Thought-Factory.net Philosophical Conversations Public Opinion philosophy.com Junk for code
parliament house.gif
RECENT ENTRIES
SEARCH
ARCHIVES
Commentary
Media
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
Cartoons
South Australian Links
Other
www.thought-factory.net
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

When the US goes to China « Previous | |Next »
November 20, 2009

President Obama didn't get much from the Chinese on his inaugural state visit as part of his first visit to Asia with respect to the law on human rights, exchange rates, sanctions on Iran, or climate change.

There is little point in the US getting the stick out as many members of the US Congress are demanding, since China is the US's creditor.The temptation in the US is to lash out at a totalitarian China for predatory trade policies looks to be very tempting for members of the US. Congress. China is anything but a faled dictatorship.

PinnIchina.jpg

Obama's Chinese hosts were at pains to remind him that China is now the US’s creditor-in-chief and so there was a backdrop of lectures about credit bubbles in the US the urgency of raising US interest rates and narrowing its budget deficit. The debtor needed to do better as it were in getting its house in order.

That would not go down well with members of the US Congress who see the US as the superpower, are unhappy about the need for the US to more multilateral and consultative out of necessity and the economic gravity shift to Asia. The US, it appears, continues to evade the issues raised by China’s growing power rather than address them.

As Alan Kohler says in Business Spectator:

China has become such a vast creditor to the US as a result of that bubble that it now calls the shots. The US is not quite in receivership with its banker in full control, but this week’s excessively polite, uncomfortable visit had all the hallmarks of a distressed debtor's trip to the bank for a difficult meeting.

America relies on China to finance its trade deficit, whilst China needs the US to buy its goods in order to keep export-led growth on track. However China also owns over a trillion dollars in U.S. assets, the U.S. economy is on life support, and the American military is mired in two losing wars. America has a few problems it need to fix. The Obama administration is learning to manage an empire in decline.

This requires working with a China that refuses to bear the burden of the US's problems and whose economy is geared to production, not consumption. China wants to become the world's preeminent producer nation. China's export policy is really a social policy, designed to maintain order as tens of millions of poor Chinese pour into large cities from the countryside in pursuit of better-paying work.

The US does have a point about the revaluation of the RMB exchange rate. As Paul Krugman points out in the New York Times. He says that the problem of international trade imbalances is about to get substantially worse. And there’s a potentially ugly confrontation looming unless China mends its ways. Though most nations try to keep the value of their currency in line with long-term economic fundamentals China is the great exception.

Despite huge trade surpluses and the desire of many investors to buy into this fast-growing economy — forces that should have strengthened the renminbi, China’s currency — Chinese authorities have kept that currency persistently weak. They’ve done this mainly by trading renminbi for dollars, which they have accumulated in vast quantities. And in recent months China has carried out what amounts to a beggar-thy-neighbor devaluation, keeping the yuan-dollar exchange rate fixed even as the dollar has fallen sharply against other major currencies. This has given Chinese exporters a growing competitive advantage over their rivals, especially producers in other developing countries.

Krugman says that we can expect to see both China’s trade surplus and America’s trade deficit surge leading to a scenario in the US of soaring U.S. trade deficits and Chinese trade surpluses juxtapositioned with the suffering of unemployed American workers.

| Posted by Gary Sauer-Thompson at 6:23 AM | | Comments (10)
Comments

Comments

The Chinese can lecture until the pandas come home! The fact remains that the US of A... just like Bear Stearns, General Motors, Freddie Mac, Merrill Lynch, AIG, Citigroup & Co... is simply too big to fail.

It's a very unhealthy relationship.

mars08,
Robert Reich makes a good point on his blog. He says:

In the U.S., the root of the problem is a growing share of total income going to the richest Americans, leaving the middle class with relatively less purchasing power unless they go deep into debt. Inequality is also widening in China, but the problem there is a declining share of the fruits of economic growth going to average Chinese and an increasing share going to capital investment.

Both societies are threatened by the disconnect between production and consumption. In China, the threat is civil unrest. In the U.S., it's a prolonged jobs and earnings recession that, when combined with widening inequality, could create political backlash.

