Green Room

US-China Relationship to be Based on Realism?

posted at 10:56 am on July 27, 2009 by

President Obama says the U.S.-China relationship will mold the 21st century.

Obama said that links between Beijing and Washington are “as important as any bilateral relationship in the world,” declaring that the two countries must base their partnership on realism.

And not to be left on the sidelines, Hillary Clinton and Tim Geithner want China to work with the United States to spur the American economy and create American jobs….among other things.

China is our most important partner in the 21st Century, according to the Obama Administration.

More empty words from the Administration?

How do the Chinese see it?  What is their reality?

Are we asking China again to bail us out?  Why?  What’s in it for China?

And realism?  The reality of it all is that China may not need us as much as we need China.

Mull that over for a moment.

China already owns a huge portion of our debt.  Are our promises of repayment with interest based on reality?  Should they buy more?  And why should they?

Trying to get China to put the yuan on par with the dollar or at least pegged to the dollar hasn’t worked out so well.

China is no longer Mao’s China.  it is not just another Third World nation with a huge army and nukes.

China today is a far cry from the China of “Sand Pebbles” and missionaries and exploitative imperialists.  Well past a traditional society to be exploited.

It is a far cry from Mao’s China…the transitional revolutionary era…relying on heavy industry,  iron, steel, in order to grow from an agrarian society to an industrial society.

The 1980-90′s saw China’s taking off…making a true economic leap forward and hitting the global economy firing on all cylinders, driving into the future, speed limit be damned.

China today is driving to maturity, and well into domestic high mass consumption.

China is a modern state.  China has an identifiable and very large and rapidly growing middle class.  And the Chinese middle class has wants, where at one time they only had needs.  Their middle class is as large as our entire population.

The days of China spending enormous amounts to copy Western technology have long since passed. They can now independently develop what they need.  Copy-cat capitalism is long since passed.

So, what exactly do they need to buy from the United States to make their lives better or satisfy their domestic consumerism?  And what will they demand from us in order to get that declining portion?

The reality of it all is that China produces what we need…and just about all of what we want.

If one is looking at realities, as the Obama Administration claims, why would China incur added costs for these wonderful modern consumer items by buying them from the United States?  They can produce what they want and need at home, and don’t have to pay the shipping charges…or American union-scale wages.  And China is less dependent on our shopping at Wal-Mart than ever before.

The top-level US-China talks are to cover a range of issues, but the economy is at the top of the list.

Before this Administration gets all hopey and changey and has tingles running up and down their legs, perhaps they really need to ask that really dumb question, “What can China get from us that they don’t already produce at home?”

The only economic spur the Chinese are interested in is at home…and the only job creation they are concerned about is at home.

If I were a Chinese leader I’d be looking to making China self-sufficient across the board, like the United States was back in the 1950′s and 1960′s…and grow from there.  if I were a Chinese leader, I’d be worried about the United States being able to pay me back.  And if I were a Chinese leader, I’d be playing hardball.  They not only have us over a barrel…they built the barrel…and we bought it from them.

That is a reality that the Obama Administration hopes changes.

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FINALLY! A little common sense on China.

China is most likely in the process of an exit strategy from dependence on the dollar. The biggest problem we have is that we do not control our money supply. China can today sign long term contracts in dollars and feed a steady stream of those dollars into the market place over the next 10-20 years. In this case commodity prices in dollars must rise.

Theworldisnotenough on July 27, 2009 at 11:33 AM

Good post.

Unfortunately, I don’t have any confidence that anyone in the Obama adm. has a clue of how to work with China.

Upstater85 on July 27, 2009 at 2:07 PM

Aaargh.

I wrote a reply. I didn’t see it. WordPress insisted it had been posted and wouldn’t let me re-post it. And now, it’s gone.

My main point is asking whether China has bootstrapped to the point where their middle class and their “wants” can pull the rest of the country along. If so, then the only reason for ‘em to buy debt is to use it to get what they want through non-economic means.

Economically, China is playing the long game.

Mew

acat on July 27, 2009 at 7:31 PM

When I gets to China, fust thang I does is check into my Western hotel soz I can be sher to get me some o’ my faverit’ Western foods ‘stead of eatin’ noodles wit’ sticks. Then I heads for the Carrefour ta git the Chocolate Chips Ahoys to keep in my room for da munchies.

The reality of it all is that China produces what we need…and just about all of what we want.

China knows how to cater the party. You can get anything you need and or want while in China – don’t be shocked that it is all made in China too. It’s like a Star Trek episode where everything you know is there, but it isn’t truly everything you know.

ericdijon on July 27, 2009 at 8:46 PM

In this case commodity prices in dollars must rise.

Theworldisnotenough on July 27, 2009 at 11:33 AM

You’re kidding – right?

ericdijon on July 27, 2009 at 8:47 PM

China holds nearly $800 billion in US debt…about 45% of the total foreign-owned debt.

That’s a lot of leverage if applied at the right time and place to the right commodities. Oil? Gold? Cobalt? Tungsten? Nickel? Just about anything we need strategically that is not totally produced, mined, extracted or readily available in the United States can be cornered by China with a phone call or handshake.

China’s “need” for oil last year before the Olympics as they rushed to complete construction of venues and other civic projects did what to us? Seem to remember +$4.00 a gallon gas…and a lot of panic in the market…and some guy from Chicago getting elected in large part because of it.

Even as recently as a decade ago, China was still playing copy-cat capitalism and stealing processes and patents was the norm. Not anymore. They are the 21st Century Nation in the world.

Us? Not there yet…and at the rate we are going, perhaps not for a while yet, either.

coldwarrior on July 27, 2009 at 9:05 PM

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Ed Morrissey on July 28, 2009 at 1:43 AM