Does America Have a China Policy?

Does America Have a China Policy?
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President Obama's visit to China has underscored the dramatically unbalanced nature of the Sino-American relationship. No, not the oft-lamented imbalance in trade between the two countries, but a strategic imbalance. Put simply, China has a U.S. strategy, but it's not clear that the U.S. has a China strategy.

The Chinese know what they want, and for the most part, they are getting it. Foreign policy mavens take note: this is what 21-century realpolitik looks like.

China wants the United States to keep its markets open. "I stressed to President Obama that under the current circumstances, our two countries need to oppose all kinds of trade protectionism even more strongly," Chinese President Hu Jintao said yesterday in a joint news conference in Beijing's Great Hall of the People. Though he was too polite to say so, he had in mind U.S. tariffs on Chinese steel and tires.

While President Obama swore fealty to free trade, he also called for "balanced growth," which is diplo-speak for U.S. efforts to get China to spur domestic consumption and rely less on exports. The president also declared that the world cannot count on overleveraged U.S. consumers to be a perpetual engine of global growth.

Change in Trade Relationship Unlikely

That's right in concept. But the U.S. trade deficit with China -- even in the midst of recession and financial crisis -- is expected to be $200 billion this year, about the same as last year. And U.S. injunctions to pump up domestic demand are no more likely to work with China than they did two decades ago with another export juggernaut, Japan. Beijing not surprisingly seems intent on sticking with the economic strategy that has produced annual growth rates of 10 percent - even as the U.S. wallows in 10 percent unemployment.

Worried about the value of the huge hoard of dollar assets they are sitting on, the Chinese admonished U.S. officials to keep the dollar's value from sliding further. President Obama, determined to accentuate the positive, praised China's previous pledges to "move toward a more market-oriented exchange rate over time." But pegging the renminbi to the dollar is integral to China's quasi-mercantile strategy. We should expect no more than cosmetic adjustments that will have scant effect on exchange rates and, therefore, will not give a major boost to U.S. exports to China.

So all and all the president's visit was satisfactory from China's point of view. Beijing got assurances that the administration would not shut out Chinese imports, or let the dollar get much weaker. It had to endure only mild U.S. nudges on boosting domestic consumption and letting its currency appreciate.

The Limits of Cooperation

For his part, President Obama stressed the need for Beijing to work with the U.S. to get North Korea and Iran to forswear nuclear weapons, and to reduce greenhouse gas emissions. China pays lip service to nuclear non-proliferation, but it has steadfastly declined to use its economic leverage to bring serious pressure to bear on North Korea. It also has blocked stiffer U.N. sanctions against Iran, even while upping its trade with Tehran. And China is adamant that it won't sign a global warming pact with binding targets next month in Copenhagen.

The president seems not to have said much about democracy, which begs the question of whether the White House believes the absence of accountable governance in China in any way inhibits a close partnership with the U.S. Obama, however, did win Beijing's acquiescence in a human rights dialogue set to start next year.

In sum, Beijing displayed a hard-boiled realism about hewing to an economic nationalism that has catapulted China from the Third World to the first tier of nations in just 30 years, but at a growing cost to global growth and financial stability. It also gained recognition as a key stakeholder in the world's steering committee of great powers, without having to sacrifice anything of importance to the common cause of stemming the spread of nuclear weapons or slowing climate change.

What the U.S. got was the atmospherics of a cordial and cooperative Sino-American relationship, and little else.

President Obama is right, of course, that a U.S.-China collision is neither inevitable nor desirable. He may also be right that that none of the world's toughest challenges can be met without Sino-American cooperation.

It is time, however, for frank acknowledgement of the limits of cooperation. We need to be clear about where U.S. and Chinese interests diverge, and about what, above all else, American really wants from China. Once the administration can answer that question, it will be able to pursue U.S. strategic interests with as much focus and determination as Beijing brings to the bargaining table.

Marshall is the president of the Progressive Policy Institute. This item is cross-posted at

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