Sinomania!

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