Discussion in 'China' started by Daredevil, Nov 18, 2009.
It seems Obama trip to China is not so successful if not failure.
An interesting poll. American view China as an unfair competitor.
Obama prods China on yuan but Hu silent
By Caren Bohan and Patricia Zengerle
Tue Nov 17, 7:53 am ET
BEIJING (Reuters) – U.S. President Barack Obama on Tuesday urged a reluctant China to let its yuan currency rise in value at a summit where strains over trade between the two giants crept into proclamations of goodwill.
Standing beside Obama after their summit, Chinese President Hu Jintao avoided mentioning the yuan or the dollar.
Instead, Hu emphasized during a joint media appearance the need to avoid trade protectionism in a thinly veiled reference to China's irritation over new U.S. tariffs on Chinese-made tires, steel pipes and other products.
With the U.S. unemployment rate at 10.2 percent, one of Obama's top priorities during his three-day trip to China is pressing Beijing over the huge trade imbalance between the two countries, a move he believes would pave the way for greater U.S. export opportunities.
Washington argues that an undervalued yuan is putting U.S. manufacturers at a disadvantage and stoking global economic imbalances.
"I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time," Obama said as Hu stood next to him on a podium with three Chinese and three U.S. flags in the background.
Obama said movement by China on its exchange rate would "make an essential contribution to the global rebalancing effort."
But his reference to China's "past statements" on currencies indicated Hu might not have been forthcoming on how Beijing might respond.
Hu said the two leaders talked of the need to keep in close contact on "macroeconomic and financial policies and continue to consult, on an equal footing, to properly resolve and address economic and trade frictions."
"I stressed that under the current circumstances, we need to oppose all kinds of trade protectionism even more strongly," Hu said.
Sun Zhe, director of the Center for U.S.-China Relations at Tsinghua University in Beijing, said Hu's silence on the currency may stem in part from a reluctance by China to be seen making policy concessions under foreign pressure.
"I personally think that there may be some slight, symbolic adjustment on exchange rate policy after Obama leaves, but not during the visit itself," said Sun.
"But don't expect much. China believes that the main problem is not the weakness of the yuan but the weakness of the dollar. The feeling here is, 'Why should we be the scapegoat for your dollar problems?"
The issue of currencies has sparked testy exchanges in recent days between U.S. and Chinese officials.
China's Commerce Ministry on Monday rebuffed calls for the yuan to appreciate, signaling resistance to change a controversial foreign exchange policy.
Outside pressure has been building on Beijing to let the yuan rise after more than a year of it being nearly frozen in place against the dollar, with the latest appeal voiced by the head of the International Monetary Fund on Tuesday.
China's central bank last week tweaked its description of how it manages the currency, setting off a firestorm of speculation that it might be willing to give the yuan some room to run, although market expectations of appreciation have remained muted.
Investors betting the yuan will soon rise may be disappointed as Beijing is likely to keep the currency on a tight leash at least until mid-2010 to cement China's economic recovery, analysts say.
SEEKING TO DEFUSE DISPUTES ON NORTH KOREA, IRAN
In addition to discussing economic issues, the two leaders discussed North Korea and Iran, and promised to cooperate on fighting global warming.
The Chinese leader said both sides saw signs of a global economic recovery but noted there was some way to go.
In a joint statement released after the summit, they said they were "determined to work together to achieve more sustainable and balanced global economic growth," echoing the position of the G20 on ironing out dangerous imbalances.
Hu expressed appreciation that Obama, who arrived in China on Sunday night, had welcomed a "strong, prosperous and successful China that plays an even greater role on the world stage."
Obama said he told China that all minorities should enjoy human rights and urged China to resume talks with representatives of the Dalai Lama, Tibet's exiled spiritual leader.
Obama did not meet the Dalai Lama when he was in Washington in early October. But the Dalai Lama has said they may meet after Obama returns from China, which condemns the Buddhist monk as a separatist for demanding Tibetan self-determination.
Chinese media have avoided fawning over Obama, in contrast to the effusive receptions he has received in Europe. Several websites deleted comments championing Internet freedom that he made at a town hall talk with students in Shanghai on Monday.
Trade ties have surged since China opened up to the world and introduced market reforms in the late 1970s after decades of virtual isolation under Mao Zedong, founder of communist China.
But that has sparked tensions because of a surplus in China's favor. Chinese exports to the United States were $337.8 billion in 2008 compared with U.S. exports to China of $69.7 billion.
Must read for our Chinese members on what will happen to the US treasuries that China holds now. Very insightful article
that is great post dd. many of us have been telling the chinese members about this but they seem to feel it gives them a deterrence and shift of hegemony to them!!!
it's not the first time that "looks like a honeymoon between US and China", but each of them knows how superficial is.
in a simple way, USA-China is citi bank to white house.
USA is too big to be down to China.
what's even more funny is these arrogant Chinese keep buying more of these US treasury that they will never see one dime from, but hey why compalin free low quality goods is great for USA.
It feels good that China is sitting on the US shoulders with half of her 2+ trillions dollars. At least for the time being Americans can't live their way of life without cheap consumer products made in China. This is indeed not a concern for India. Funny enough to see that some Indian posters screamed like babies on the sidewalk...
why are you counting the debt in the 2 trillion dollars your dollar holdings are less than that amount don't overstate the number, you do hold debt that you are counting that according to the rest of the world is worth 1 -10 cents on the dollar.
that is hardly a comfort. check out the letter DD posted-
ofc it should not concern us. actually it does not. but when chinese members boast of it to ridicule us, we have to point out the folly.
China Holds Firm on Major Issues in Obama’s Visit
By HELENE COOPER
Published: November 17, 2009
BEIJING — In six hours of meetings, at two dinners and during a stilted 30-minute news conference in which President Hu Jintao did not allow questions, President Obama was confronted, on his first visit, with a fast-rising China more willing to say no to the United States.
On topics like Iran (Mr. Hu did not publicly discuss the possibility of sanctions), China’s currency (he made no nod toward changing its value) and human rights (a joint statement bluntly acknowledged that the two countries “have differences”), China held firm against most American demands.
