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Updated Tuesday, November 17, 2009 10:13 am TWN, By Keith B. Richburg, The Washington Post

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China, U.S. locked in uneasy economic co-dependence

China's dependence on the U.S. market for exports is perhaps most strongly felt in Guangdong province in the south, and particularly in the industrial city of Dongguan, whose factories churn out shoes, clothing, machine parts and Christmas toys, most destined for American cities and towns.

With the United States spiraling into recession last year, thousands of factories in Guangdong either closed or cut production, and hundreds of thousands of migrant workers from other provinces went home.

In Dongguan, The Huajian Group shoe factory exports 90 percent of its shoes to the United States, including name brands like Kenneth Cole and Marc Fisher, and some pink, blue and gold high-heeled strappy numbers for the Paris Hilton brand. Last year, the factory's orders dropped as much as 15 percent compared with the year before, and profit was cut in half.

This factory, like others in Guangdong province, is seeing a slight uptick in orders — a sign of the nascent economic recovery in the United States. But factory officials said buyers are a lot more cautious now, placing smaller orders and giving the factory much shorter — one-month — turnaround times.

“We think our business is gradually coming up from the bottom,” said Zhang Huarong, the group's chairman. “Our business profit and the U.S. economy have a direct relationship.”

Despite the interdependence and the mutual benefits, many in both countries remain deeply suspicious of each other's intentions.

“At this point, no one can say China and the United States are friends,” said Yan Xuetong, director of Tsinghua University's Institute of International Studies. “I don't think we like America or have the same political values or ideology. But we have to do business. We have no other choice. ... It doesn't mean I want to do it; it means I have to.”

There are signs that the interdependence may ease slightly on its own, without either side making any dramatic moves. One consequence of the prolonged recession is that Americans are saving more — and putting more money into mutual funds that buy U.S. Treasurys — so the need for the U.S. government to sell securities externally is gradually being reduced. Similarly, China's trade surplus is gradually coming down.

One concern voiced by critics in America, and by human rights advocates in this country, is that the growing economic links between the countries — and the United States' dependence on China financing its debt — is causing the Obama administration to mute its criticism of China on human rights issues, an accusation U.S. officials dismiss.

“Many dissidents are disappointed that since Obama entered office, he only talks about economic and climate change issues with China, even though there are a lot of human rights problems,” said Mo Shaoping, a Beijing lawyer specializing in human rights and press-freedom cases. “Obama is trying to avoid these issues.”

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