November 30, 2008
Hu Says Faster Reform Needed
In Beijing the Political Bureau of the Communist Party of China (CPC) Central Committee met this weekend and President Hu Jintao made a headline statement about China losing its economic competitiveness if it doesn't continue to evolve. The meeting has particular significance since it falls on the 30th anniversary of the start of Deng Xiaoping's "opening up" reform movement of 1978. The era since that time was nicely encapsulated by the Swedish Ambassador to China in a talk in Stockholm today.
Hu's words and other official and quasi-official statements about the need to hasten change in China's domestic policies seem to point to full implementation of the land reform promised at October's party meeting. This is a trend worth watching...
Labels: china property, hu jintao, land reform, panic of 2008
November 26, 2008
CHINDIA TAKES DIRECT HIT
The idea that the eastward shift in the global balance of power will be defined as the rise of China and India is put to rest now. Imagine if the Shanghai Securities Exchange announced it would close in the middle of the trading week because the police did not have control over the city and foreign tourists many of them business travelers were taken hostage in the Jin Mao Tower. India's "911" is more "Oklahoma City" and a sign that the territories of the subcontinent are still being defined. And how is that India/Tibet/China boundary coming along?
Labels: foreign relations
China Rate Cut Boosts Commodities
The Chinese central bank cut interest rates over 1% today in a surprisingly strong move that partly accounted for rescuing the price of oil, copper, and other traded commodities. In related news Bosai Minerals, a privately owned Chinese mining conglomerate, announced a deal to build a $1 billion (US Dollars) aluminum oxide plant in Guyana.
Labels: banking, foreign trade, money, panic of 2008
November 25, 2008
China Customs Duty at 1 Yuan?
Effective December 1, 2008, the majority of Chinese light industry and textiles exports (and imports) will pay only a "nominal payment" of customs duty requirement versus "actual payment." Chinese exporters and manufacturers asking their native English speaking clients and partners for an English translation of "nominal payment" are told that it is the equivalent of saying "just give me a dollar" or Euro or Yen, etc. This move along with increase in VAT rebates is part of Beijing's massive financial crisis stimulus package and aimed at shoring up declining exports.
The US textile industry is in uproar over this action and want the US Government to put quotas on Chinese imports. This is not likely to happen in the final weeks of the Bush administration. But the new Congress might be tempted for political gain...
Labels: foreign trade, panic of 2008
China Oilfield Corporate Bond Issue
China Oilfield Services, Ltd., listed in the USA as an over-the-counter ADR CHOLY.PK will issue six billion Yuan worth (around $880 million US dollars) of bonds later this week. Details will be announced in Shanghai on Thursday. The company is an offshoot of offshore oil major CNOOC and has been on an acquisition spree buying offshore oil companies in Norway and southeast Asia.
China Oilfield Services is in a joint venture with Australian tech firm Atlantis Deepwater Technology to explore formerly inaccessible regions of the oceans.
Labels: chinese stocks, oil
China's Diplomatic Push
While Chinese President Hu Jintao seals deals in Greece and Latin America following last weekend's APEC Summit, members of the new Chinese government (11th National People's Congress) are spanning the globe to strengthen China's foreign relations. Jia Qinglin (Communist Party Standing Committee), considered Beijing's top political advisor, met with the King of Jordan yesterday. Liu Yunshan (Standing Committee) is currently in Bahrain and will next visit Egypt, Israel, and occupied Palestine. Meanwhile Liu Yandong (State Council) is in Switzerland for meetings in Geneva and Meng Jianzhu (State Council) will soon travel to Cambodia and Vietnam.
And next week Beijing will host Treasury Secretary Paulson and a delegation of Bush administration officials at the US-China Strategic Economic Dialogue.
Labels: foreign relations
Tibet & Moral Righteousness
Western media are drumming up a storm of righteous indignation (just in time for the holidays) over the failures of the Dalai Lama and Tibetan elites in India to reach a deal with Beijing. As anyone who has bothered to actually read the Dalai's wants, the issue is not "free Tibet" but acceptance by Beijing as the true rulers of Tibetans. As long as there are power rivalries with Beijing such as determining the 14th Panchem Lama the Dalai Lama cannot be a despot. The Dalai Lama (and his court) cannot accept this compromise. Thus the stalemate.