With China’s micro-management of Mr. Obama’s appearances in the country, the trip did more to showcase China’s ability to push back against outside pressure than it did to advance the main issues on Mr. Obama’s agenda, analysts said.
“China effectively stage-managed President Obama’s public appearances, got him to make statements endorsing Chinese positions of political importance to them and effectively squelched discussions of contentious issues such as human rights and China’s currency policy,” said Eswar S. Prasad, a China specialist at Cornell University. “In a masterstroke, they shifted the public discussion from the global risks posed by Chinese currency policy to the dangers of loose monetary policy and protectionist tendencies in the U.S.”
White House officials maintained they got what they came for — the beginning of a needed give-and-take with a surging economic giant. With a civilization as ancient as China’s, they argued, it would be counterproductive — and reminiscent of President George W. Bush’s style — for Mr. Obama to confront Beijing with loud chest-beating that might alienate the Chinese. Mr. Obama, the officials insisted, had made his points during private meetings and one-on-one sessions.
“I do not expect, and I can speak authoritatively for the president on this, that we thought the waters would part and everything would change over the course of our almost two-and-a-half-day trip to China,” said Robert Gibbs, the White House spokesman. “We understand there’s a lot of work to do and that we’ll continue to work hard at making more progress.”
Several China experts noted that Mr. Obama was not leaving Beijing empty-handed. The two countries put out a five-point joint statement pledging to work together on a variety of issues. The statement calls for regular exchanges between Mr. Obama and Mr. Hu, and asks that each side pay more attention to the strategic concerns of the other. The statement also pledges that they will work as partners on economic issues, Iran and climate change.
But despite a conciliatory tone that began weeks ago when Mr. Obama declined to meet the Tibetan spiritual leader, the Dalai Lama, before visiting China to avoid offending China’s leaders, it remains unclear whether Mr. Obama made progress on the most pressing policy matters on the American agenda in China or elsewhere in Asia.
The president has had to fend off criticism from American conservatives that he appeared to soften the American stance on the positioning of troops on the Japanese island of Okinawa, and for bowing to Japan’s emperor.
At a regional conference in Singapore, Mr. Obama announced a setback on another top foreign policy priority, climate change, acknowledging that comprehensive agreement to fight global warming was no longer within reach this year.
Past American presidents have usually insisted in advance on some concrete achievements from their trips overseas. President Bush received vigorous endorsements of his top foreign policy priority, the global war on terrorism, during his visits to Beijing, and President Bill Clinton guided China toward joining the World Trade Organization after prolonged negotiations. When either of those presidents visited the country, China often made a modest concession on human rights as well.
This time, Mr. Hu declined to follow the lead of President Dmitri A. Medvedev of Russia, who, after months of massaging by the Obama administration, now says that he is open to tougher sanctions against Iran if negotiations fail to curb Iran’s nuclear program. The administration needs China’s support if tougher sanctions are to be approved by the United Nations Security Council. But during the joint appearance in Beijing on Tuesday, Mr. Hu made no mention of sanctions.
Rather, he said, it was “very important” to “appropriately resolve the Iranian nuclear regime through dialogue and negotiations.” And then, as if to drive home that point, Mr. Hu added, “During the talks, I underlined to President Obama that given our differences in national conditions, it is only normal that our two sides may disagree on some issues.”
White House officials acknowledged that they did not get what they wanted from Mr. Hu on Iran but said that Mr. Obama’s method would yield more in the long term. “We’re not looking for them to lead or change course, we’re looking for them to not be obstructionist,” one administration official said.
In a meeting in Beijing with a senior Chinese official on Wednesday morning, Secretary of State Hillary Rodham Clinton again pressed China on Iran. She told the official, Dai Bingguo, that even if China had not decided what sanctions on Iran it would accept, “you need to send a signal,” said a senior American official, who spoke on condition of anonymity so he could describe the exchange.
Mr. Obama did not appear to move the Chinese on currency issues, either. China has come under heavy pressure, not only from the United States but also from Europe and several Asian countries, to revise its policy of keeping its currency, the renminbi, pegged at an artificially low value against the dollar to help promote its exports. Some economists say China must take that step to prevent the return of large trade and financial imbalances that may have contributed to the recent financial crisis.
Mr. Obama on Tuesday could only cite China’s “past statements” in support of shifting toward market-oriented exchange rates, implying that he had not extracted a fresh commitment from Beijing to move in that direction soon.
There are many reasons the White House may have heeded China’s clear desire for a visit free of the polemics that often accompany meetings between leaders of the two countries. Mr. Obama’s foreign policy is rooted in recasting the United States as a thoughtful listener to friends and rivals alike. “No we haven’t made China a democracy in three days — maybe if we pounded our chest a lot that would work,” Mr. Gibbs said in an e-mail message on Tuesday night. “But it hasn’t in the last 16 years.”
Kenneth Lieberthal, a Brookings Institution scholar who oversaw China issues in President Clinton’s White House, agreed. “The United States actually has enormous influence on popular thinking in China, but it is primarily by example,” he said. “If you go to the next step and say, ‘You guys ought to be like us,’ you lose the impact of who you are.”
The National Security Council’s spokesman, Michael A. Hammer, added, “What we did come to do is speak bluntly about the issues which are important to us, not in an unnecessarily offensive manner, but rather in the Obama style of showing respect.”
Mr. Obama, even as he projected a softer image, did nudge the Chinese on some delicate issues.
On Tuesday, standing next to Mr. Hu, Mr. Obama brought up Tibet, where Beijing-backed authorities have clamped down on religious freedom. “While we recognize that Tibet is part of the People’s Republic of China, the United States supports the early resumption of dialogue between the Chinese government and representatives of the Dalai Lama to resolve any concerns and differences that the two sides may have,” he said.
Reporting was contributed by Sharon LaFraniere, Edward Wong, Michael Wines and Mark Landler.
L.A Times: Understanding China
Understanding China -- latimes.com
The dynamics of President Obama's trip to China were markedly different from those evident on visits made by President Clinton and President George W. Bush. This time the Chinese made clear that they were unwilling even to discuss issues such as human rights or free speech. Why? The relationship between the countries has changed: America feels weak and China strong in their bilateral ties. This is not a temporary shift that will reverse itself once the U.S. has escaped from its mountain of debt. Rather, it is the expression of a deep and progressive shift in the balance of power between the two nations, one that is giving the Chinese -- though studiously cautious in their approach -- a rising sense of self-confidence.
