U.S. and China

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anonymous user
Registered: 12-31-1969
U.S. and China
Thu, 09-16-2010 - 9:20pm

I'm not sure if this is something you'd like to discuss, but I'll throw it out there :)

What is causing tension between U.S. and China?
A snapshot of some of the issues surrounding the bumpy relationship between the U.S. and china

Andrew Quinn, Washington, Reuters, Sep. 16, 2010

U.S. Treasury Secretary Timothy Geithner sharpened his criticism of China’s exchange rates on Thursday at a congressional hearing on Beijing’s currency policy, one of a lengthening list of issues sparking tension between the two countries.

Below are some questions and answers about the U.S.-China relationship, which is growing more fractious as the two huge powers jostle for political and economic influence around the world.


U.S. President Barack Obama has said the U.S-China relationship will shape the 21st Century, and on nearly every front that is already happening.

Trade between the two countries is flourishing, cross-border investment is increasingly a two-way street and Washington and Beijing are taking halting steps toward diplomatic cooperation on issues such as Iran’s nuclear program and the stand-off with North Korea.

The two have squared off over the future of the Internet, the military balance in East Asia, human rights and climate change.

The breadth of the relationship has led some commentators to predict that China and the United States will ultimately become a “Group of 2,” setting the global agenda and sidelining the Group of 20 which includes a broad range of developed and developing countries.

Neither the United States nor China has embraced this idea, a notion which alarmed some of their traditional allies.

But it is clear that their uneasy partnership will continue to deepen and grow more complicated as the leaders of the world’s largest economy and the world’s fastest growing economy seek to figure out the road ahead.


Many U.S. lawmakers have charged that China has engineered its economic rise in part by keeping its currency, the yuan, artificially low against the U.S. dollar - an accusation that Beijing rejects.

But the U.S. trade deficit with China is projected to approach $250-billion (U.S.) this year, and U.S. manufacturers say the yuan needs to appreciate by as much as 25 per cent to 40 per cent to level the playing field.

Political debate over the currency issue has complicated Mr. Obama’s efforts to smooth relations with Beijing. While the White House has urged China to take steps to allow the yuan to move more freely, it has stopped short of officially labeling China a currency manipulator, a designation which could lead to possible trade sanctions.

With U.S. voters already frustrated by the struggling economy and stubbornly high unemployment rate near 10 per cent, the China currency issue has heated up as Mr. Obama’s fellow Democrats brace for possibly large losses in the Nov. 2 congressional elections.

The hearings this week at the House Ways and Means, and Senate Banking committees, could result in calls for tough new legislation to punish China. But many analysts say this is a risky approach, which could backfire if China retaliates against U.S. exporters seeking to expand in the world’s most populous country.

The U.S. dollar itself is also a hostage to the debate. China’s huge $2.45-trillion pile of foreign exchange reserves are almost two-thirds in U.S. dollars, giving Beijing a powerful lever over the dollar’s value should it decide to make significant changes.


Officials in both Washington and Beijing have tried hard to isolate the currency issue, and vowed it would not harm cooperation on other fronts.

There have been some signs that this is working. The United States lobbied successfully for China to back new UN sanctions against Iran over its nuclear program, overcoming Beijing’s usual reluctance to support punitive measures against one of its key oil suppliers.

China has also cooperated to some degree on North Korea, although progress here has been slower.

Beijing - the only major ally of Pyongyang’s isolated communist government - has urged North Korea to abandon its nuclear weapons and supported U.N. sanctions over North Korea’s atomic violations.

Beijing has also hosted six-party talks with North and South Korea, the United States, Japan and Russia in a bid to resolve the impasse. Those talks stalled in 2009, however, and the issue was further complicated in March when a South Korean naval ship was sunk in what both Seoul and Washington say was a North Korean attack.

Despite heavy U.S. pressure, China stopped short of blaming North Korea for the incident and it is unclear whether the talks can resume soon, as Beijing hopes.

