Chinese President Hu Jintao and President Barrack ObamaNot too long ago, booming trade relations between the U.S. and China had the two countries being touted as a model partnership between two powerhouses. The fast-rising Asian juggernaut provided the U.S. with cheap goods and ample credit, while U.S. consumption of China's goods helped fuel a rapidly expanding Chinese middle class.

The term "Chimerica," coined by Harvard historian Niall Ferguson, helped thrust this supposedly symbiotic and ever-closer relationship into the public sphere. But the seemingly cozy relations between the two countries have been coming apart fast in the wake of the financial crisis.

And investors should be aware of the implications of the U.S.'s growing resentment given China's soaring importance on the world stage. In short: The notion of Chimerica is becoming chimerical as those tensions mount.

Politics and Policy Aren't Helping

The two countries' starkly different economic fortunes set the stage for the current disagreements. While the U.S. is suffering from unemployment of near 10%, China's economy is racking up growth at the same rate. The domestic politics and policy responses from both countries, though, have poured fuel on the blaze created by these rapidly diverging directions.

While the U.S. Federal Reserve is busy fighting a potential for deflation, Chinese policymakers are grappling with rapid inflation instead. And the fears now are that the latest round of quantitative easing by the Fed, which aims to stoke price gains in the U.S., may instead add to already strong inflationary pressures abroad because of the instant flow of funds in interconnected financial markets.

"Don't make other people take the medicine for your disease," Chinese Ministry of Commerce official Yu Jianhua said at the G-20 meeting. "Quantitative easing will have a very big impact on developing countries including China."

Is China Taking American Jobs?

Of course, well before the Fed's latest moves, American politicians have been putting increasing pressure on China to let its currency rise. By pegging the yuan to the dollar and keeping it undervalued, China makes its exports cheaper than they should be and is able to take an unfair share of jobs as well, the argument goes.

President Obama became the latest to take that line in what was largely a G-20 meeting with few tangible achievements for American positions (Chinese President Hu Jintao and Obama are pictured above at the G-20 summit in Seoul). Many analysts have questioned the stolen-jobs logic given the vastly different labor costs between the U.S. and China.

China has also vigorously argued that it has no choice but to opt for a gradual appreciation of the yuan rather than an abrupt adjustment. Given the razor-thin margins of the Chinese export sector, a sudden jump could wipe out many firms and lead to social upheaval.

China has also made a big push to portray itself as a force for global economic stability. The country helped prop up the euro and stabilize Greek bonds earlier by saying it would be a buyer amid chatter about whether it would head for the exits.

China has alluded to similar commitments for other troubled peripheral European economies like Portugal and Spain. As anxiety over Ireland grows, China may engage in checkbook diplomacy yet again.

The seeming warming to other countries is the flipside of a rapidly heating rivalry with the U.S. What was once billed as the ideal partnership is quickly turning into a competition for global influence instead.

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lulu0510

We have what China ( and India,Egypt, and other Mid East countries ) do not have. FOOD! Yet we waste our agriculture on raising corn for ethanol, a money losing proposition. Meanwhile we're pursuing alternate energy projects like wind turbines, solar panel and electric cars, all of which take rare earth elements on which China has a virtual monopoly. And were are not developing our own energy resources, which would also make jobs here in the USA. If a diabolical enemy wanted to devise a plan for our economic destruction they couldnt do better than that. WAKE UP AMERICA!

February 16 2011 at 6:58 PM Report abuse rate up rate down Reply
lulu0510

We have what China does not. FOOD!

February 16 2011 at 6:46 PM Report abuse rate up rate down Reply
malcolm

G-String-20 results in an expensive lap-dance..& Yes, we do get Screwed..literally not physically..or is it physically not literally..oh whatever..We're getting Screwed....Party On Garth..Shwwing

November 16 2010 at 3:23 PM Report abuse rate up rate down Reply
thomasva6

the caption for the picture should say "who is this muslim and why is he getting in my face?"