Nor should we be surprised by the Chinese response. They may have appeared more conciliatory on previous visits by American leaders, but that was largely decorative. The Chinese have a powerful sense of their identity and worth. They have never behaved toward the West in a supplicant manner, for reasons Westerners persistently fail to understand or grasp.
Ever since the Nixon-Mao rapprochement, and through the various iterations of the Sino-American relationship over the subsequent almost four decades, there has been an overriding belief in the West that eventually China would become like us: that, for example, a market economy would lead to democratization and that a free media was inevitable. This hubristic outlook is deeply flawed, but it still prevails, albeit with small cracks of self-doubt starting to appear.
The issue here is much deeper than Western-style democracy, a free media or human rights. China is simply not like the West and never will be. There has been an underlying assumption that the process of modernization would inevitably lead to Westernization; yet modernization is not just shaped by markets, competition and technology but by history and culture. And Chinese history and culture are very different from that of any Western nation-state.
If we want to understand China, this must be our starting point.
The West's failure to understand the Chinese has repeatedly undermined its ability to anticipate their behavior. Again and again, our predictions and beliefsabout China have proved wrong: that the Chinese Communist Party would fall after 1989, that the country would divide, that its economic growth could not be sustained, that its growth figures were greatly exaggerated, that China was not sincere about its offer of "one country two systems" at the time of the hand-over of Hong Kong from Britain -- and, of course, that it would steadily Westernize. We have a long track record of getting China wrong.
The fundamental reason for our inability to accurately predict China's future is our failure to understand its past. Although China has described itself as a nation-state for the last century, it is in essence a civilization-state. The longest continually existing polity in the world, it dates to 221 BC and the victory of the Qin. Unlike Western nation-states, China's sense of identity comes from its long history as a civilization-state.
Of course, there are many civilizations -- Western civilization is one example -- but China is the only civilization-state. It is defined by its extraordinarily long history and also its huge geographic and demographic scale and diversity. The implications are profound: Unity is its first priority, plurality the condition of its existence (which is why China could offer Hong Kong "one country two systems," a formula alien to a nation-state).
The Chinese state enjoys a very different kind of relationship with society compared with the Western state. It enjoys much greater natural authority, legitimacy and respect, even though not a single vote is cast for the government. The reason is that the state is seen by the Chinese as the guardian, custodian and embodiment of their civilization. The duty of the state is to protect its unity. The legitimacy of the state therefore lies deep in Chinese history. This is utterly different from how the state is seen in Western societies.
If we are to understand China, we must move beyond the compass of Western reality and experience and the body of concepts that has grown up to explain that history. We find this extremely difficult. For 200 years the West, first in the shape of Europe and then the United States, has dominated the world and has not been required to understand others or The Other. If need be it could always bully the latter into submission.
The emergence of China as a global power marks the end of that era. We now have to deal with The Other -- in the form of China -- on increasingly equal terms.
China, moreover, is possessed, like the West, with its own form of universalism. It long believed that it was "the land under heaven," the center of the world, superior to all other cultures. That sense of self, which has engendered a powerful self-confidence, has been persistently evident over the last 40 years, but with China's rise, it is becoming more apparent as the country's sense of achievement and restoration gains pace. Or to put it another way, when the presidents of China and the United States meet in Beijing in 2019, with the Chinese economy fast approaching the size of the American economy, we can be sure that the Chinese sense of hubris will be far stronger than in 2009.
But long before that, we need to try and understand what China is and how it behaves. If we don't, then relations between China and the United States will never move beyond the polite and the formal -- and that will be a bad omen for the future relationship between the two countries.
Martin Jacques is the author of "When China Rules the World: the End of the Western World and the Birth of a New Global Order."
It's surprising how the Americans think a China-led new world order is going to be any different from a USSR-led world order which they feared and opposed.
Asia Times Online :: China News, China Business News, Taiwan and Hong Kong News and Business.
Greater China Dec 15, 2009
Courtship and censure in US's China policy
By Benjamin A Shobert
Several years ago, while attending a conference on United States-China business relations, I heard a well-respected leader in the field finish his presentation and take questions from the audience. Perhaps the most interesting question was also the simplest: "What could happen in the United States that would shift our relationship with China?" With only the slightest of pauses, his answer was "a long and protracted recession in the US".
The exchange was certainly interesting that particular moment, when the idea of such an event seemed distant and easy to trivialize. Today, in the midst of precisely that situation, his comments are difficult to ignore.
The recent release of the annual 2009 congressional report from the US-China Economic and Security Review Commission (USCC), the product of a congressional committee long known for its suspicious view of China's modernization and military growth, reinforces the idea that US-China relations are vulnerable to any number of things, but the state of the US economy remains the predominant threat. Many of the committee's comments are not surprising, especially for those who have followed the growth of its role in policymaking over the past several years. Ongoing concerns over Taiwan echo throughout the report, while at the same time acknowledging the small gains that have transpired in 2009 regarding travel restrictions between China and Taiwan.
Similarly, the committee continues to push for greater transparency from the Chinese government regarding its objectives for the burgeoning military budgets coming from Beijing. Perhaps because 2009 was a year with its share of economic conflict, the most recent USCC report does a remarkably good job at casting a more balanced light on the growth of the Chinese military, and its potential to contribute to military conflict. The report goes so far as to say that " ... the expansion of China's military and security activities abroad are more evolutionary than revolutionary in nature. Although the PLA [People's Liberation Army] is operating more frequently abroad, it should not yet be considered a global military or a military with global reach."
Even more surprising was the report's contention that "The Chinese military's more international orientation is not a fundamentally negative development. A more activist PLA could in some circumstances provide a 'public good' by contributing more to global stability." Given the many criticisms the report usually has for China, these points suggest that even the most hawkish forces in Washington are being forced to recognize that they will have to co-exist with Chinese power, and that doing so need not be detrimental to peace or prosperity.