The British, who defined Tibet's borders and helped create the Tibet brand of a "Shangri-La" utopia for lost Westerners bored with their own spiritual heritage, are trying to play intermediary. Foreign Minister Bill Rammel urged the Tibetan confab at Dharamsala to seek "meaningful autonomy for Tibet within the framework of the Chinese constitution."
It's not hard to buy a mob in Asia. Given the global cash crisis will we again see riots in Lhasa soon? Let's hope the Free Tibet crowd will be restrained enough to keep their moral righteousness on the bumpers of their sedans.
Labels: dalai lama, free tibet, psyop
November 24, 2008
Record Ad Revenue for China Central TV
The annual advertising auction held by China Central Television in Beijing November 18 raked in $1.36 billion (US dollars) in ad spending with legendary soap maker Procter & Gamble the biggest buyer.
Advertising Age has a good review of the auction drama. Variety Asia has some information on the impact on Chinese soap opera producers.
Labels: media
China Shifts Shipping Strategy
Chinese President Hu Jintao is in Greece to cement a billion dollar deal to expand the container port at Piraeus. In 2007 the Port of Piraeus handled 1.37 million TEU containers. The expansion planned by Chinese shipping conglomerate COSCO will expand Piraeus capacity to almost 4 million containers by 2015. In 2005 the Piraeus port was connected to the railway network in Greece. These developments will strengthen Piraeus's status as a 'hub' port in container shipping. Almost 40% of the container traffic at the port is transhipment.
In fact, COSCO is developing its facilities at Piraeus as part of a larger strategy to create a new service linking China with North America via the Mediterranean. Several aims are accomplished here. Chinese exports have a new hub to serve southern and more importantly emerging economies of East Europe and bypass competition from Rotterdam and Hamburg. And Chinese exports will now reach the eastern Atlantic and Gulf ports of the USA. The Port of Houston is developing expansion to accomodate container megaships. I believe we are seeing a new shift in Chinese export strategy not to replace but supplement the one-sided Pacific trade between the Chinese coast and LA/Long Beach.
Copper Up on Chinese Demand
Copper closed up 7% on the London Metal Exchange today on continued Chinese demand. China is a net importer of nearly all basic metals. This fact alone should ensure that the commodities supercycle will resume once the current capital crisis is sorted out. Some analysts see demand back up for all commodities by 2010. When (not If) commodities markets recover there will be a future supply crunch. And higher prices once more.
Labels: economic impact, foreign trade
November 21, 2008
Time to Make the Donuts in China
Dunkin' Donuts --as famous for its coffee as it is for donuts-- opened its first franchise in Shanghai the company announced today. Plans are to open dozens of Dunkin' Donuts in Shanghai and the Pearl River delta region. Whether the company is looking at any Chinese Tier 2 or 3 cities is unknown. Dunkin' Donuts is most commonly found in Asian locations with heavy American (and American military) presence - South Korea and the Philippines.
Dunkin' Donuts (phonetic) Chinese name will be Tang En Dou Le meaning 'everybody is happy'.
Labels: global economy
Obama Picks China Hand for Treasury
Well, it may be a stretch to call Tim Geithner, current President of the Federal Reserve Bank of New York, a "China Hand" but he did study Chinese in university (Dartmouth) and study abroad at Peking University. So Geithner lived in Beijing and has experienced China first hand.
Of course, one can argue that Beijing is hardly "China" and Geithner was there back in the 80s before Deng Xiaoping solidified control and the bourgeoisie won China back.
Nevertheless, first hand China knowledge is very important as the USA and China continue their odd economic convergence. Equally important is Geithner's personal background.
His father, Peter Geithner, is advisor to the Asia Center at Harvard, a member of the uber-influential National Committee on US-China Relations, on the board at Peking University, and formerly of the Rockefeller and Ford Foundations. Tim Geithner, like Obama and Hank Paulson, is a member of the Council on Foreign Relations.