China and the United States are also divided over proposals to fight global climate change - another Obama priority - with Beijing saying the developed world should take the lead in cutting carbon emissions.


As its economy boomed, China has also significantly increased its military expenditure - raising fears of new frictions with the United States particularly over Taiwan and the South China Sea.

Already boasting the largest army in the world, China has also invested in modernizing its navy and combat aircraft to project its power, especially in the Pacific where U.S. forces have long held sway.

Chinese officials point out that their defense spending is still far lower than that of the United States, and that it is not seeking confrontation.

But there have already been rifts. China froze military contacts with the United States after the Obama administration in January unveiled a potential $6.4-billion arms package for Taiwan, which Beijing regards as a renegade province.

While U.S. officials hope this period will soon be over, Taiwan remains a potential flashpoint.

China has also protested joint U.S.-South Korean naval drills after the sinking of the South Korean navy ship and has accused Washington of meddling in the South China Sea, where Beijing is involved in territorial disputes with Southeast Asian nations over an area rich in energy and key to shipping.


Disputes over human rights once dominated the U.S.-China relationship, but appear to be receding as a public issue.

U.S. officials say they still press China to respect the basic political and religious freedoms of all of its citizens, improve its legal system and end repression of unrest in border areas Tibet and Xinjiang.

While Mr. Obama in February met Tibet’s exiled spiritual leader, the Dalai Lama, earning sharp Chinese criticism, rights groups say his administration has been less vocal than its predecessors in pushing for political change.

But the human rights issue flared on a new front this year: the Internet. China’s Internet controls thrust it into a dispute with search engine giant Google, and Secretary of State Hillary Clinton led U.S. criticism of Beijing’s censorship policies, which she said were part of a “new information curtain descending across much of the world.”

Analysts say the Internet row - pitting a U.S. vision of unfettered access against China’s more controlled approach - is a sign of the deep political and cultural differences which continue to divide Beijing and Washington, and which repeatedly lead the two giants to misunderstand each other.


iVillage Member
Registered: 09-01-2010
In reply to:
Thu, 09-16-2010 - 10:57pm

My gut reaction would be that the US needs to impose some type of trade sanctions and demand that China's currency come in line with ours. According to Robert Reich, however, China isn't the problem. Our problem is that our middle class is weak and over-leveraged. Income inequality is a problem that won't be solved by a trade war (of sorts) with China:


Thursday, Sep 16, 2010 18:54 ET

Why getting tough with China won't solve our jobs problem

America isn't suffering high unemployment because we're buying too much from China and not selling them enough

By Robert Reich

With unemployment in the stratosphere and the midterm elections weeks away, politicians naturally want to show voters they’re committed to getting jobs back.

So now they’re getting tough on China.

But it’s a dangerous ploy based on wishful thinking.

Treasury Secretary Tim Geithner told the Senate Banking Committee Thursday the Administration is "examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly." Translated: We’re on the verge of threatening them with trade sanctions.

Even this didn’t satisfy the senators. Charles Schumer (D-New York) charged that trade with China "diminishes America, our standard of living here in America, and America as a world power." Richard Shelby (R-Ala) demanded to know why "the administration protecting China by refusing to designate it as a currency manipulator" -- a designation that could lead to trade sanctions.

On Wednesday the U.S. filed a pair of complaints against China with the World Trade Organization, alleging China was unfairly denying American companies access to its market. Meanwhile, several Democrats facing elections in November are introducing measures that would allow companies to pursue sanctions against China for manipulating its currency.

It’s true China has kept the value of its currency artificially low relative to the dollar. If China allowed its currency to rise, Chinese exports would become more expensive to us and our exports would be relatively cheaper to them. This would help shrink the trade imbalance.

It’s also true China has dragged its feet. In June, the U.S. stopped short of branding China a currency manipulator after China promised to reform its ways. But since then China’s currency has risen just 1 percent relative to the dollar.

