It's no secret that the entire world thinks the United States is crazy for its self-imposed political and economic crisis of shutdown and potentially default. China especially has a lot to lose if our economy craters, and is taking the opportunity to both criticize American democracy – a popular pastime in Beijing – and to urge us to please not default.
China's message hit Washington especially hard on Monday morning, when an editorial in the state-run media outlet Xinhua called for a new international reserve currency to replace the U.S. dollar and declared that the international community should "start considering building a de-Americanized world." According to Business Insider, it's got lots of people in Washington talking, probably because it hits on the dual American anxieties that we are letting down the rest of the world and that China is finally making its move to replace us as the global leader.
We can calm down on the threat to "de-Americanize," though. China has shown little to no indication that it seriously wants to displace the United States as the global leader anytime soon or even that it believes it could do this, perhaps outside of a few hard-liners in the government. The fact that China is so rightly panicked about the possibility of a U.S. default just goes to show that Beijing knows it is, and will long continue to be, reliant on a U.S.-dominated global order.
The mistake we often make here in Washington is seeing China's rise and assuming that the country's next goal will be to displace the United States as the global leader. This wrongly assumes that Beijing thinks like Washington, that it has a similar view of how the world works and a similar set of goals. It also wildly overstates China's actual power – something that officials in Beijing will be the first to acknowledge. If anything, China is overly insecure. Maybe that's because Beijing is first and foremost worried about internal political instability, which it sees as tied directly to maintaining strong economic growth, which could all fall apart if the United States defaults. Keep in mind that China almost saw everything collapse during an economic crisis just 24 years ago that ended with troops gunning down protesters in Beijing.
China cares much more about its internal issues than about its international standing. We in Washington might see the Xinhua editorial and think, "Oh no, China thinks that this is its big opportunity to kick us out of our position as the global leader." And maybe it's possible someone at Xinhua thinks that. But there is every indication that China's actual leaders want us to stay at the top of the global order. That's why China is betting huge amounts of the money on the future of the American economy. The Chinese economy is growing so quickly in part because China can sell lots of stuff to Americans and because the U.S. military ensures that global trade routes remain open. If the world "de-Americanizes," then both of those go away and China's economic growth would collapse, which Beijing is terrified would lead to political instability and possibly even the end of the Communist Party's rule. They need us, and they know it.
As for Xinhua's demand to stop relying on U.S. dollars, The Post's Willian Wan explains from Beijing why this is not likely:
But the reality, many here acknowledge, is that the United States and China are inexorably intertwined.
For all the talk of de-Americanization, moving away from the U.S. dollar anytime soon is unlikely, Chinese experts say. And while Chinese economists say diversification of the country’s holdings is a good idea regardless of the current crisis, it could only happen incrementally or risk volatility.
Yes, China often bridles under American global dominance; that's accurately reflected in the rhetoric of the Xinhua editorial. But the rhetoric is only that.