The report to congress makes a total of 42 recommendations, of which 10 are deemed to be "key". Of the 10, four are economic: push for more aggressive World Trade Organization trade remedies; legislate in ways that force the yuan to "become flexible"; determine how the Chinese value added tax (VAT) impacts on US manufacturers; report back on how Chinese subsidies on clean energy are impacting US companies in this field.
Five are military: increase funding for "anti-access" technologies to the US Department of Defense; better respond to Chinese espionage; make sure prevention [measures] from Chinese computer attacks are properly funded; suggest that China begin to "draw down" its forces positioned against Taiwan; review how potential dual-use technologies are making their way from Hong Kong to China.
Only one of the 10 key recommendations is focused on human rights, that congress should better track the role of US companies whose technologies or services might enable the People's Republic of China (PRC) to censor the Internet from its own people.
While many of these points are not necessarily new, a handful of interesting and challenging narratives do emerge. The most problematic is the idea, fostered by a number of witnesses who testified during the year to the USCC, that China is partly to blame for the US's current economic woes.
The congressional report goes so far as to state, "The policies that China adopted generated a huge flow of liquidity - or money that can be easily lent to borrowers - into US markets. This excess liquidity created perverse incentives in the United States that encouraged banks to make risky loans to US households, which in turn grew even more indebted."
As political dynamite goes, this kind of statement could not be more troubling, not least because it potentially mistakes context for cause. During a period when US politicians are not looking to discriminate between the two, blame assignment of this nature does great damage not only to US-China relations, but to a meaningful and honest review of what the US needs to do differently to better manage its fiscal house.
Admittedly, the USCC 2009 report does at points find some balance on this topic, possibly said best when the committee reports, "By continuing to consume more than is produced, the United States must continue to borrow. Meanwhile, China continues to add manufacturing capacity, producing more than it can consume domestically."
While testifying to the committee, Stephen Roach, author of The Next Asia and currently based in Hong Kong as chairman of Morgan Stanley's Asia office, took a dim view of those who would assign blame for the US's economic problems on China: "... we made dumb mistakes that were reinforced by, I think, poor policies and poor behavior across our economy, from politicians to central banks to regulators to Wall Street to Main Street, and I think it is really incorrect to even think that the Chinese are responsible for those poor decisions." Observers of the USCC will note that the economic conditions of the past 18 months have made it more difficult for testimony like that of Roach to be heard, as this year's report and its key recommendations suggest.
Yes, the context within which the US economy has gone into recession is one where high savings in China have created pools of capital for investment, some of which has gone overseas to create excess liquidity, some of which has caused severe overcapacity in key manufacturing industries globally.
But to say that this excess liquidity is the cause of the US's problems is to look past the enormous differences and responsibilities which should characterize both countries. It seems a profound statement about the US's own responsibility in this affair to put much blame on China. One country has been an economic powerhouse for over 50 years, with a financial and governing system so strong that its currency has become the denomination of global reserves, and its political system the envy of many.
The other is a country dealing with very recent trauma, with severe problems in feeding itself, providing social services to its citizenry, defending its borders, and frequent bouts of famine coupled to severe economic contraction. That the latter would find its footing and begin the process of political reformation, only to find enough success to even have a pool of money to invest is a remarkable feat.
To turn a phrase that is often used by US policymakers about China, it seems that with respect to the question of how to best invest China's newfound savings, the US could have done a better job as the "responsible stakeholder". It was the choice of the US government to design public policy in such a way that new home ownership programs could be supported with low interest rates, just as it was the choice of consumers to view inexpensive capital as a right, not a privilege, and one that could go away if not used properly.
In both cases - the government and consumers - other options for using this pool of Chinese capital existed. Inexpensive capital could have fostered much-needed investments in infrastructure and education. Testifying to the USCC, Robert Skidelsky, an economist, stated, "It is one thing to borrow from abroad for investment, a different matter to borrow for consumption, since this does not create assets which can service the debt."
The 2009 USCC report does attempt to represent both sides to this question, but the overarching storyline that predominates is that, at a minimum, China has some blame in the US's economic situation and that, at worst, its policies were contributing causes to the US's fall. This is very troubling as the report serves to educate many in congress about the role of China's policies and practices within the US. To the extent the report distracts American politicians from a single-minded focus on what the US can control, and what it must do differently, it is unlikely to create meaningful change or have a lasting impact.
But, the report does draw out one particular point regarding China's economic policies that is likely to have teeth: the use of VAT to rebate particular industries once they export products manufactured in China. All imports into China face a 17% VAT, but only a handful of exports must pay this tax. In recent years, China has made moves to adjust this policy, and now selectively provides the VAT rebate to key industries, defined as such either by their inclusion into the PRC's 11th Five-Year Economic Plan, or industries that have made investments in special economic development zones.
Practical application of this adjusted VAT policy has forced many low-technology, high-labor content products further inland into China, or simply moved out entirely. But the VAT remains a tool that Beijing deploys when it suits its own purposes, and these purposes are at odds with many of the remaining manufacturing sectors in the US which need to export into China if they are to capture meaningful market share in the country.
The USCC commissioners, William Reinsch and Robin Cleveland, write towards the end of the 2009 report, "There are only so many times one can review Chinese exchange rate policy, for example, and still learn something new." The yuan's path towards a fully floating currency, tradable outside the country, seems to be reasonably clear, if not happening in a time frame that many in Washington would like to see.
The pressure of congressional groups like the USCC have done much to elevate concerns over the yuan, but beyond the internal agenda within China to only gradually lose control over its currency, there are much greater strategic issues against which little can be done. Consequently, concerns over China's "unfair" trade practices are seeking another actionable venue, and VAT is likely to provide one means for putting these concerns forward.
Because the VAT grievance has impact on China's WTO status, Beijing cannot simply ignore it. Manufacturers in the US have long known that their Chinese counterparts could export at cost, counting on Beijing to pay them back the 17% VAT. This, in conjunction with the yuan's fixed exchange rate, has combined to force many US manufacturing companies out of business, a concern the USCC has long been monitoring and growing increasingly alarmed about.
While Beijing's adjustments to its VAT policies were beginning to take effect, the country's stimulus plan actually rolled back many of these, allowing some manufacturing sectors to continue and enjoy selling at or near cost with only the VAT as their profit. The net result has been that even in low-technology industries, which Beijing would like to see move inland or relocate out of the country entirely, the VAT rebate has proven an effective tool for keeping jobs and contributing to some economic growth.
