The New York Times reports on growing tensions between two of the world’s biggest trade partners: China and the USA. The article exposes how:

“… heightened tensions between China and the United States may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President-elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the United States to borrow more than ever from China, the largest buyer of Treasury securities.” So in effect, as the US rides further into debt, China will gain an ever stronger hand over it’s economic trade partner.

China is experiencing a huge rise in unemployment. This year alone, 10 million workers lost their jobs as factories are closing across the mainland. During the same time, the US workforce has seen the number of unemployed persons increased by 2.7 million. It goes without saying, that both countries are facing tough times. And as their interdependancy has grown it will become forever more difficult to work out a fair action plan for both. Have they worked themselves up to a “catch 21” situation?

As Obama prepares for Presidency, “American businesses, unions and lawmakers are… gearing up to force Mr. Obama’s hand. Unions and lawmakers plan to push measures to force China to raise the value of its currency”. And what is happening on the Chinese front? Will both economies lose out? Will Obama be forced to take counterproductive measures?

Image by 87913776@N00 under Creative Commons