U.S. turns to carrots to improve China relations
The United States is going out of its way to build a warmer economic relationship with China and the strategy seems to be paying early dividends.
In the past two weeks, China has endorsed a U.S.-backed commitment to rebalance the global economy, and impressed some European officials by backing up the pledge with specific steps it planned to take to reconfigure its own economy.
In addition, what looked like it could have been the start of a trade war when the United States imposed tariffs on Chinese tires fizzled out with minimal drama.
French Finance Minister Christine Lagarde said China had delivered a surprisingly forthright speech at an International Monetary Fund meeting in Istanbul this past week.
“What really hit me was the change of speech, and I suppose of economic policy of China,” she said, adding that China had spelled out policy goals on improving social security, pensions, infrastructure and other areas that “correspond to calls to rectify imbalances.”
Some officials and private analysts credit a change in tone out of Washington for helping build credibility in Beijing.
U.S. Treasury Secretary Timothy Geithner held a series of phone conversations with Chinese finance officials within weeks of taking office in late January, and visited Beijing in June.
He has fought for greater representation for China on the international economic stage, even though it put him in direct conflict with some European allies who saw it as a threat to their own global influence.
Last week, President Barack Obama broke with tradition when he declined to meet with the Dalai Lama who was visiting Washington, opting instead to delay the meeting until after his official trip to China in mid-November banks issue payday loans.
And at bilateral talks in Washington in July, the United States downplayed the touchiest issues including human rights violations and whether China’s yuan currency is undervalued. Obama sought common ground over a non-controversial topic — basketball. He referenced Chinese star Yao Ming and presented the Chinese delegation with a signed basketball.
ECONOMIC REALITIES
The strategy is aimed at showing that the United States is not simply trying to impose its will on China. Both sides have something to gain — and lose — from the relationship.
For the United States, China remains a critically important buyer of U.S. government debt, holding some $800 billion as of July, according to Treasury Department data.
For China, which relies on exports to generate jobs for the millions of workers migrating to urban areas, the United States is still the most reliable customer, although the recession has clearly put a dent in demand.
The U.S. trade deficit with China stood at $143.7 billion for the year through August, government data shows. While that still makes China easily the largest single contributor to the trade gap, it is down 15 percent from the $169.2 billion recorded in the same period a year ago.
Filed under: technology by Wolf