Unfortunately, at least from China's point of view, it is unlikely they can both maintain their current VAT policies at the same time their currency policy stands as it does. As the full weight of a slow to no-growth economy in North America begins to realize itself, the US Congress is not going to be able to look past the conclusions of the USCC, and will have to act more deliberately than it has in the past. Beijing is likely to find that it can defend its currency position, but not the VAT policy. Given a choice between one or the other, increasingly aggressive moves cutting VAT rebates are likely to occur.
Taken together, the 2009 USCC report to congress seems to draw a slightly more brittle tone than in the past, a point made perhaps most eloquently by commissioners Reinsch and Cleveland, who both write, "This year's report, as usual, is critical of China on many points. Some are well taken, but they are too often made out of fear rather than out of confidence. While blame is tempting in global policy debates - and often well placed - it is our destiny we control, not China's. Faulting Beijing for doing things in their own interest may be politically expedient, but ultimately an empty gesture."
Past reports from the USCC have occurred within a much different economic and political environment. The depression we hope to have averted has strained the ties that have bound the US and China together over the past 20 years, and the USCC report reflects this. The report also reflects a political need on the part of congress to begin to act more substantively on the question of China, in ways that are perceived to benefit American stakeholders more directly and immediately.
As President Barack Obama has courted China, very aware of the potential risks in not taking a conciliatory tone with Beijing, the US government's reliance on China holding and continuing to purchase US debt has prevented him from taking more strident positions. But congress, as advised by and reflected in the USCC's 2009 report, has slightly different objectives, not only to distinguish itself from Obama's position, but to be perceived by its constituents as working to eliminate any unfair advantages that China may now enjoy.
Benjamin A Shobert is the managing director of Teleos Inc (Teleos - The Intelligent Way To U.S. Markets), a consulting firm dedicated to helping Asian businesses bring innovative technologies into the North American market.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
U.S. Arms for Taiwan Send Beijing a Message
By HELENE COOPER
WASHINGTON — For the past year, China has adopted an increasingly muscular position toward the United States, berating American officials for the global economic crisis, stage-managing President Obama’s visit to China in November, refusing to back a tougher climate change agreement in Copenhagen and standing fast against American demands for tough new Security Council sanctions against Iran.
Now, the Obama administration has started to push back. In announcing an arms sales package to Taiwan worth $6 billion on Friday, the United States leveled a direct strike at the heart of the most sensitive diplomatic issue between the two countries since America affirmed the “one China” policy in 1972.
The arms package was doubly infuriating to Beijing coming so soon after the Bush administration announced a similar arms package for Taiwan in 2008, and right as tensions were easing somewhat in Beijing and Taipei’s own relations. China’s immediate, and outraged, reaction — cancellation of some military exchanges and announcement of punitive sanctions against American companies — demonstrates, China experts said, that Beijing is feeling a little burned, particularly because the Taiwan arms announcement came on the same day that Secretary of State Hillary Rodham Clinton publicly berated China for not taking a stronger position on holding Iran accountable for its nuclear program.
While administration officials sounded a uniform public note, cautioning Beijing not to allow this latest tiff to damage overall relations, some administration officials suggested privately that the timing of the arms sales and the tougher language on Iran was calculated to send a message to Beijing to avoid assumptions that President Obama would be deferential to China over American security concerns and existing agreements.
“This was a case of making sure that there was no misunderstanding that we will act in our own national security interests,” one senior administration official said. A second Obama administration official, also speaking on the condition of anonymity because of the sensitivity of the issue, said pointedly: “Unlike the previous administration, we did not wait until the end of our administration to go ahead with the arms sales to Taiwan. We did it early.”
But larger questions remain about where the Obama administration is heading on China policy, and whether the new toughness signals a fundamentally new direction and will yield results that last year’s softer approach did not.
Beyond the wars in Afghanistan and Iraq, management of the American relationship with China is one of Mr. Obama’s biggest foreign policy challenges. Flush with cash, China’s economy is growing mightily, and China has become one of the biggest foreign lenders to the United States. China also is an increasingly critical American trading partner and a global rival in influence and economic power.
“The president’s view is that obviously we have to have a mature enough relationship with China that we can be candid and firm where we disagree and cooperate forcefully when we agree,” a senior administration official said. He insisted that the timing of the arms package and Mrs. Clinton’s tough words were “not designed to send a gratuitous message to China, but to demonstrate the firmness of our position.”
China has a history of getting off to a tough start with American administrations. President Bill Clinton alienated Beijing with tough talk on human rights, even signing an executive order that made renewal of trade privileges for China dependent on progress on human rights. But Mr. Clinton reversed himself in 1994, saying that the United States and China would move forward faster on issues of mutual concern if Beijing was not isolated.
Similarly, President George W. Bush’s first dealings with the Chinese were also fractious, including an effort to recover American airmen whose spy plane was forced down off the Chinese coast.
“The Obama administration came in exactly the opposite,” said Steven Clemons, director of foreign policy programs at the New America Foundation. “They needed China on economic issues, climate change, Iran, North Korea. So they came in wanting to do this lovely dance with China, but that didn’t work.”
Instead, China pushed back hard, including at the Copenhagen climate change summit meeting in December, when Beijing balked at American and European demands that China agree to an international monitoring system for emissions targets. Twice, the Chinese prime minister, Wen Jiabao, sent an underling to represent him at meetings with Mr. Obama, in what diplomats said was an intentional snub. Mr. Obama later had to track down Mr. Wen, surprising him and appearing at the doorway of a conference room where Mr. Wen was meeting with the leaders of South Africa, Brazil and India.
The United States and China eventually reached a compromise on the monitoring agreement, but the whole incident left a bad taste in the mouths of many Obama administration officials, who believed China had deliberately set out to belittle Mr. Obama, and who were determined to push back and reassert American authority.
“The Chinese,” said James J. Shinn, who was assistant secretary of defense for Asia during the Bush administration, “now seem to have a palpable sense of confidence that they’re more in the driver’s seat than two years ago, across a whole range of issues.”
