China Business Blog and Podcast

Filed from Beijing

U.S. President Barack Obama is in Shanghai and will be coming to Beijing today. He spoke to a “town hall meeting” with young students in Shanghai and Obama took the high road on issues ranging from universal rights to trade to climate change. He also offered to open the U.S. educational system to 100,000 Chinese students, telling the students that “I see China’s future in you.” He pointed out that U.S.-China trade, which totaled just $5 billion in 1979, now exceeds $400 billion a year and constitutes a pillar of the global economy.

Obama’s first China trip is very much focused on “rebalancing the relationship in a thoughtful way” – just as the Obama administration vowed to “push the re-start button” on the relationship with Russia. The “rebalancing” will occur in three arenas of cooperation – climate change, economic recovery, and nuclear proliferation (read North Korea). There is a sense that the U.S.-China agenda is broadening out again from the myopic focus of the George W. Bush administration on terrorism, although terrorism and the Middle East (read Iran) remain very much on the agenda as areas of strategic dialog, but not necessarily consensus between the two countries.

US Commerce Secretary Gary Locke (left) and USTR Ron Kirk (right)

Obama’s economic surrogates are also very much in evidence. I today attended a luncheon of the American Chamber of Commerce in Beijing that featured comments and another highly scripted “town hall meeting” with Commerce Secretary Gary Locke and U.S. Trade Representative Ron Kirk. For me, the highlight of the meeting was Locke’s comment on what he called the “moral imperative for the U.S. and China to work closely together to address climate change.” Locke spoke with evident personal passion as he pointed out that 100 years from now, nobody will remember or care which country was developed and which country was developing, but everyone will care whether or not the problem of climate change was addressed by our generation of Chinese and Americans working together. This problem cannot be resolved without joint global leadership between China and the United States. Climate change is at the top of the agenda for the Obama visit, not a footnote.

Trade Rep Kirk injected a sense of humor into the proceedings by announcing that he was accompanying “President Clinton and Secretary of State… oh oh – that was my You-Tube moment…” But he and Locke worked together to dispel the notion that the U.S. was engaged in increased protectionism through the anti-dumping actions on tires and steel tubes. Locke pointed out that in 2009, anti-dumping cases by the U.S. against China involved just 3.6% of total Chinese exports to the U.S. and Chinese anti-dumping cases against the U.S. involved a matching 4% of U.S. exports to China. The implication – trade is 96% free and open between the two countries. So not to worry – that whiff of gunpowder ain’t a trade war, not just yet.

On another interesting point, Locke and Kirk revealed that in response to Chinese complaints that the U.S. has unnecessarily limited U.S. exports of high-technology products through the export control system, President Obama has ordered a comprehensive interagency review of U.S. export controls. Locke stated flatly that, “the current export control system is broken,” controlling technologies that are not critical to U.S. national security and that are readily available from Europe, Japan, and other global competitors. So perhaps we will see some rationalization and loosening of the U.S. export control regime in coming years.

Where do we come out on all of this? As Kirk pointed out, much too much global trade over the past couple of decades has been contributed by the propensity of the American consumer to over-indulge at the global trough. Oink! Oink! This has led to trade and financial imbalances that are not sustainable – formerly long term unsustainable, now short term unsustainable. “Chimerica” is the relationship that is at the heart of this problem. Time to “rebalance” the relationship in a “thoughtful way.” Well said. Now, as for well done – let’s wait and see.

This entry was posted on Monday, November 16th, 2009 at 3:33 pm and is filed under China, U.S. politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.