The Relationship of the United States With China

The Relationship of the United States With China The relationship between the U.S. and China traces back to the Treaty of Wanghia in 1844. Among other issues, the treaty fixed trade tariffs, granted U.S. nationals the right to build churches and hospitals in specific Chinese cities and stipulated that U.S. nationals cannot be tried in Chinese courts (instead they would be tried in U.S. consular offices). Since then the relationship has fluctuated coming closet to open conflict during the Korean War. Second Sino-Japanese War/World War II Beginning in 1937, China and Japan entered into conflict that would eventually combine with the Second World War. The bombing of Pearl Harbor officially brought the United States in the war on the Chinese side. During this period the United States funneled a great amount of aid to help the Chinese. The conflict ended simultaneously with the end of the Second World War and the surrender of the Japanese in 1945. Korean War Both China and the US got involved in the Korean War in support of the North and the South respectively. This was the only time when soldiers from both countries actually fought as the U.S./U.N. forces battled Chinese soldiers upon Chinas official entrance in the war to counter American involvement. The Taiwan Issue The end of the second world war saw the emergence of two Chinese factions: the nationalist Republic of China (ROC), headquartered in Taiwan and supported by the United States; and the communists in the Chinese mainland who, under the leadership of Mao Zedong, established the Peoples Republic of China (PRC). The U.S. supported and only recognized the ROC, working against the recognition of the PRC in the United Nations and amongst its allies until the rapprochement during the Nixon/Kissinger years. Old Frictions The United States and Russia have still found plenty over which to clash. The United States has pushed hard for further political and economic reforms in Russia, while Russia bristles at what they see as meddling in internal affairs. The United States and its allies in NATO have invited new, former Soviet, nations to join the alliance in the face of deep Russian opposition. Russia and the United States have clashed over how best to settle the final status of Kosovo and how to treat Irans efforts to gain nuclear weapons. Closer Relationship In the late 60s and at the height of the Cold War both countries had a reason to start negotiating in hopes of a rapprochement. For China, the border clashes with the Soviet Union in 1969 meant that a closer relationship with the U.S. might provide China with a good counterbalance to the Soviets. The same effect was important for the United States as it looked for ways to increase its alignments against the Soviet Union in the Cold War. The rapprochement was symbolized by the historic visit of Nixon and Kissinger to China. Post-Soviet Union The disintegration of the Soviet Union re-inserted a tension into the relationship as both countries lost a common enemy and the United States became an undisputed global hegemon. Adding to the tension is Chinas ascent as a global economic power and the expansion of its influence to resource-rich areas such as Africa, offering an alternative model to the United States, usually termed the Beijing consensus. The more recent opening of the Chinese economy has meant closer and increased trade relationships between both countries.

Raising Capital as a Corporation

Raising Capital as a Corporation Large corporations could not have grown to their present size without being able to find innovative ways to raise capital to finance expansion. Corporations have five primary methods for obtaining that money. Issuing Bonds A bond is a written promise to pay back a specific amount of money at a certain date or dates in the future. In the interim, bondholders receive interest payments at fixed rates on specified dates. Holders can sell bonds to someone else before they are due. Corporations benefit by issuing bonds because the interest rates they must pay investors are generally lower than rates for most other types of borrowing and because interest paid on bonds is considered to be a tax-deductible business expense. However, corporations must make interest payments even when they are not showing profits. If investors doubt a companys ability to meet its interest obligations, they either will refuse to buy its bonds or will demand a higher rate of interest to compensate them for their increased risk. For this reason, smaller corporations can seldom raise much capital by issuing bonds. Issuing Preferred Stock A company may choose to issue new preferred stock to raise capital. Buyers of these shares have special status in the event the underlying company encounters financial trouble. If profits are limited, preferred stock owners will be paid their dividends after bondholders receive their guaranteed interest payments but before any common stock dividends are paid. Selling Common Stock If a company is in good financial health, it can raise capital by issuing common stock. Typically, investment  banks help companies issue stock, agreeing to buy any new shares issued at a set price if the public refuses to buy the stock at a certain minimum price. Although common shareholders have the exclusive right to elect a corporations board of directors, they rank behind holders of bonds and preferred stock when it comes to sharing profits. Investors are attracted to stocks in two ways. Some companies pay large dividends, offering investors a steady income. But others pay little or no dividends, hoping instead to attract shareholders by improving corporate profitability and hence, the value of the shares themselves. In general, the value of shares increases as investors come to expect corporate earnings to rise. Companies whose stock prices rise substantially often split the shares, paying each holder, say, one additional share for each share held. This does not raise any capital for the corporation, but it makes it easier for stockholders to sell shares on the open market. In a two-for-one split, for instance, the stocks price is initially cut in half, attracting investors. Borrowing Companies can also raise short-term capital usually to finance inventories by getting loans from banks or other lenders. Using Profits As noted, companies also can finance their operations by retaining their earnings. Strategies concerning retained earnings vary. Some corporations, especially electric, gas, and other utilities, pay out most of their profits as dividends to their stockholders. Others distribute, say, 50 percent of earnings to shareholders in dividends, keeping the rest to pay for operations and expansion. Still, other corporations, often the smaller ones, prefer to reinvest most or all of their net income in research and expansion, hoping to reward investors by rapidly increasing the value of their shares. This article is adapted from the book Outline of the U.S. Economy by Conte and Carr and has been adapted with permission from the U.S. Department of State.