Obama, China and the U.S. - 2009

President Obama toured the historic Forbidden City in Beijing on Tuesday during a break from meetings with Chinese leaders.
Stephen Crowley/The New York Times

I share three articles below covering the visit to China. The first and last articles are from the New York Times. The middle piece is from the blog of former Secretary of Labor Robert Reich. I have long respected his views. (Sorry about the links, but I don't advise clicking on them. I have no idea where they will take you.)

For some reason, I feel that the vist with the Chinese has been a wake-up call to Pres. Obama. For me, he has a somewhat 'Pollyannish' quality to his world view. I am glad he is in the position, but I hold a much more jaded understanding of America's nature, history and policies. For some reason, I sense his naive expectations and impressions of the U.S. and her role in the world will return to these shores with new fodder for that contemplative mind that he displays.

Hearing the Chinese "No", is important for his development. He's had to accept it from the Israeli government. It will be interesting to watch to see what his Life's response to these realities will be. And as I ponder this, I realize that hearing these "No's" are also important for the American people. As we begin to awaken to the delusions of grandeur under which we've existed for most of our lives, and realize, that others have the right to say NO to our wishes, it poses a critical juncture for the maturing of the American polity.

It means that we get to set new examples of new ways of Being in the world. Today, we're forced to forego our usual tactics, of using the might of our force, because we ain't got it no more! Surely we can not use the threat of trade or economics as before. Nor can our military, or intelligence agencies bring the terror which they once could.

So we all get to do some soul searching, and deep thinking about what the equalizing factors of the moment mean to us, as an individual, as human beings, as a nation, and as an element of Life upon the planet.

In many ways it's very liberating. To know that you can't be the same old way, means you have the freedom to grow, and expand beyond that, into a new and hopefully more wholesome part of the harmony that's possible.

Yea...maybe that's it....We can all stop striving to 'corner the market'. We can forgo the religion of seeking profit. We can forget about being mindless consumers, and start exploring what an interesting natural world we are blessed to be a part of.

We could each get in touch with our own unique abilities and creative gifts. We can make things~ things that are functional, that are beautiful, that are funny and fun ~ and we can give them where needed! We can keep circulating gifts of food, and necessities of life.

And we can slow down. So that we can admire and enjoy what we have already received.