Labels: china policy, treasury
Party Chief Hu to Meet Chairman Lien at APEC Summit
Another weekend, another summit. The annual APEC summit is underway in Lima, Peru, and in the first joint statement from the 20th meeting the nations of the Pacific basin agree to " stand firm against any protectionist sentiment arising out of this crisis."
Behind the scenes China and Taiwan will meet when President Hu Jintao meets with former Taiwan VP Lien Chan in private meeting.
Behind the scenes China and Taiwan will meet when President Hu Jintao meets with former Taiwan VP Lien Chan in private meeting.
Labels: apec, panic of 2008, taiwan
November 20, 2008
Fish and Chips
The US-China Economic and Security Review Commission (set up in 2000 as a consolation prize to anti-China Trade Relations Act foes) has released its annual blather accusing China of manipulating its currency and of dangerous outer and cyber space data stealing and exports of fish.
Wortzel's Last Blast of Hot Air
Five of the 12 commissioners will end their 2 year terms on December 31, including Chairman Larry Wortzel, the Heritage Foundation's China "authority" who was given the chairmanship by disgraced former House Speaker Dennis Hastert (R-IL).
With the current crisis surrounding the Panic of '08 and China's status as the USA's number 1 creditor, it would be wise for the incoming Congress to appoint less biased members to the panel.
With the current crisis surrounding the Panic of '08 and China's status as the USA's number 1 creditor, it would be wise for the incoming Congress to appoint less biased members to the panel.
Labels: china policy, global security, panic of 2008
November 19, 2008
Beijing Tells SOEs To Avoid Layoffs
China's all powerful State Council is getting the word out to the Provinces and cities: help the unemployed and get them to consume! State owned enterprises are told to avoid layoffs and must get approval for any layoff of more than 50 workers. Incentives abound to keep workers in their jobs and Beijing is exploring a type of unemployment insurance something not currently available from the central government. Smaller and private busineses are urged to "refrain" from layoffs.
A major shift in Chinese society is underway as millions of unemployed migrant workers are returning to their home provinces, towns, villages, and farms, and Beijing is making it clear to Mandarins in the field: if they don't settle down but return to the mega cities of the coast, the attempt to redirect the economy will fail. Conditions are apparently tense as the recent disturbances in Gansu illustrate. If the mood continues it reinforces the need to enact the land reforms promised in last months Party conference.
A major shift in Chinese society is underway as millions of unemployed migrant workers are returning to their home provinces, towns, villages, and farms, and Beijing is making it clear to Mandarins in the field: if they don't settle down but return to the mega cities of the coast, the attempt to redirect the economy will fail. Conditions are apparently tense as the recent disturbances in Gansu illustrate. If the mood continues it reinforces the need to enact the land reforms promised in last months Party conference.
Labels: panic of 2008
November 18, 2008
Uncle Sam to Beijing: IOU $600 Billion
This past September China moved ahead of America's old reliable top creditor Japan to become the number 1 holder of the USA's foreign debt. I expect this development to become a major issue with the loose far-left and far-right anti-China coalition in American politics.
Need Washington remember that Obama's muse Abraham Lincoln said "be courteous to your creditors"?
Little more than a century ago, the shoe was on the other foot as the old corrupt Qing Dynasty owed the USA. In the illustration (pictured) from those days, see how Uncle Sam treated his Chinese debtors.
Labels: foreign relations, panic of 2008
China Steel Crisis Opportunity
As the Chinese are fond of saying, a crisis presents an opportunity. World steel is in a meltdown and Chinese steel production fell over 9% in September. Anecdotal reports say October figures will be much worse with entire steel towns shut down in parts of old industrial China. The steel sector in China is overcapacity and one fifth of Chinese steel output is not profitable.
Talks for 2009 iron ore contracts are now getting underway between Chinese importers and the iron ore majors Vale, BHP, and Rio Tinto. The six year iron ore boom is over (at least for the global cycle now unwinding) and this will impact businesses and lives in Australia and Brazil in particular.
Chinese steelmakers however may use this period to change the iron ore pricing mechanism and end benchmark contract agreements in favor of iron ore indexes. This could present new investment opportunities for the next cycle.
