In his book, The Ascent of Money, historian Niall Ferguson describes the emergence of a new post-cold-war superstate, Chimerica, a fictional combination of China and the US. 'For a time, it seemed like a marriage made in heaven,' he writes. 'The east Chimericans did the saving, the west Chimericans did the spending.' Chinese benefited from export-oriented economic growth and rising living standards; the Americans from cheap imports and low inflation.
Will the bond of mutual interest survive the global financial turmoil and deepening recession? A few weeks ago, David McCormick, US Treasury undersecretary for international affairs, said that Beijing had been 'a responsible participant and ally' in dealing with the crisis. Treasury Secretary Henry Paulson was in Beijing last week heading a cabinet-level team of US officials in talks with their Chinese counterparts on how to continue bilateral co-operation.
But, with president-elect Barack Obama due to take over next month, there is no assurance that the twice-yearly US-China Strategic Economic Dialogue, established by the Bush administration in 2006, will remain in place. During his election campaign, Mr Obama accused China of keeping the yuan weak and using other unfair means to expand exports and dampen imports.
At about the same time that Mr McCormick praised China, Russian Prime Minister Vladimir Putin urged Beijing to jettison the US dollar in favour of national currencies in bilateral trade. The appeal appeared to leave his visiting Chinese counterpart, Wen Jiabao , unmoved. Sino-Russian trade was worth US$43 billion in the first nine months of this year. It was dwarfed by the US$305 billion in trade that China did with the US in the same period.
China's accumulated trade surpluses, particularly with the US and Europe, have helped it amass the world's largest foreign exchange reserves, some US$2 trillion. Analysts say China has invested up to US$1.5 trillion of that in US debt, including that issued by the now government-controlled mortgage finance giants Fannie Mae and Freddie Mac.
China's prominent role as creditor to an increasingly indebted US was underlined by US Treasury figures released last month showing that, in September, China overtook Japan to become the largest owner of Treasury bonds, bills and notes, with US$585 billion of these securities.