from crisis, into promoting transition that recreates the growth engine.

Third, under the guidance of the Concept of Ecological Civilization, we should deepen the reform of government functions, and break through the obstacle of the government’s vested interest groups. The key is to promote reform of government functions, management methods, and management objectives. According to the requirements of the Concept of Ecological Civilization raised at the 17th CCP National Congress, if we want to promote the eco-economy, green GDP, and a low-carbon life style as the goal of transition, the key is to promote transitions in government management and management objectives.

Fourth, I suggest to strengthen strategic planning and theoretical research into the eco-economy under the guidance of the Concept of Ecological Civilization, so as to provide theoretical support for China to enter an era of eco-economy. From the heights of transformation of the economic structure, against the background of transitions in the world economy, we should explore the laws of ecological civilization and eco-economy, new growth models, and new civilization models suitable for China and the world’s harmonious growth. This is a new challenge and opportunity after the establishment of a market economy with Chinese characteristics.

Endnote:
[1] Study Times, November 2, 2009
http://www.studytimes.com.cn/WebPage/ny1.aspx?act=1&id=3019&nid=11017&bid=4&page=1

Question: Compared to the previous presidents, Obama is the first U.S. President to visit China during his first year after taking office. In addition, the exchanges between the high level officials of the two countries have been very frequent. Do you think this implies that the U.S. has undergone a strategic shift in its policy toward China, or is this an expedient measure that Obama took because of the economic crisis?  
 
Answer:

Peng Guangqian, Specialist in Strategy Research, Chinese Academy of Military Sciences: After Obama took office, he made some adjustments in his China policy; however, we cannot say whether a strategic shift has occurred or it is just an expedient measure. We still need time to observe. What may cause strategic conflicts between the two countries is not the fact that China’s power is getting closer to that of the U.S., but U.S.’s mentality of hegemony. Only when the U.S. changes its way of thinking can conflicts between the two countries be avoided. [1]

Qin Yanqing, Vice President of China Foreign Affairs University: From the deep level, Obama holds the idea of (establishing) a multilateral relationship to cooperate with other big countries and he has indeed made adjustments to the U.S. foreign policy. At the same time, in order to get out of the (financial) crisis, the US also needs China. However, we cannot completely separate a strategic shift from an expedient measure. The U.S. cares more and more about Asia. The first reason is that China is developing rapidly. The second reason is that Asia is the most active region in development. Third, from the perspective of the economy of the U.S. and its overall strategy, East Asia is an important region. In addition, countries in this region also want to strengthen their relationships with China and the U.S. [2]

Shen Dingli, Vice Dean of the Institute of International Studies, Fudan University: In my opinion, the adjustment of U.S. policy toward China is an expedient measure. Fundamentally, the U.S. still perceives socialist China as a strategic competitor. Therefore, currently, the U.S. is merely making gradual tactical adjustments in its China policy. For example, the U.S. is still selling arms to Taiwan. We should not have any illusion about the U.S. The behavior of Obama in mentioning Communism during his inaugural speech is a first among all the U.S. presidents.  That indicates that the U.S. has a strong ideological conflict with China. Our ideas are different from the U.S.’s. There are both common ground and conflicts in them. [3]

Yang Zhidan, Specialist at the Institute of Asia-Pacific Studies, Chinese Social Science Institute: I don’t think we can say it is a strategic shift, or an expedient measure. The U.S. has a systematic plan for its strategy for China and the whole East Asia. That usually will not undergo a dramatic change due to a change in the administration. From this perspective, the policy toward China of Obama’s administration to a large extent is inherited from the latter stage of the Bush administration. As the financial crisis sweeps across the world, Obama’s administration also faces an additional series of challenges, such as Iran’s nuclear issue and North Korea’s nuclear issue. On the other hand, China is becoming increasingly powerful. These facts force the U.S. to pay more attention to China. The U.S. on one hand has a protective mentality toward China, and on the other hand, it also hopes China will shoulder more international responsibility.  [4]

Tao Wenzhao, Specialist at the Institute of U.S. Studies, Chinese Social Science Institute: I think it’s neither. Obama has inherited a lot from the Bush administration, including its China policy. The 2008 Presidential election was the first time that the Democrats and Republicans did not have major disagreement on their policy toward China. What’s most important in the Sino-US relationship and benefits the interests of both countries is stability. Don’t let those unstable factors impact the normal development of the relationship between the two countries. We cannot expect that a single visit can elevate the Sino-US relationship to a new level. However, as a matter of fact, with the development of the Sino-US relationship in recent years, the common interests between the two countries are continuously expanding. [5]