(chart: Economist.com)
November 17, 2008
China Hydrogen Cars by 2010
According to reports first revealed by the venerable Gasgoo.com China auto portal, SAIC's VW unit will debut a hydrogen Passat -- the Lingyu -- at the LA Auto Show starting this weekend. Shanghai VW plans production of the car by 2010.
Chinese auto companies appear to gain on their American partners (and rivals, at least in terms of market share) in alternative fuel technologies. BYD Auto plans electric cars and got a show of confidence from Warren Buffett with a sizeable shares purchase. And other technologies are being implemented such as continuously variable transmissions (CVT) which the German firm Bosch may transfer to Chinese car makers.
Labels: automobiles, chinese autos, clean tech
Pure Vanilla
The much anticipated G20 Summit in Washington, DC, resulted in the following reassurance from the G7 nations plus BRIC and other "emerging" economies:
"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems."
In the words of one participant the gathering was "plain vanilla" and intended - like the opulent showy setting in Washington's monumental old Pension Building - to give the illusion that the world's political elite are united in responding to the Panic of '08.
Meanwhile most of the world's reserve currency, the dollar, is held outside the "Western" world while the latter still controls the old global institutions of the past - the IMF and the UN.
Labels: dollar, financial crisis, panic of 2008, un
Chinese Airlines May Get Bailout
An anonymous source at China Southern Airlines confirmed to the Shanghai Securities News that the company was seeking a cash injection from China's central government. Unconfirmed reports are that Air China and China Eastern are also seeking a bailout from Beijing. China Eastern has grounded 10% of its fleet as Chinese cut back severely on air travel.
Labels: aircraft, financial crisis, panic of 2008
November 14, 2008
China Could Join War in Afghanistan
According to a Pakistan source, British PM Gordon Brown told a Council on Foreign Relations gathering that he believed Chinese troops could join the coalition fighting the Taliban in Afghanistan. Lest if be forgotten, China founded the Shanghai Cooperation Organization in 1996 specifically to counter terrorism from Afghanistan.
Labels: global security, war
Will China Switch to Gold?
The Hong Kong Standard asserts that China may up its gold reserves to close the gap with the US. Beijing's offical gold reserves are a mere 7% of Uncle Sam's hoard. Beijing has moved to diversify its foreign exchange reserves (world's biggest) into other currencies but China's reserves are still mainly denominated in the dollar and used to buy mostly USA Treasury debt. Given the admitted lack of transparency now in Washington's financial picture thanks to Wall Street corruption, it would not be a surpise if Beijing began to move away more quickly from the dollar. Noble winning economist Robert Mundell who advises the Chinese government was overhead at a confab saying that Beijing should buy IMF gold holdings. China may announce its readiness to support IMF's balance sheet at the G20 summit this weekend. Would gaining IMF gold be part of any financial assistance?
In Sao Paulo this week China's Central Bank chief Zhou Xiaochuan hinted that China may allow the Yuan to depreciate in order to do whatever it takes to support Chinese exports. Meanwhile Canada is ready to pressure China to appreciate the Yuan at the G20 summit. Interesting times...
Labels: financial crisis, gold, panic of 2008
Nigeria Awards China Power Plant
The government of Nigeria plans to spend billion$ of its oil revenues on fixing the country's notorious power shortage. Much of that money will go to a Chinese company, ShenZhen Energy Group, according to reports today. ShenZhen Energy will build a 3 MegaWatt power plant in Nigeria and nearly double power generation capacity.
China's soft power diplomacy is paying off. This is an example of how American power overseas does not benefit companies (or citizens) of the USA.
Photo: Nigeria President Umaru Musa Yar'Adua and Chinese PM Wen Jiabao earlier this year.
Labels: great power
November 13, 2008
China Mobile Awards Equipment Deals for TD-SCDMA Rollout
ZTE and Huawei are the biggest single winners of China Mobile's equipment bids but Datong, Nokia Siemens, Poterio, and Ericsson all got substantial pieces of the TD-SCDMA network development. The aim is to build 23,000 base stations and cover 28 additional Chinese cities in time for commercial operation mid 2009.
Labels: Telcom
Hong Kong-US Container Shipping Down 19%
Containerized cargo shipments from China to the USA, around half of all US container imports, is forecast down 8% in 2008. Container shippments from Hong Kong will be down 19% already.