* Continue reading

America’s trade imbalance with China is growing. In the first half of this year, China exported $119 billion more goods and services to us than we did to them – putting the two nations on course to exceed last year’s $227 billion trade gap.

But it’s naive to assume all we have to do to get Chinese to do what we want is to threaten them with tariffs.

First, they might retaliate. Remember, China is the biggest foreign investor in U.S. Treasury securities, with holdings of more than $843 billion. If China were to start selling off large amounts, America’s borrowing costs would soar – and we’d end up worse off.

Second, it’s already costly to China to keep its currency artificially low – requiring that China buy loads of dollars. So why would anyone suppose that making it more expensive for them would bring China around?

China has been willing to bear this huge cost because its export policy doubles as a social policy, designed to maintain order.

Each year, tens of millions of poor Chinese stream into China’s 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 jobs than allow its currency to rise substantially and thereby risk job shortages at home.

Third, even if China did allow its currency to rise against the dollar, there’s no reason to think this would automatically generate lots more American jobs.

American exports would become cheaper to Chinese consumers. But Japan, Germany, and other major exporters would also demand a piece of the action. Unemployment is high in all developed nations, and every government is under pressure to create more jobs.

Meanwhile, Chinese manufacturers – whose goods would suddenly become more expensive to American consumers – could simply shift their production to other nations with lower currencies. Indeed, as Chinese wages have begun to rise, Chinese manufacturers have already started to shift production to Vietnam, Indonesia, and other low-wage outposts of Southeast Asia.

What worries me most about all this tough talk about China is it diverts attention from the real problem. America isn’t suffering high unemployment because we’re buying too much from China and not selling them enough. Trade with China is a small portion of the U.S. economy.

Twenty million Americans lack jobs because American consumers – especially America’s vast middle class – can no longer spend what’s necessary to keep nearly everyone employed.

After three decades of stagnant middle-class wages, during which almost all the economic gains have gone to the top, we’ve finally reached a day of reckoning. The middle class can no longer borrow vast sums by using their homes as ATMs. They can’t squeeze more working hours out of two wage earners. And they have to start saving for retirement.

The central challenge we face isn’t to rebalance trade with China. It’s to rebalance the American economy so its benefits are more widely shared.

* Robert Reich, a professor of public policy at the University of California at Berkeley, was secretary of labor during the Clinton administration. He is also a blogger and the author of "Supercapitalism: The Transformation of Business, Democracy, and Everyday Life." More Robert Reich>>>

iVillage Member
Registered: 02-28-2010
In reply to:
Thu, 09-16-2010 - 11:08pm
Wouldn't it be great if we could have a "do over" with regards to the Iraq war and the Bush years???
iVillage Member
Registered: 09-01-2010
In reply to:
Thu, 09-16-2010 - 11:47pm
Yes, I know somebody who I wish was undead. Plus, just think of the money we wouldn't have spent there. Too bad do-overs aren't allowed in the areas of really serious stuff like wars.
iVillage Member
Registered: 07-15-2010
In reply to:
Fri, 09-17-2010 - 12:06pm

And here I thought you almost had me agreeing with you.

Yes, it would be an awesome thing to have "do-over" regarding the Iraq war.

>>Luck is what you call it when preparation meets opportunity<<
iVillage Member
Registered: 01-25-2010
In reply to:
Sat, 09-18-2010 - 12:52am
i myself want China Yuan to go back to 12 to 1 I like that a lot!
Buying dinner for 8 is so cheap! The currency is nothing more than a red herring by politician looking for a scapegoat. China is a sovereign Nation and can do what it likes.
Good food, great beer,now to import the super bikes!
What is holding America back is the socio-economic stupidity and hidden bigotry. We hate welfare but don't want Abortions on demand.
Economic reason the corps and politicians love a captive audience/wage slaves.
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