Hot and Cold : US-China Economic Ties Cooling Down?

Where most have rejoicing Obama is now officially our 44th President, others aren't so sure of what it's going to mean, especially in terms of economic relations.

Among these peeps, according to the Monde, are the Chinese.

The article, titled "Pékin s'interroge sur les intentions de Washington", explains that the Chinese are wary of Obama and what he might ask for. They're not quite sure yet what to expect from the new president and seem to be getting mixed signals. Normal in a way that they're wary, as Bush was seen as a "ami de la Chine", or a friend of China.

Of course, Bush certainly didn't help things by telling the Chinese gov, right before he left, oh, by the way, Obama's team thinks you're artificially maintaining a low/weak yuan so it drives your exports, and they'd like you to put a stop to it.

Come on! Even you, Bush thought that. It just ain't that easy!

It takes two to tango:

Sure, the current US administration would like China to stop manipulating the yuan to ensure it stays low, especially from a domestic political standpoint, as Obama is being pressured by the syndicates who need him to balance trade exchanges to protect US workers. In return the democrats could use the syndicates to help them implement the new economic stimulus plan that is currently under discussion at the Congress.

BUT, right now, as you all know, the Chinese are also gobbling up US State Bonds, and the US needs them to keep doing that as it's one of the key elements balancing out (i.e fueling) US debt. "

The result? Mixed signals

U.S.-China economic relations: blowing hot and cold

There's what they say :

Officially, Hu Jintao and Obama declared both wanting to build better and more constructive U.S-China relations :"construire une relation sino-américaine plus positive et plus constructive"

and what they actually mean:

- Obama's inaugural speech addressed the errors and failures of communism. Biden said China should "jouer selon les règles auxquelles les autres se plient", follow the same rules as everybody else.

- Wen Jiabao, during the Davos forum, indirectly accused the US of being those that brought on this global crisis ( "les premiers responsables de cette crise, qui s'enracine dans une culture de "poursuite aveugle du profit"."

A solution needs to be found for two key issues.

These two key sensitive issues are :

• the yuan exchange rate. US asked that the trade imbalances be corrected, and that implies doing something about the low, low, low, yuan exchange rate. That is to say, ask China to change its monetary habits.
  

• a strategic dialogue that might no longer be only about economy anymore. Le Monde indicates (see below) Hillary Clinton hinted at discussing Tibet and human rights. Apparently Taiwan is not an issue. Democrats are rumored to be more lenient and flexible on that subject than Republicans.
  

A few choice excerpts :

"La politique chinoise de l'administration Bush, explique un professeur de relations internationales de l'Université du peuple de Pékin, Shi Yinhong, consistait "à éviter autant que faire se peut toute confrontation avec la Chine dans le but de multiplier les chances dans la relation économique".

Avec Barack Obama, les choses vont changer : la secrétaire d'Etat Hillary Clinton vient d'évoquer la perspective d'un "dialogue stratégique" avec Pékin dont "l'économie est un aspect très important, mais pas le seul".

Les dirigeants chinois ne sont pas inquiets sur le dossier de "l'île rebelle" taïwanaise, car les démocrates sont plus "souples" à leurs yeux que les républicains sur la question. Mais les déclarations de la nouvelle responsable de la diplomatie américaine peuvent laisser présager des désaccords sur des sujets tels que la répression chinoise des droits de l'homme ou la situation au Tibet. "