China’s Role as Lender Alters Obama’s Visit

November 15, 2009

By HELENE COOPER, MICHAEL WINES and DAVID E. SANGER

When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay his respects to his banker.
That stark fact — China is the largest foreign lender to the United States — has changed the core of the relationship between the United States and the only country with a reasonable chance of challenging its status as the world’s sole superpower.
The result: unlike his immediate predecessors, who publicly pushed and prodded China to follow the Western model and become more open politically and economically, Mr. Obama will be spending less time exhorting Beijing and more time reassuring it.
In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president’s budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.
“They wanted to know, in painstaking detail, how the health care plan would affect the deficit,” one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.
It is a long way from the days when President George W. Bush hectored China about currency manipulation, or when President Bill Clinton exhorted the Chinese to improve human rights.
Mr. Obama has struck a mollifying note with China. He pointedly singled out the emerging dynamic at play between the United States and China during a wide-ranging speech in Tokyo on Saturday that was meant to outline a new American relationship with Asia.
“The United States does not seek to contain China,” Mr. Obama said. “On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations.”
He alluded to human rights but did not get specific. “We will not agree on every issue,” he said, “and the United States will never waver in speaking up for the fundamental values that we hold dear — and that includes respect for the religion and cultures of all people.”
White House officials have been working for months to make sure that Mr. Obama’s three-day visit to Shanghai and Beijing conveys a conciliatory image. For instance, in June, the White House told the Dalai Lama that while Mr. Obama would meet him at some point, he would not do so in October, when the Tibetan spiritual leader visited Washington, because it was too close to Mr. Obama’s visit to China.
Greeting the Dalai Lama, whom China condemns as a separatist, weeks before Mr. Obama’s first presidential trip to the country could alienate Beijing, administration officials said. Every president since George H. W. Bush in 1991 has met the Dalai Lama when he visited Washington, usually in private encounters at the White House, although in 2007 George W. Bush became the first president to welcome him publicly, bestowing the Congressional Gold Medal on him at the Capitol. Mr. Obama met the Dalai Lama as a senator.
Similarly, while he was campaigning for the presidency, Mr. Obama several times accused China of manipulating its currency, an allegation that the current Treasury secretary, Timothy F. Geithner, repeated during his confirmation hearings. But in April, the Treasury Department retreated from that criticism, issuing a report that said China was not manipulating its currency to increase its exports.
While American officials said privately that they remained frustrated that China’s currency policies lowered the cost of Chinese goods and made American products more expensive in foreign markets, they said that they were relieved that China was fighting the global recession with an enormous fiscal stimulus program to spur domestic growth, and added that now was not the time to antagonize Beijing.
China is not viewed as a trouble spot for the United States. But this administration, like its predecessor, has had difficulty grappling with a rising power that seems eager to avoid direct clashes with the United States but affects its interests in many areas, including currency policy, nuclear proliferation, climate change and military spending.
In that regard, two members of Mr. Obama’s foreign policy team said that the United States’ interactions with the Chinese had been far too narrow in past years, focusing on counterterrorism and North Korea. Too little was done, they said, to address China’s energy and environmental policies, or its expansion of influence in Southeast Asia, South Asia and Africa, where China has invested heavily and used billions of dollars in aid to advance its political influence.
One hint of the Obama administration’s new approach came in a speech this fall by James B. Steinberg, the deputy secretary of state, who has deep roots in China policy. He argued that China needed to adopt a policy of “strategic reassurance” to the rest of the world, a phrase that appeared intended to be the successor to the framework of the Bush era, when China was urged to embrace a role as a “responsible stakeholder.”
“Strategic reassurance rests on a core, if tacit, bargain,” Mr. Steinberg said. “Just as we and our allies must make clear that we are prepared to welcome China’s ‘arrival,’ ” he argued, the Chinese “must reassure the rest of the world that its development and growing global role will not come at the expense of security and well-being of others.”
The Chinese reaction has been mixed, at best. The official China Daily newspaper ran a column just before Mr. Obama’s arrival suggesting that the United States needed to provide some assurance of its own — to “respect China’s sovereignty and territorial integrity,” code words for entirely backing away from the issues of how China deals with Taiwan and Tibet.
In the United States, the phrase “strategic reassurance” has been attacked by conservative commentators, who argue that any reassurance that the United States provides to China would be an acknowledgment of a decline in American power.
In an op-ed article in The Washington Post, the analysts Robert Kagan and Dan Blumenthal argued that the policy had echoes of Europe “ceding the Western Hemisphere to American hegemony” a century ago. “Lingering behind this concept is an assumption of America’s inevitable decline,” they wrote. White House officials shot back, insisting that it is China that needs to do the reassurance, not the United States.
In China, Mr. Obama will meet with local political leaders and will host an American-style town hall meeting with students in Shanghai. He will then spend two days in Beijing meeting with President Hu Jintao.
It seems unlikely that Mr. Obama will get the same celebrity-type reception in Beijing that he received in Cairo, Ghana, Paris and London. China seems mostly immune to the Obama fever that swept other parts of the world, and the Chinese are growing more confident that their country has the wherewithal to compete with the United States on the world stage, analysts say.
“Obama is still a positive guy, and all over the world most people think he’s more energetic, more sincere, than Bush, more a reformist,” said Shi Yinhong, a professor and an expert on United States-China relations at People’s University in Beijing. “But in China, Obama’s popularity is less than in Europe, than Japan or Southeast Asia.” In China, he said, “there is no worship of Obama.”
For instance, during the Bush and Clinton years, China might release a few political dissidents on the eve of a visit by the president as a good-will gesture. This time, American officials say, they do not expect any similar gestures, although they say that Mr. Obama will raise human rights issues privately with Mr. Hu.
“This time China will agree to have a human rights dialogue with the U.S. on some cases,” Mr. Shi said, but “the arguments have changed compared to the past. Now we say, ‘We are a different country, we have our own system, our own culture.’ ”

Helene Cooper reported from Singapore, Michael Wines from Beijing, and David E. Sanger from Washington.

Robert Reich's Blog~
Robert Reich was the nation's 22nd Secretary of Labor and is a professor at the University of California at Berkeley. His latest book is "Supercapitalism."

Tuesday, November 17, 2009

Obama, China, and Wishful Thinking About American Jobs

President Obama says he wants to "rebalance" the economic relationship between China and the U.S. as part of his plan to restart the American jobs machine. "We cannot go back," he said in September, "to an era where the Chinese . . . just are selling everything to us, we're taking out a bunch of credit-card debt or home equity loans, but we're not selling anything to them." He hopes that hundreds of millions of Chinese consumers will make up for the inability of American consumers to return to debt-binge spending.

This is wishful thinking. True, the Chinese market is huge and growing fast. By 2009, China was second only to the U.S. in computer sales, with a larger proportion of first-time buyers. It already had more cell-phone users. And excluding SUVs, last year Chinese consumers bought as many cars as Americans (as recently as 2006, Americans bought twice as many).