For Mr. Obama, the arms sale to Taiwan, which China considers a breakaway province, may be only the first of many instances this year in which he will run afoul of Beijing.
Some foreign policy experts said that the administration now seemed intent on poking at the sovereignty issues that have long been China’s Achilles’ heel. Mrs. Clinton noted on Friday that Mr. Obama would soon be meeting with the Tibetan spiritual leader, the Dalai Lama — a meeting that White House officials put off last summer to avoid alienating Beijing in advance of Mr. Obama’s China trip. China regards the Dalai Lama as an advocate of Tibetan independence.
“China is feeling very confident these days, but the one thing that the Chinese freak out about consistently are sovereignty issues,” said Mr. Clemons of the New America Foundation. “So anything related to Taiwan or Tibet will get them going.”
Added to that, the administration has been championing Internet freedom recently, another source of public tension with Beijing. China’s government is embroiled in a fight with Google over that company’s complaints about Internet censorship and hacking attacks it says originated in China.
But the tougher American positions do not change the fact that Mr. Obama needs Chinese cooperation on a host of issues. Beyond his efforts to rein in Iran’s nuclear ambitions, the president is also working with Beijing on similar ambitions in North Korea.
And Mr. Obama announced in his State of the Union address last week that he planned to double American exports in the next five years, an ambitious goal that cannot be met unless he somehow persuades China to let its currency appreciate, making Chinese products more expensive in the United States and American products more affordable in China.
China Confused & Outraged By Obama’s Google & Taiwan Cards
By B. Raman
At a time when Chinese officials and non-Governmental analysts have been highly confused by the unusually strong line taken by Mrs.Hilary Clinton, the US Secretary of State, in support of Internet freedom in the wake of Google’s threat to stop censoring its search engine in China and its protests over alleged Chinese web snooping into the Google mail accounts of Chinese political dissidents and Tibetan and Uighur nationalists, they have been in for another shock by the decision of the administration of President Barack Obama to notify the Congress on January 29, 2010, of its plans to sell a fresh package of arms to Taiwan in disregard of Chinese protests and sensitivities on the subject.
2. Mrs.Clinton’s strong statement on the question of Internet freedom has already given rise to Chinese allegations of the US reverting to its past policy of “information imperialism” and adopting double standards with regard to restrictions on the Internet in the interest of national security. As a result, earlier speculation and even expectations that the Chinese authorities and Google could reach a face-saving compromise to facilitate the continued operation of the Google in the Chinese market have been belied so far.
3. The continuing controversy over the Google was till now viewed by the Chinese authorities as an aberration and not as reflective of any change of policy by the Obama Administration towards China. However, the Administration’s notification to the Congress of its plan to sell to Taiwan US $ 6.4 billion worth of Patriot missiles, Black Hawk helicopters and minesweepers has come as a second surprise to Beijing. It is learnt that the Chinese authorities were aware for some time that the sale of this package was under the consideration of the Obama Administration, but were confident that after the smooth visit of Mr.Obama to China in November last and the importance attached by him to China’s role as an Asian power with stakes even in South Asia, he will not go ahead with the sale.
4. His surprise (to the Chinese) decision to go ahead with the sale has evoked strong resentment in official circles and has been strongly criticized by non-governmental analysts, who have accused him of being insincere and projected his decision as a wake-up call to China about the real Obama.
5. In its strong reaction within 24 hours of the notification, the Chinese Government has suspended (not cancelled) all military exchanges with the US. Mr.Qian Lihua, Director of the Foreign Affairs office of the Chinese Defence Ministry, lodged a strong protest with the US Defence Attache in Beijing. A press release issued by his office on the protest said: "The Chinese military expresses grave indignation and strongly condemns such a move to grossly interfere in China's internal affairs and harm China's national security interests. The Taiwan issue is related to China's sovereignty and territorial integrity, and concerns China's core interests. The US arms sales to Taiwan gravely violates the three joint communiques between China and the United States, and seriously endangers China's national security and harms China's reunification course. Such a move also constitutes severe violation of the agreements reached by the top leaders of both sides on the China-US relations in the new situation. It runs counter to the principles of the joint statement issued during US President Barack Obama's visit to China in November last year.”
6. A strong commentary on the US notification by the “China Daily” published on January 31, 2010, said: “ The latest US arms sale to Taiwan has once again come up as a wake-up call. It cannot but let us be clear that in a world where the law of the jungle still prevails, China, like any other developing country, cannot remain aloof from bullies. It is painful to come to such reality. The feeling gripped us when our embassy was bombed in Belgrade; when our ace pilot was knocked down into the sea by a spy plane at door step. It is gripping us now….
More than 20 years after the end of the Cold War, the US is still bent on integrating Taiwan into the American defense strategy in Asia, and still dreaming of using the island as an "unsinkable aircraft carrier" to contain the growth of China. Forget about the pledge that "the United States does not seek to contain China" made by Mr Barack Obama when he was in Beijing just two months ago. Sincerity is subject to proof by action, not by words….China's response, no matter how vehement, is justified. No country worthy of respect can sit idle while its national security is endangered and core interests damaged. When someone spits on you, you have to get back. Compared with the US, China is still weak, both economically and militarily. The counter-measures that China has taken -- ranging from repeated protests to plans to halt military exchanges and punish US companies involved in the arms sale, may not be forceful enough to make Washington smart and mend its ways. But a message has to be sent: From now on, the US shall not expect cooperation from China on a wide range of major regional and international issues. If you don't care about our interests, why should we care about yours? China must never waver to make sure that it means what it says.”
7. The Chinese have also been surprised by indications from Washington DC that Mr.Obama intended meeting His Holiness the Dalai Lama at a convenient time. He had avoided meeting His Holiness during his last visit to the US which came shortly before Mr.Obama’s visit to China.
8. Chinese analysts are confused as to why this sudden change in the policies of Mr.Obama on two issues----Taiwan and Tibet--- which are among the core concerns of China. Barring what the US viewed as China’s unhelpful stance at the recent Copenhagen summit on climate and Beijing’s dispute with Google, the relations between the two countries have been proceeding smoothly and the Chinese, in Beijing’s perception, have been co-operating with the US in its efforts to stabilize the global economy.