Sun Zhe, Director of the Center for US-China Relations, Tsinghua University: We cannot say it is a strategic shift or an expedient measure. As a matter of fact, Obama to a great extent has continued the China policy of Bush’s administration. Furthermore, facing the global financial crisis, Obama’s administration has no choice but to cooperate more with China. [6]

Jin Canrong, Vice Dean of the School of International Studies, Renmin University of China: Both exist. On one hand, the financial crisis forces Obama to seek more cooperation with China; on the other hand, everyone sees the importance of China in international society. It is reasonable for Obama to make strategic adjustments in the policy toward China. [7]

Yuan Peng, Dean of the Institute of American Studies, China Institute of Contemporary International Relations: It is hard to say whether the shift in the policy toward China is based on tactical or strategic grounds. It should be both. From a strategic point of view, the U.S. currently has issues both inside the country and outside, and China is the only one that can truly help the U.S. from all perspectives. At the same time, in the drafting of U.S. foreign policy, the “need” from China is gradually increasing. If we study the policy shift at a deep level, the rise of China has become an irreversible fact. The U.S. has to face it, and cannot avoid it at all. The fact proves that the suppressive measures toward China adopted by the U.S. were not successful. Therefore, the U.S. indeed needs a shift in strategy. In addition, China is indeed sincerely promoting constructive cooperation with the U.S. That has also made the U.S. change its policy toward China. [8]

Ni Feng, Specialist at the Institute of U.S. Studies, Chinese Social Science Institute: As a matter of fact, the strategic shift of the U.S. policy toward China started during Bush’s administration. In 2005, the U.S. had a big internal debate on the policy toward China, arguing about “where China is heading.” At that time, Zoellick, (eleventh president of the World Bank) proposed the concept of “responsible stakeholder,” which was a positioning of the policy toward China. The U.S. thinks that China has become strong and should not get a free ride any more. In the eyes of the U.S., the issue of China has become the issue of a rising China. After Obama took office, he inherited Bush’s viewpoint toward China and Bush’s China policy from the latter stage of his administration. If there is any change, it is that Obama has higher expectations of China and hopes China will shoulder more international responsibilities. Right after Obama took office, he not only encountered the most serious financial crisis, but Iran and North Korea’s nuclear problems also forced the U.S. to depend more on China. [9]

Question: From the situation in Asia, what is the implication of the U.S. regarding China as more and more important? How does this influence the situation in Asia? Will other Asian countries such as India, Japan, and Korea adjust their diplomatic policies according to the change in the Sino-U.S. relationship? If so, what kind of adjustment may they make?
  
Answer:

Su Hao, expert on East Asia studies, China Institute of Diplomacy: With the development of China, it is an indisputable fact that the U.S. regards China as important, and China’s status has elevated. The development of the Sino-U.S. relationship has important implications for peace and development in the Asia-Pacific region. The U.S. has been following the idea of establishing an Asian-Pacific order and ally system under U.S. leadership. However, recently, the US obviously felt that China has extended its influence on affairs in the region and China has its own priorities. For example, China promotes regional cooperation in East Asia, which is different from the “Asia-Pacific” concept promoted by the U.S. We can say that the regional cooperation in East Asia has become an irreversible trend. Currently, what China, the U.S. and other countries in this region should consider is in what way to include the U.S. in it. The adjustment of the Sino-U.S. relationship is not only an issue between these two countries; indisputably, it will impact the whole Asia-Pacific region. Facing this adjustment, the reaction of different countries in Asia and the Asia-Pacific region is different. Specifically, after the South Korea President Lee Myung-bak took office, he initially focused on developing the relationship with the U.S. for a period of time. However, with the increasing influence of China, recently, South Korea made a rational choice to put more emphasis on development inside Asia. At the same time, Japan also found that the attitude of leaning toward the U.S. in diplomatic relations is not suitable to Japan. Therefore, after Yukio Hatoyama took office, he raised the concept of the “East Asia Community,” and is looking for new balance between China and the U.S. As to India, although from the perspective of Geo-politics, India was excluded from the Asia-Pacific framework, India is proactively participating in East Asia affairs. At the same time, between China and the U.S., India has recently focused more on developing its relationship with the US. Furthermore, Australia has raised the concept of the “Asia Pacific Community” too, and has been looking for a balance between the U.S. and China. [10]  
Yang Zhidan: From the perspective of other East Asian countries, if the Sino-U.S. relationship develops stably, they will feel more comfortable. Those countries will not be happy to see friction between China and the U.S. coming to the point where they have to make a choice. On the other hand though, other Asian countries also have a defensive mentality toward China because under the situation that their own power is not strong enough to influence China, they definitely hope to use the U.S. to keep China in check. [4]