Even as the U.S. government was bailing out General Motors and Chrysler, the two firms' sales in China were soaring; GM's sales there are almost 50% higher this year than last. Proctor & Gamble is so well-established in China that many Chinese think its products (such as green-tea-flavored Crest toothpaste) are Chinese brands. If the Chinese economy continues to grow at or near its current rate and the benefits of that growth trickle down to 1.3 billion Chinese consumers, the country would become the largest shopping bazaar in the history of the world. They'll be driving over a billion cars and will be the world's biggest purchasers of household electronics, clothing, appliances and almost everything else produced on the planet.

So this will mean millions of American export jobs, right? No.

In fact China is heading in the opposite direction of "rebalancing." Its productive capacity keeps soaring, but Chinese consumers are taking home a shrinking proportion of the total economy. Last year, personal consumption in China amounted to only 35% of the Chinese economy; 10 years ago consumption was almost 50%. Capital investment, by contrast, rose to 44% from 35% over the decade.

China's capital spending is on the way to exceeding that of the U.S., but its consumer spending is barely a sixth as large. Chinese companies are plowing their rising profits back into more productive capacity—additional factories, more equipment, new technologies. China's massive $600 billion stimulus package has been directed at further enlarging China's productive capacity rather than consumption. So where will this productive capacity go if not to Chinese consumers? Net exports to other nations, especially the U.S. and Europe.

Many explanations have been offered for the parsimony of Chinese consumers. Social safety-nets are still inadequate, so Chinese families have to cover the costs of health care, education and retirement. Young Chinese men outnumber young Chinese women by a wide margin, so households with sons have to accumulate and save enough assets to compete in the marriage market. Chinese society is aging quickly because the government has kept a tight lid on population growth for three decades, with the result that households are supporting lots of elderly dependents.

But the larger explanation for Chinese frugality is that the nation is oriented to production, not consumption. China wants to become the world's preeminent producer nation. It also wants to take the lead in the production of advanced technologies. The U.S. would like to retain the lead, but our economy is oriented to consumption rather than production.

Deep down inside the cerebral cortex of our national consciousness we assume that the basic purpose of an economy is to provide more opportunities to consume. We grudgingly support government efforts to rebuild our infrastructure. We want our companies to invest in new equipment and technologies but also want them to pay generous dividends. We approve of government investments in basic research and development, but mainly for the purpose of making the nation more secure through advanced military technologies. (We regard spillovers to the private sector as incidental.)

China's industrial and technological policy is unapologetically direct. It especially wants America's know-how, and the best way to capture knowhow is to get it firsthand. So China continues to condition many sales by U.S. and foreign companies on production in China—often in joint ventures with Chinese companies.

American firms are now helping China build a "smart" infrastructure, tackle pollution with clean technologies, develop a new generation of photovoltaics and wind turbines, find new applications for nanotechologies, and build commercial jets and jet engines. GM recently announced it was planning to make a new subcompact in China designed and developed primarily by the Pan-Asia Technical Automotive Center, a joint venture between GM and SAIC Motor in Shanghai. General Electric is producing wind turbine components in China. Earlier this month, Massachusetts-based Evergreen Solar announced it will be moving its solar panel production to China.

The Chinese government also wants to create more jobs in China, and it will continue to rely on exports. Each year, tens of millions of poor Chinese pour into large cities from the countryside in pursuit of better-paying work. If they don't find it, China risks riots and other upheaval. Massive disorder is one of the greatest risks facing China's governing elite. That elite would much rather create export jobs, even at the cost of subsidizing foreign buyers, than allow the yuan to rise and thereby risk job shortages at home.

To this extent, China's export policy is really a social policy, designed to maintain order. Despite the Obama administration's entreaties, China will continue to peg the yuan to the dollar—when the dollar drops, selling yuan in the foreign-exchange market and adding to its pile of foreign assets in order to maintain the yuan's fixed relation to the dollar. This is costly to China, of course, but for the purposes of industrial and social policy, China figures the cost is worth it.

The dirty little secret on both sides of the Pacific is that both America and China are capable of producing far more than their own consumers are capable of buying. 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.

U.S. President Barack Obama, left, listens to Chinese President Hu Jintao, as they attend a state dinner reception at the Great Hall of the People in Beijing, China, Tuesday, Nov. 17, 2009. Standing behind them are their translators.

China Holds Firm on Major Issues in Obama’s Visit

November 18, 2009

By HELENE COOPER
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.