9. Even presuming that the Obama Administration might have been unhappy over the Chinese role in Copenhagen, its dispute with Google over web snooping, its failure to exercise sufficient pressure on North Korea to return to talks on the nuclear issue and its opposition to robust sanctions against Iran, would that be sufficient cause to go ahead with the arms sale to Taiwan at the risk of serious damage to Sino-US relations? That is a question to which the Chinese have not yet been able to find an answer.
China's strident tone raises concerns among Western governments, analysts
By John Pomfret
Washington Post Staff Writer
Sunday, January 31, 2010; A01
China's indignant reaction to the announcement of U.S. plans to sell weapons to Taiwan appears to be in keeping with a new triumphalist attitude from Beijing that is worrying governments and analysts across the globe.
From the Copenhagen climate change conference to Internet freedom to China's border with India, China observers have noticed a tough tone emanating from its government, its representatives and influential analysts from its state-funded think tanks.
Calling in U.S. Ambassador Jon Huntsman on Saturday, Chinese Vice Foreign Minister He Yafei said the United States would be responsible for "serious repercussions" if it did not reverse the decision to sell Taiwan $6.4 billion worth of helicopters, Patriot Advanced Capability-3 missiles, minesweepers and communications gear. The reaction came even though China has known for months about the planned deal, U.S. officials said.
"There has been a change in China's attitude," said Kenneth G. Lieberthal, a former senior National Security Council official who is currently at the Brookings Institution. "The Chinese find with startling speed that people have come to view them as a major global player. And that has fed a sense of confidence."
Lieberthal said another factor in China's new tone is a sense that after two centuries of exploitation by the West, China is resuming its role as one of the great nations of the world.
This new posture has befuddled Western officials and analysts: Is it just China's tone that is changing or are its policies changing as well?
In a case in point, one senior U.S. official termed as unusual China's behavior at the December climate conference, during which China publicly reprimanded White House envoy Todd Stern, dispatched a Foreign Ministry functionary to an event for state leaders and fought strenuously against fixed targets for emission cuts in the developed world.
Another issue is Internet freedom and cybersecurity, highlighted by Google's recent threat to leave China unless the country stops its Web censorship. At China's request, that topic was left off the table at this year's World Economic Forum in Davos, Switzerland, Josef Ackermann, chief executive of Deutsche Bank and co-chairman of the event, told Bloomberg News. The forum ends Sunday.
China dismisses concerns
Analysts say a combination of hubris and insecurity appears to be driving China's mood. On one hand, Beijing thinks that the relative ease with which it skated over the global financial crisis underscores the superiority of its system and that China is not only rising but has arrived on the global stage -- much faster than anyone could have predicted. On the other, recent uprisings in the western regions of Tibet and Xinjiang have fed Chinese leaders' insecurity about their one-party state. As such, any perceived threat to their power is met with a backlash.
A spokesman for the Chinese Embassy in Washington said China's tone had not changed.
"China's positions on issues like arms sales to Taiwan and Tibet have been consistent and clear," Wang Baodong said, "as these issues bear on sovereignty and territorial integrity, which are closely related to Chinese core national interests."
The unease over China's new tone is shared by Europeans as well. "How Should Europe Respond to China's Strident Rise?" is the title of a new paper from the Center for European Reform. Just two years earlier, its author, institute director Charles Grant, had predicted that China and the European Union would shape the new world order.
"There is a real rethink going on about China in Europe," Grant said in an interview from Davos. "I don't think governments know what to do, but they know that their policies aren't working."
U.S. officials first began noticing the new Chinese attitude last year. Anecdotes range from the political to the personal.
At the World Economic Forum last year, Premier Wen Jiabao lambasted the United States for its economic mismanagement. A few weeks later, China's central bank questioned whether the dollar could continue to play its role as the international reserve currency.
And in another vignette, confirmed by several sources, a senior U.S. official involved in the economy hosted his Chinese counterpart, who then made a series of disparaging remarks about the bureau that the American ran. Later that night, the two were to dine at the American's house. The Chinese representatives called ahead, asking what was for dinner. They were informed that it was fish. "The director doesn't eat fish," one of them told his American interlocutor. "He wants steak. He says fish makes you weak." The menu was changed.
Tone with Europe, India
With Europe and India, China's strident tone has been even more apparent. In autumn 2008, China canceled a summit with the European Union after French President Nicolas Sarkozy met with the exiled Tibetan leader, the Dalai Lama. Before that, it had denounced German Chancellor Angela Merkel over her contacts with the Tibetan spiritual leader. And in recent weeks, it has engaged in a heated exchange with British officials over its moves to block a broader agreement at the climate conference.
At the Chinese Embassy, Wang differed on the climate issue. "China is strongly behind the idea of meeting the issue of climate change," he said, "but at the same time we think that there are some people who want to confuse the situation, and we feel the need to try to let the rest of the world know our position clearly."
China also suspended ties with Denmark after its prime minister met the Dalai Lama and resumed them only after the Danish government issued a statement in December saying it would oppose Tibetan independence and consider Beijing's reaction before inviting him again.
"The Europeans have competed to be China's favored friend," Grant said, "but then they get put in the doghouse one by one."
China's newfound toughness also played out in a renewed dispute with India over Beijing's claims to the Indian state of Arunachal Pradesh, which borders Tibet. Last summer, China blocked the Asian Development Bank from making a $60 million loan for infrastructure improvements in the state. India then moved to fund the projects itself, prompting China to send more troops to the border.
David Finkelstein, a former U.S. Army officer at the Defense Intelligence Agency who now runs the China program at the Center for Naval Analyses, said the new tone underscores a shift in China. "On the external front," he said, "we will likely see a China that is more willing than in the past to proactively shape the external environment and international order rather than passively react to it."
An example would be events that unfolded in December when 22 Chinese Muslims showed up in Cambodia and requested political asylum. China wanted to hold seven of them on suspicion of participating in anti-Chinese riots in the Xinjiang region in July.
Under intense pressure from Beijing, Cambodia sent the group home, despite protests from the United States. Two days after the group was repatriated, China signed 14 deals with Cambodia worth about $1 billion.
What the future holds
Whether this new bluster from Beijing presages tougher policies and actions in areas of direct concern to the United States is a key question, Lieberthal said. What China does after the United States sells Taiwan the weapons may provide some clues.