Tao Wenzhao: The fact that the U.S. considers China more and more important implies that the imbalance in the Sino-U.S. relationship has changed. In earlier times, people thought that China needed help from the U.S. more than otherwise. Now, nobody says that any more. China’s development and increased strength have made the U.S. care more about China. This year, a major shift in the international situation is that the status of China “has been raised.” It is not that China proactively did or fought for something; it is that China did better than other countries during the global financial crisis, which prominently shows the importance of China in international society. This puts the Sino-U.S. relationship on a more balanced foundation and places the communication, dialogues, and cooperation between the two countries in a normal state. The change in the Sino-U.S. relationship will definitely have an impact on surrounding countries. The influence resulting from the rise of a huge country with a population of 1.3 billion might be something even we ourselves cannot imagine at present; therefore, it is natural that the surrounding countries have concerns. We should understand this kind of mentality, as long as it is not a malicious attack on us. [5]  

Sun Zhe: That the U.S. cares more and more about China makes some Asian countries feel uncomfortable as it is hard to adjust to it. Based on the current situation, different countries have had different reactions. The Japanese government showed that they care more about Asia; the Australians raised the concept of “the Asia Pacific Community” including the U.S.; Singapore directly called for more attention from the U.S. to keep China’s influence in check. The shift of the Sino-US relationship has influenced other Asian countries to make a policy adjustment. [6]  

Jin Canrong:  The U.S. will for sure pay more attention to countries around China when it cares more about China. With the increase in China’s power, when the U.S. deals with China, it will consider all factors that are related to China. [7]  

Ni Feng: Currently, the Sino-US relationship has become the most important bilateral relationship in East Asia. The direction of the Sino-US relationship determines the direction of the future East Asia situation. Under this situation, the U.S. will definitely pay more attention (to China) to keep the evolution of the situation in East Asia under its control. This kind of change in the Sino-US relationship will definitely affect other Asian countries. On the one hand, they will regard China as more important and care more about their relationship with China; on the other hand, when Asian countries such as Japan and Korea cannot hide their sense of loss, they will have a sense of self protection against China. [9]

Question: Do you think that Obama will make the decision to stop selling arms to Taiwan?

Answer: 

Qin Yaqing: The U.S. will not stop selling arms to Taiwan for three reasons. First, the overall and long-term strategic promise of the U.S. (to Taiwan) has not changed. Second, besides the political reason, selling arms also brings an economic benefit. Third, the US wants to maintain a balance in the “scalene triangle” consisting of China, the U.S., and Taiwan. Therefore, the US will not stop selling arms to Taiwan. [2]

Yang Zhidan: No. From the perspective of the U.S., currently, the military balance on the two sides across the Taiwan Strait has been broken and Mainland China has bigger and bigger advantages. In this kind of situation, it is hard to imagine that Obama would make such a decision to terminate arms sales to Taiwan. In addition, the U.S. will not easily give up the strategy of using Taiwan to constrain China. [4]

Tao Wenzhao: Obama will not make too many promises regarding selling arms because the U.S. has the Taiwan Relations Act. The Taiwan Relations Act did not specify when the U.S. president should sell arms to Taiwan and what kind of arms to sell. Therefore, we should seriously communicate to Obama that we request that the U.S. respect China’s stand, consider the core interests of China, and not create barriers for the development of Sino-U.S. relations as a result of the issue of selling arms to Taiwan. [5]

Sun Zhe: The essence of the issue is not whether Obama will terminate the arms sales to Taiwan, but when he will make the decision to sell the arms. The U.S. parties that are close to Taiwan and those related arms enterprises of course hope Obama can make the decision to sell arms to Taiwan as soon as possible. Although currently the China-Taiwan relationship is at peace, from the perspective of the U.S., the fact that the military forces across the strait are out of balance and that the Mainland’s missiles are pointing at Taiwan can both be used as excuses for selling arms to Taiwan. [6]

Jin Canrong: Selling arms to Taiwan has been a long-term policy of the U.S. for many years. Due to this long-term policy, the possibility of terminating the sale of arms to Taiwan within a short period of time is slim. The U.S. is a country of pragmatism. Maybe with the further growth of the power of China or a change in the international situation, when it is no longer meaningful for the U.S. to sell arms to Taiwan, the U.S. can then make the decision to terminate the sale of arms to Taiwan. [7]

Ni Feng: It is very difficult for Obama to make such a decision in his term. The U.S. sells arms to Taiwan according to the Taiwan Relations Act. The Act will not change with the change in the administration. Furthermore, the imbalance of the military forces across the Strait has been the excuse for the U.S. to insist on selling arms. This will not change during Obama’s term. However, Obama may make some adjustment in the arms sales according to the situation, such as not allowing the sale for a certain year or delaying the sale. [9]

Question: In your opinion, with the power of the two countries becoming closer, will there be more strategic conflicts rather than strategic cooperation between the two countries? Do you think that the two countries can create an efficient model to limit conflicts?