Westward shipments from America are suffering even more. Wastepaper exports have collapsed and that means containers may sail back to the China coast empty.
Labels: chinese trade, exports, imports
Details on China Stimulus Infrastructure Projects
The State Council in Beijing released some details on multi-billion dollar value infrastructure projects included in the big stimulus package:
Gas pipeline from western China to Guangzhou and Hong Kong (perhaps to meet up with pipelines currently under construction from Kazakhstan and Turkmenistan);
Nuclear power plants in Zhejiang and Guangdong Provinces (mostly likely Westinghouse AP-1000 type);
Airports in Inner Mongolia (a rising wind power area) and Anhui Provinces;
and water conservation projects in Xinjiang, Guizhou, and Jiangxi.
Labels: economy, panic of 2008
USA HALTS ALL CHINA MILK IMPORTS
The USA Food & Drug Administration issues an import alert:
"DETENTION WITHOUT PHYSICALEXAMINATION OF ALL MILK PRODUCTS, MILK DERIVED INGREDIENTS AND FINISHED FOODPRODUCTS CONTAINING MILK FROM CHINA DUE TO THE PRESENCE OF MELAMINE AND/ORMELAMINE ANALOGS"
Measures such as this are a dangerous sign of renewed protectionism in America and it is no surprise that the FDA announced the alert as the USA racked up a record $27.8 billion trade deficit with China last month.
Labels: chinese trade, imports
Saddam Era Iraq-China Oil Deal In Place
The NY Times reporting on the multi-billion dollar oil deal (was production, now servicing contract) between North Oil of Iraq and CNCP/Norinco signed in Baghdad.
China Commercial Property Stays Strong
China remains a bright spot in the otherwise glum commercial property sector according to the Royal Institute of Chartered Surveyors latest Global Commercial Property Survey.
Remember, the property sector as a whole is one of the key drivers of the Chinese economy.
Labels: china property, private property
November 12, 2008
Pakistan Instability Containing China?
The USA and India are behind the recent severe instability in Pakistan in order to "contain" China according to an opinion piece in the Pakistani paper The Post.
Labels: global security, great power, india
CHEN SHUI-BIAN IN POLICE CUSTODY
Prosecutors in Taipei brought disgraced former Taiwan President Chen Shui-bian into custody for questions relating to the ongoing corruption probe into Chen and his family.
Ever the showman, Chen hammed for the TV cameras and is making the investigation into his unpopular Presidency into a referendum on Taiwan reunification.
Meanwhile, relations continue to warm between Beijing and Taipei with news that Chinese students will be allowed to enroll in Taiwan universities.
Labels: chen shui-bian, reunification, taiwan
November 11, 2008
China Natural Gas Consumption to Triple by 2020
It is well observed that China's consumption of all energy is at all times increasing but the impact on global natural gas demand is particularly powerful.
It was revealed at the 3rd Asia-Pacific LNG International Conference this year that consumption of natural gas may rise to 210 to as much as 350 billion cubic meters in China by 2020.
Although domestic production may increase to 150 bln cm by that time (from just under 70 bln cm in '07) the amount of imports will equal close to EU consumption today.
In June the Turkmenistan-China pipeline broke ground. When complete it will provide for 30 years up to 40 bln cm of natural gas. Now where to find the other 160 billion cubic meters?
[graphic: Nouriel Roubini's RGE Monitor]
Labels: asian energy security grid, gas
November 09, 2008
Beijing Announces Massive Stimulus Plan
Acting quicker and bigger than forecasters expected, China's State Council revealed Monday morning huge economic stimulus efforts valued upwards of half a trillion (US) dollars. The central government will spend several hundred billion Yuan on infrastructure building (railways and roads) immediately to be matched by Provinces and City spending on development including housing. Markets are responding positively this morning with Chinese stocks up and commodities markets -- including oil -- getting a boost as well.
Only China and the USA have the latitude to take on central government debt to build their way out of a depression. Will China's actions be followed in the next year or two by government spending in America?