A neat summary.
Precisely the sort of thing MSM should have ran, but inexplicably ducked on.
Will be interesting when some geuine in depth analysis involving state of play between Australia and its near northern neighbours turns up in the MSM (yeah, yeah, Greg Sheridan- Iknow...yawn...)?
Seems to have some resonance with the state of play at the beginning of the twentieth century, involvingt the vast, extended British mercantile Empire and the landlocked but advanced Prussian Germany, hungry for resources and access to them.
Definitely "unhealthy", as Mars 08 observes.

In the context of China and the United States what on earth could "the 'law' of human rights" possibly mean?

Jayjee
"In the context of China and the United States what on earth could "the 'law' of human rights" possibly mean?"

Hope

Paul,
The AFR may have covered it. 'May' because I no longer read it. Martin Wolf of the Financial Times did in Grim truths Obama should have told Hu.

With respect to your comment:

Seems to have some resonance with the state of play at the beginning of the twentieth century, involvingt the vast, extended British mercantile Empire and the landlocked but advanced Prussian Germany, hungry for resources and access to them.

I agree. The US is in a bad way.

"The US is in a bad way"

Sort of like a snake eating it's own tail....

I wonder how many American voters realise how bed things really are?

The stock market is up, and all's well with the world! Right... right?

Or not. Robert Reich has a different view.

"No economy can recover without consumers. Yet American consumers, who constitute 70 percent of the U.S. economy, are facing mounting job losses as well as pay cuts."

http://robertreich.blogspot.com/2009/11/great-disconnect-between-stocks-and.html

One dominant view in the US is that China’s role in the world can, and should, be defined by, and limited to, its participation in the global order led by the United States. Hugf White points out that this is what is meant by those in the US saying that China by China being a ‘responsible stakeholder’ or providing ‘strategic reassurance’: ie., China should not challenge US primacy in Asia in order to make way for of a stronger Chinese role in Asia.

It is wishful thinking that China must accept US primacy indefinitely even as it's economy grows to equal America's.

Gary


China has never viewed UN diplomatic instruments, such as Human Rights Declarations and Conventions, let alone their attendant Commissions, or Rapporteur (such a deliciously ironic residual legacy of western lingo-cultural colonialism) as what westerners think of as "law".


Unfortunately, you are just amplifying the same occidental cultural neo-imperialism that the Western academy has blindly and ignornantly been spouting for nearly two generations now.


Yet for 20 years the critique of precisely this occidental cultural neo-imperialism has been growing; and particularly what an exemplar of said imperialism white people's notions of the universalism of their notion of legal rights are.


It is so patronising, presumptuous, and often just downright racist the way the western elite insists its culturally-specific values and notions of jurisprudence must be imposed on the globe.


I find it hard to understand how someone like you has missed the boat on this one. Dude, you are 20 years behind. Catch up!


Jay Gee's comment begs the question, as to universal values and what they might be, in this relativistic, post theological age.
Is the identity-marker, "Do unto others as you would have done unto you" a universal value, or just a value held in common by humanity (just coming from a site where twenty one major religions, plus a raft of renowned philosophers, state "do unto others" in virtually identical ways).
JayGee is right to rebuke the
West's "History according to the victors" and its crude attempts to change the IR goalposts to maintain access to or control of, strategic and material goods.
Think of the preposterous garbage that came from neo cons, as to justificastion for Palestine and Iraq.
But I hope he does not see developing world countries thru rose coloured glasses, either.
You just as easily ask a guard in a Chinese labor camp, whaling into some dissident in a cell whether the beating he administers is "what he would have done him", as much as some zombie in the Pentagon, pushing a missile launch button that will land a high tech weapon on a civilian village in Afghanistan ten thousand miles away.
Hannah Arendt talked of the "banality of evil" after witnessing the Eichmann trail, hinting at the role of memes and myths in habituation of people to abmormality as normality.
It is no one individual that will need to do a personal inventory of their views from time to time, when reality intervenes to rob us of our most cherished prejudices dreams and certainties.
For instance, in the light of passing events, how many Hansonists have had to go back and reconsider their beleifs, after the last ten years?