November 16 2010 at 10:18 AM Report abuse rate up rate down Reply
bcrnbs2

you yo yos elected a marxist to the office of the president. what did you expect.... now live with it...and shut up

November 16 2010 at 9:42 AM Report abuse -1 rate up rate down Reply
avdltd

This say's it all! http://www.youtube.com/watch?v=Yde_wYkhCm8&feature=player_embedded

November 16 2010 at 9:20 AM Report abuse rate up rate down Reply
sfamilyent

First of all we do not need to subject ourselves to the wills or desires of other nations. If anything, our "disease" has been to accept trade arrangements that are unbalanced in favor of "developing" nations, and to allow "developed" nations to continue with export based protectionist policies. China's economy has benefited from favorable trade arrangements and it is quite possibly time that they stop being considered a "developing" nation and that they should stop looking to grow their economy at the expense of other nations. There should be absolutely no doubt that the US manufacturing and production sector has declined while China's has risen. And, with the US having the largest economy on the globe, there should be no doubt that our consumers and our workers paid for China's growth. Congress can take action to stop further job loss and to balance the trade with China by imposing tariffs / duties on goods from China, and to subsidize competing domestic businesses. Whether you want to believe it or not, we are engaged in a global economic war - and there are nations and people that seek to destroy America. It is in our collective interests that we protect ourselves by ensuring that we do not allow other countries to adopt or maintain exploitive economic and trade policies with respect to the US.

November 16 2010 at 8:32 AM Report abuse +4 rate up rate down Reply
ingfp

Our country is being dismantled by leftist, media, dems, muslims...just the ash and trash of the freakin devil himself.

November 16 2010 at 8:29 AM Report abuse +1 rate up rate down Reply
Appaloosa

NOBODY, INCLUDING CHINA, IS TAKING AMERICAN JOBS!!! Make a reality check here folks. China did not slip in during the night and steral jobs. They are sent there by the American consumer who fails or refuses to spend a few cents or dollars more for an American made product. They rather pay a Chinese worker $320 a month that to pay an American a decent wage. Minimum wage is not decent, it still is below the federal poverty level and families qualify for welfare assistance and food stamps (SNAP)those jobs Americans have not directly SENT to China as stated, corporations have sold to China. As an engineer, I know chines products made in China to "exacting American corporation standards" are not true in the least bit. That is to say Mattel designed toys with lead paint, corporations that chose to manufacture cribs and baby carriers/car seats did not make that the standard to use inferior products/plastics and lead paint. So we have the American consumer and corporate greed to blame, but it goes forther. Not a single president has had the guts to tell China we are adding the same tarrifs to your imports to America as you assign to our exports. And the Congress still gives China a "Favored Nation Trading Status"! WHY? American need to send a message to retailers that they want American made goods. Corporations that lay off thousands that taxpayers have to support with unemploymment and all should be fined that amount per employee they lay off. Corporate greed should never be subsidized by the American middle class via taxes. How's that trickle down affect working for you? It isn't working for America. We need to start taxing the super wealthy at a rate greater than the middle class. These executives that are making up to $125 million in stock options only payt 17% in tax. That rate is less middle class Americans pay on their UNEMPLOYMENT! China's economy is growing at 10% or more and they have the fastest growing middle class in the world. America UASEd TO HAVE THE LARGEST MIDDLE CLASS. IT IS THE MIDDLE CLASS THAT SUPPORTS A COUNTRY! The Anerican middle class is shrinking at a rate below what it was before the great depression. The super wealthy now hold 25% of ALL the monmey in America, like in the 20's. If things do not change, you will see this is not a Great Recession, but a prelude to the GREAT DEPRESSION II. We have a debt that CANNOT BE PAID! Amd we owe most of it to China. They call that debt and America will be bankrupt. As it stands, by all definitions, we are a third world nation. We owe more than we can ever repay, we cannot provide enough food for our population nor clothe them. America is dependent on China. It starts at Walmart! Demand they stop importing well over 20% of everything China produces. Write to manufactures and tell them you buy American Made. And don't forget your Congressional representation that takes hundred of millions from the same banks they bailed out and the corporations and retailers that thrive on the Chinese connection! America is in trouble and we canb change it.

November 16 2010 at 8:28 AM Report abuse +3 rate up rate down Reply
1 reply to Appaloosa's comment
thomasva6

our elected officials allowed this to line their own pockets and it's been going on for years. vote libertarian or deal with it.

November 16 2010 at 10:21 AM Report abuse +2 rate up rate down Reply
ingfp

Our leadership and unions gave away our great way of life! Our current and past leaders have retirement, health care and no worries about their future. It is an example of how selfish and a true testimony of they really are.

November 16 2010 at 7:51 AM Report abuse +2 rate up rate down Reply