Labels: inflation, panic of 2008
November 07, 2008
Is the Taiwan Straits Crisis Over?
While most Western media sources focused on the raucous demonstrators (a staple of political life in Taipei) surrounding the historic China-Taiwan summit in the wake of the hubub is a truly astounding move forward toward inevitable reunification - expanded trade relations and a commitment for peace. As Beijing's Chen Yunlin and Chiang Ping-kung of Taipei said, it's a "win-win situation."
Included in the trade deal are cargo flights, expanded access - 21 cities with flying rights - and direct shipping across the Taiwan Straits for the first time in over 60 years.
Is the long Taiwan Straits crisis finally over?
Labels: chinese trade, reunification, taiwan
November 06, 2008
No Change in China Policy: Obama Advisor
So says Chinese radio international quoting former Clinton (and Bush) Asia specialist Jeffrey Bader who is Obama's advisor on China.
AVIC I & II In Massive Merger of Aerospace Industry
The long anticipated consolidation and reorganization of China's aerospace industries is underway with a huge merger of the AVIC I and AVIC II conglomerates. The new single AVIC will be a temporary holding company with several big entities that most likely will each be spun off as independent public companies. The new AVIC is interested in a foreign acquisition possibly a European maker of small to medium size jet planes and AVIC may issue shares. The new AVIC consists of:
Transport Aircraft Corp.
Indepenent supplier expected to compete with Airbus and Boeing for production of Chinese large jets by CACC (COMAC) - see below.
Will own non-defense AVIC assets in Xi'An, Chengdu, Shenyang
"Defense Division"
All military related assets and production centers.
Assigned defense assets in Chengdu, Shenyang, Xi'An, and the military businesses of the Hongdu Aviation Industry Group.
AVICopter
Helicopter makers in Harbin, Changhe and Jingdezhen and other locations.
Aviation Engine Industry Corp.
Containing engine makers and research centers located in Liming, Xi'An, Chengdu, Zhuzhou, and China Gas Turbine of Jiangyou, Sichuan.
General Aviation Company
Production centers at Guizhou and Shijiazhuang of medium size planes.
Aviation Systems Company
Made up of dozens of prototype factories and research institutes across China including those located in Xi'An, Shanghai, and Nanjing.
Commercial Aircraft Corp of China (CACC)
Will become largely independent and rebranded COMAC.
The company will be the Chinese brand challenger to Boeing and Airbus.
And COMAC just got its first big order - 25 Chinese made ARJ21 jets - from GE.
Watch these businesses in the near to medium future. This is big new competition from China in an industry considered a "first world" prerogative.
Labels: aerospace, aircraft, avic, globalization, jet planes, military-industrial complex
November 01, 2008
Obama's China Policy
SAN DIEGO, CALIFORNIA -- November 1, 2008
Both China and the USA are born of trade. American exports poured into China beginning in the late 1800s. By the 1900s the USA had the upper hand in trade and the balance was in America’s favor. The trade argument then was US goods versus Chinese immigration. The US and China were the two largest economies in the world and China was big and powerful enough to challenge the USA with market restrictions. There was mutual distrust and a fear of military conflict. A Californian in 1907 wrote a prediction that the "Yellow Peril" (China) would attack the USA by first bombing Pearl Harbor and then invading the California coast.
Flash forward to today and little has changed in USA-China relations despite the dislocations during what Historian Eric Hobsbawm calls the "short Twentieth Century" (1914-1991). Only there is one key difference. In the late 1900s China was the debtor nation. Now China is the USA's chief creditor although in a very significant twist American debt to China is valued in its own currency which China relies on for trade settlement.
Trade is the true focus of US-China relations. The next four years - the course of a (first?) Obama administration - are the last four years of Congressional protection for American manufacturers under the US-China Trade Relations Act. The temptation to protect US manufacturers from Chinese imports will be very strong in a Congress controlled by the Democratic Party. How would Democrat President Obama react and what do we know about Obama’s China Policy?
Strategic Competitor Still
During the primary contests Obama and other Democrat contenders talked tough on China. There is a very old tradition of bullying China on the campaign trail for political gain by both parties.
