A Study Of Obama’s Motive&Purpose Of Financial Statecraft Towards China And China’s Possible Countermeasures

Financial diplomacy is international financial activity for the purpose of nationalsecurity. Financial diplomacy serves national economic and social development; it isbeneficial to safeguarding national financial security, enhancing national financialpower and promoting the international status of national finance. Additionally, financialdiplomacy plays an important role in the establishment&development of theinternational financial system, the coordination of international financial relations, thesettlement of international financial disputes, the organization of international financialcooperation, and resolving international financial crisis, improving&reforming theinternational financial order. However, essentially, financial diplomacy is the product ofdeeply development of economic globalization and an important tool in pursuit ofnational interests.Since Obama came to power, U.S. economic growth has been weak; meanwhile,China’s economy has been developing rapidly, which means the economic powercontrast of U.S. and China is changing and the trend of the change seems terrible forU.S. The United States believes that China is trying to change the existing internationaleconomic order based on its economic power which is dominated by U.S, thus poses athreat to U.S. hegemony in the world economy. Under the circumstance, Obamaadministration made a series of policy arrangements towards China, including adoptingfinancial statement. The arsenal of financial statement has several weapons, and so far,of which Obama has used two: the exchange rate war and capital markets sanctions.Obama’s purpose is to contain China’s rapid economic development, to maintain U.S.leading status in the world economy and ultimately to maintain and consolidateAmerica’s status as the sole superpower. However, from the perspective of theory of realism, China could take at least three possible countermeasures below: to reduce theholdings of U.S. Treasuries at the right time in order to place pressure on the UnitedStates; to look for diverse capital markets abroad to utilize U.S capital as far as possible;to diversify the investment of foreign currency especially to enhance the reserves ofgold and petroleum.