Answers:

Qin Yaqing: The fact that the two countries are becoming more equally powerful will not result in inevitable conflicts. The two countries can establish a mechanism to avoid the emergence of conflict. Different from the time of the confrontation between the U.S. and Soviet Union, the threats that China and the U.S. face are no longer each other, but some threats to both countries. The U.S. and China should not escalate the conflicts; instead, they should limit the conflicts to a certain model and resolve them using the model. Since Obama took office, the Sino-U.S. relationship has been improving. Communication between high levels has also started. Those are all very good approaches. [7]

Shen Dingli: Both are possible. Currently, China is at the stage of resting and developing its power. No conflict will break out between the two countries. However, China will become more and more powerful in the future. If the U.S. knows clearly the current situation and understands the reality, it should not provoke any conflict on the issue of Taiwan, which is the issue that China cares most about. Then the possibility of military conflict between the two countries can be eliminated. However, if the U.S. still provokes China in the situation where the country becomes weaker and goes downward, then there may be conflicts between the two countries. I can put it in such a way: the region for cooperation between the two countries is large, but their relationship is still complex. [3]

Yang Zhidan: China needs a long period of time to catch up with the U.S. For a big country, the elevation of its power is the holistic elevation in all areas including politics, the economy, the military, and so on. It cannot be realized within a short period of time. Even though the power of the two countries is really becoming closer, we need to look at specific fields to judge whether there will be conflicts or cooperation. From the perspective of the strategic culture of China, China’s diplomatic policy is weak in term of being aggressive outwards and China definitely does not want to choose conflict. However, from a long term perspective, in the agenda on regional affairs and even in the global order, it is inevitable that the two countries will have conflict. The western countries, with the U.S. as the leader, always hope to drag China into the system they lead, and hope that China’s behavior will conform to their desires and interests; however, as a big rising non-western country, during the process of being assimilated into the system, China will definitely have an impact on changing the system, since it is impossible that the interests of China will completely conform to those of the west. [4]

Sun Zhe: With the powers between China and the U.S. becoming more comparable, both strategic cooperation and tactical conflicts can increase. In many fields that were ignored previously, such as environmental protection, attacking pirates, financial system reform, etc., the cooperation between the two countries will increase. On the other hand, with the economic relationship between the two countries becoming tighter, the overall relationship between the two countries will become more complex and the probability of having conflicts will also increase. It is not terrifying to have conflict; the terrifying thing is that there is no channel to resolve conflicts. Therefore, both countries should take advantage of the current dialogue channel and strengthen communication. [6]

Jin Canrong: That is determined by the joint effort of both countries and their current behavior. We can neither say that definitely there will be more strategic conflicts, nor can we conclude for sure there will be more strategic cooperation. However, from the current state of the policies, there is more cooperation than conflict. China is the first rising big non-western country. Based on the current international situation, the historical cycle of a rising power challenging another’s hegemony can be avoided. From an international perspective, the current trend of globalization has made mutual dependence among the countries develop to an unprecedented extent. The current international system is also more effective than that in any period of time in history. Those are all positive factors to effectively limit the conflicts between China and the U.S. in the future. From the perspective of the two countries, neither of the two countries are the same as the traditional hegemony counties of the 19th century. The U.S. hegemony is a hegemony of the system and depends more on soft power, which lowers the probability of using hard power such as military force on other countries. China walks on a path of development in peace and is different from the countries challenging the hegemony such as Germany and Japan in the past. China has sufficient resources, an internal market, and the ability to rise totally on its own. [7]

Ni Feng: No matter whether the issue is strategic conflict or strategic cooperation, both are related to the issue of strategic trust. The relationship between the two countries is extremely complex. In a certain sense, the relationship by nature is an issue of how to manage conflict. The interests and conflicts between the two countries are mingled and tangled together. Therefore, the two sides should sit down to converse. Currently, the two countries have already established quite a few dialogue mechanisms. However, at present, it is still too early to talk about how to establish a model to limit the conflicts between the two countries. [9]

Endnotes:
1. http://china.huanqiu.com/roll/2009-11/629639.html
2. http://china.huanqiu.com/roll/2009-11/629641.html 
3. http://china.huanqiu.com/roll/2009-11/629638.html 
4. http://china.huanqiu.com/roll/2009-11/629636.html
5. http://china.huanqiu.com/roll/2009-11/629635.html
6. http://china.huanqiu.com/roll/2009-11/629634.html
7. http://china.huanqiu.com/roll/2009-11/629633.html
8. http://china.huanqiu.com/roll/2009-11/629639.html
9. http://china.huanqiu.com/roll/2009-11/629629.html
10. http://china.huanqiu.com/roll/2009-11/629642.html