Obama joined Hillary Clinton in supporting Chuck Schumer’s anti-trade tariff penalties on Chinese imports. Obama continues to maintain that China “manipulates” its currency to its advantage.
China is “neither our enemy nor our friend. They’re competitors,” Obama has said, thus indicating he will continue W’s distrust of China and unwillingness to partner. As the USA and China are the world’s number 1 and 2 oil importers and carbon dioxide emitters this attitude is not productive for either nation’s energy security or environment.
Throughout his campaign for the Presidency Obama has bashed China. He took great displeasure with Beijing during the Tibet riots twice writing President Bush letters in support of the His Holiness the Dalai Lama and saying that a boycott of the Beijing Olympics should be “on the table.” At one point he suggested banning Chinese toys, an impractical and impossible pander to critics of Chinese imports.
It is disappointing that the only thing the Obama campaign doesn’t seem to want to change is US-China relations.
Of course, as mentioned, there is a long history of condemning China as a wannabe President and then confronting the reality upon taking office. Indications are Obama would not make any significant change in the beginning. He is advised on China by a former Clinton official and supports the one China policy and made congratulatory comments to the new Taiwan President, Ma Ying-jeou, praising the Kuomintang Party’s efforts to build peaceful relations with Beijing – the very goal of the one China policy as envisioned by Mao and Nixon (Kissinger and Zhou Enlai, actually), although Obama also supports Taiwan entry into the World Health Organization.
Every American President since the establishment of the People’s Republic in 1949 (the so-called “loss” of China) must confront the Chinese in the course of his administration. Eisenhower had the Pescadores (Taiwan Straits) crisis in his first administration and a second for his second term. Kenneday was working behind the scenes in dialogue with Red China (secret meetings in Warsaw) and planning a potential rapprochement in a second term that never came. LBJ confronted China in his first full term and led the US into the Vietnam War. Nixon famously changed the course of USA-China relations at the end of his first term and Carter normalized relations with China by the conclusion of his term as President. Reagan actively engaged China for two terms as did his successor George H.W. Bush. Clinton confronted China over Taiwan in his second term in a ridiculous show of gunboat diplomacy to satisfy the Republican Party’s fire-breathing wing. W confronted China right out of the box three months after inauguration with the spy plane showdown. But since that moment USA-China relations under W have grown very close indeed.
Despite his obvious intellect and ability, Obama is inexperienced in foreign relations. Joe Biden does fill this deficiency well. Biden has been to China and shows a real interest in understanding China. But if unemployment continues to rise and Chinese imports dominate, a President Obama could force confrontation early and with China holding a large part of the federal debt that could be problematic. A shield to a confrontation with China could be a major disagreement over a human rights issue either with the Chinese people or over a proxy state such as Sudan or Afghanistan. But when it comes to the “human rights” wedge with China, the USA now holds the thinnest end. Taking the moral high ground with China is going to be very hard to do so long as Gitmo remains open and the memory of Abu Ghraib lingers.
Nearly all economists predict a slow recovery to the global crisis in finance. By my prediction the bottom won’t hit until fourth quarter 2009 to first quarter 2010 with a return to 2007 levels in 2011. Relations with China -- always centered on trade – will be strained in this period perhaps severely. I hope President Obama will quickly abandon the status quo view of China and finally embrace direct cooperation.
(c) Copyright, Ben Calmes 2008
Obama-Biden Official Position on China
Obama: China Manipulates Currency
Just days away from the Presidential election, Obama told a group of Textile industry lobbyists that he would take "all diplomatic means" to induce China to make a series of recommended changes to the satisfaction of America's textile mill owners.
Further, he embraced mandating the "Buy America" provision in Defense related procurement. Taking this stand, however, will give China no incentive to accede to the WTO Government Procurement Agreement, long over due after seven years of WTO membership privileges. It is a form of protectionism wrapped in the flag to appear patriotic. It is a dangerous sign that an Obama administration -- like all others before it -- may open to lobbying influence in China policy.
Labels: china policy, chinese trade, free trade, lobbyists, obama
China Poll: Obama 68 McCain 32
Obama has become a pop hit in China. A poll conducted by Beijing based Horizon shows Obama leading well over McCain in popularity among Chinese.
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