Even before the United States announced its plans Friday, at least six senior Chinese officials, including officers from the People's Liberation Army, had warned Washington against the sale.
Once the deal was announced, China's Defense Ministry said it was suspending a portion of the recently resumed military relations with the United States. China also announced that it would sanction the U.S. companies involved in the sale.
What happens next will be crucial. China quietly sanctioned several U.S. companies for participating in such weapons sales in the past. However, it would mark a major change if China makes the list public and includes, for example, Boeing, which sells billions of dollars worth of airplanes to China each year.
He, the vice foreign minister, warned that the sales would also affect China's cooperation with the United States on regional issues. Does that mean China will continue to block Western efforts to tighten sanctions on Iran? Bonnie S. Glaser, a China security analyst at the Center for Strategic and International Studies, said the answer will probably come soon.
France takes over the presidency of the U.N. Security Council on Monday and is expected to push for a rapid move in that direction.
Clinton Warns China on Iran Sanctions
By MARK LANDLER
PARIS — Secretary of State Hillary Rodham Clinton warned China on Friday that it would face economic insecurity and diplomatic isolation if it did not sign on to tough new sanctions against Iran for its nuclear program, seeking to raise the pressure on Beijing to fall in line with an American-led campaign.
Speaking to students at the École Militaire, the prestigious French war college, Mrs. Clinton said, “China will be under a lot of pressure to recognize the destabilizing effect that a nuclear-armed Iran would have” in the Persian Gulf, “from which they receive a significant percentage of their oil supply.”
With Russia increasingly frustrated by Iran’s recalcitrance, China has emerged as perhaps the lone holdout to a new United Nations resolution that would focus sweeping financial and economic sanctions on Iran’s leadership, including a possible ban on sales of technology to its energy sector.
Mrs. Clinton — in a flurry of meetings this week in Europe, including one with the Chinese foreign minister — has tried to build momentum for new measures against Iran. Britain, France and Germany back the effort, and Russia, which has often blocked previous efforts, now seems ready to act.
Only China, which imports crude oil from Iran and has large investments in Iran’s oil and gas sector, has said it would prefer to continue negotiating with the Iranian government. With a veto in the United Nations Security Council, it could block a move to impose more sanctions.
“We understand that right now, that is something that seems counterproductive to you, sanction a country from which you get so much of the natural resources your growing economy needs,” Mrs. Clinton said, referring to the Chinese, in comments after a speech on European security. “But think about the longer-term implications.”
American officials have been making this argument privately to the Chinese for weeks, as the United States tries to win them over for new sanctions. But this is the first time Mrs. Clinton has publicly made the link between China’s energy security and the alarm over Iran’s nuclear ambitions.
In case Beijing missed the urgency of her appeal, Mrs. Clinton remarked that a nuclear-armed Iran would risk setting off an arms race in the Persian Gulf, and that it could provoke a military strike from Israel, which she said would regard a nuclear Iran as an “existential threat.”
Tensions between China and the United States have flared recently over a range of issues, most notably Internet freedom and Google’s announcement that its systems had been hacked by sources in mainland China. Unprompted, Mrs. Clinton alluded to another source of friction: President Obama’s plan to meet with the Dalai Lama, whom Beijing condemns as a subversive.
China, she said, should not allow such irritants to derail its otherwise “positive, comprehensive” relationship with the United States.
Mrs. Clinton was in London and Paris this week for meetings on Afghanistan and Yemen, and for her security speech. But jitters about Iran and its nuclear ambitions have shadowed her at every stop.
In London, Mrs. Clinton brought along specialists on sanctions from the Treasury Department to talk to Chinese officials about technical issues, like how the Iranian government transfers money to banks in Asia to avoid restrictions on its transactions in Western banks.
Mrs. Clinton met Thursday with the Chinese foreign minister, Yang Jiechi, who was attending the Afghanistan conference. A senior administration official said Mr. Yang listened to the American arguments but reiterated his government’s preference to stick with negotiations.
International patience with Iran has frayed, particularly since Iranian authorities backed out of a deal to ship a significant portion of their lightly enriched uranium to France or Russia to be further enriched for medical purposes.
Frustration with Iran is also mounting on Capitol Hill, where the Senate passed its own sanctions bill on Thursday. Mrs. Clinton said the administration would focus on obtaining a United Nations resolution, though she said the Senate’s legislation could end up being “complementary.”
As part of the effort to broaden and toughen sanctions, the Obama administration is expected to push to add financial institutions to the blacklist of those helping Iran’s nuclear program.
The focus of these sanctions, Mrs. Clinton has said, would be on Iran’s leadership, particularly members of the Islamic Revolutionary Guards Corps. Many in the corps also played a role in cracking down on the enduring protests after Iran’s disputed presidential election in June.
Mrs. Clinton, who met the French president Nicolas Sarkozy, earlier in the day, said she applauded his “leadership on this issue.”
Her address on European security, the main reason for her stop in Paris, was meant to answer recent Russian proposals to revamp security arrangements on the continent, including major arms treaties.
The United States, Mrs. Clinton said, opposed negotiating new security treaties, saying that would be time-consuming and cumbersome. Instead, she said she wanted to strengthen existing institutions.
“The United States and Russia will not always agree,” she said. “Our interests will not always overlap. But when we disagree, we will seek constructive ways to discuss and manage our differences.”
China to punish US companies for arms sales
By Wu Jiao (chinadaily.com.cn)
Foreign ministry announced Saturday on its website that China will impose sanctions on those companies that involved in the US arms sale to Taiwan.
This comes as one of the serial countermeasures announced by China within a day after the United States announced a new round of arms sale to Taiwan.
Details of arms sale were posted Friday on a Pentagon website. It would include 60 UH-60M Black Hawk helicopters, 114 Patriot Advanced Capability-3 missiles, mine-hunting ships and information technology. US lawmakers have 30 days to comment on the proposed sale.
Many Chinese people and military experts have already suggested imposing sanctions on those arms merchants involved in US arms sale to Taiwan.
Sources told China Daily that some US arms merchants have actually been kept outside Chinese market for almost a decade despite the rapid increasing airport construction in China needs radar.
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