In the last three days, the United States government has added new pressures to the Chinese government: The US Department of Treasury demanded a revaluation of the renminbi, and the Commerce Department moved to restrain textile imports from China. One of the defining features of globalization today is the complex way in which countries are economically intertwined, as well as the political implications of this interdependence. China’s rise as an economic giant in recent years is a boon for US, Japanese, and European companies doing business in China, but for this very reason they must tread cautiously in political dealings. Jeffrey E. Garten, Dean of the Yale School of Management, suggests that applying punitive pressures to China will only intensify tensions. In fact, because of the complex economic relationships, these actions would likely backfire – harming more than helping the other powers. What the US, Japan, the EU, and China must do now is to engage in an over-arching dialogue about the issues troubling them. “Unless a new order is negotiated,” Garten warns, “the world will risk entering a frightful period where damaging political and economic turmoil is no longer a far-fetched prospect.”
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