Sun, Feb 15, 2009 - Page 8 News List

China uneasy with new US regime

By Sushil Seth

Last month when some former US political heavyweights attended a two-day conference in Beijing to celebrate the 30th anniversary of the normalization of relations between the US and China on Jan. 1, 1979, it was more like an exercise in nostalgia.

Jimmy Carter, who was the US president at the time, said: “There is no more important diplomatic relationship in the world than the one that has grown between the People’s Republic of China and the United States of America.”

On the Chinese side, former vice premier Qian Qichen (錢其琛) talked of how over “the past three decades, thanks to our joint efforts, the ship of China-US relations has moved forward, braving winds and waves.”

It is not unusual to talk hyperbole on such occasions. But it is painful to note that for much of the George W. Bush presidency, there was an attempt to gloss over the developing problems in China-US relations.

The paramount consideration was not to ruffle the Chinese feathers lest they become difficult on some of the issues confronting the US, such as the wars in Iraq and Afghanistan, North Korean nuclear aspirations, the Iran nuclear issue and the generic question of terrorism.

Therefore, when Taipei sought to promote Taiwan’s sovereignty, the reaction from Bush and his administration was quite testy and sharp. They didn’t want any spat with the Chinese at a time when the US was over-stretched in the Middle East.

And it suited Beijing, which used the ensuing power vacuum to expand its political influence and global reach, including lining up oil and other needed resources for its economic growth.

Within Taiwan, it strengthened the position of the Chinese Nationalist Party (KMT), leading it to win handsome rewards both in the legislative and presidential elections that followed.

The US frowned on former president Chen Shui-bian’s (陳水扁) “provocative” policy toward China.When Ma Ying-jeou (馬英九) won the presidential election, he donned, among other things, the role of a peacenik when it came to China.

In the larger scheme of US-China relations, Washington’s obsession with cultivating China by ignoring other issues has simply postponed a much-needed assessment of overall US interests.

For instance, Bush’s treasury secretary went out of his way to hose down any criticism of China’s trade policies, particularly the charge that it was manipulating its currency to increase exports to the US.

China’s undervalued currency adversely affected the US in two ways. First, it damaged the US manufacturing industry, as it couldn’t compete with cheap Chinese products. Second, the resulting trade imbalance has enabled China to accumulate vast amounts of dollar reserves.

Beijing has invested a substantial part of those reserves to buy US treasury notes and other assets. This has given it a potential role in influencing US policies by being its major creditor and a lender at a time when Washington needs dollops of money to fund its stimulus packages.

The administration of US President Barack Obama will need to grapple with this issue. Timothy Geithner, for instance, touched on it during his Senate confirmation hearings for treasury secretary. He reportedly told the senators that Obama believed that China was “manipulating” its currency for unfair advantage.

The response from the Chinese ministry of commerce was sharp, saying: “Directing unsubstantiated criticism at China on the exchange-rate issue will only help US protectionism and will not help towards a real solution to the issue.”

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