Obamas Trip to China Shows Just Who Has the Upper Hand

Posted By Travis Gearhart at 5:16 pm on November 17, 2009

china trip

“Obama’s outreach here continued the type of pragmatic bridge-building he has used in Europe and the Middle East in hopes of earning goodwill that will produce payoffs down the road.

In China, though, the challenge is of a different magnitude. The Chinese government is America’s biggest foreign creditor, with $800 billion of federal U.S. debt that gives it extraordinary power in the relationship. Its military buildup is rubbing up against America’s influence in Asia. And Beijing feels the global recession, sparked by U.S. financial industry excesses, vindicates its authoritarian leadership.”-Associated Press line.

What was troubling about President Obamas trip to China was that while many other Presidents show up and are greeted with the release of a dissident or a trade concession as a show of gratitude and a way to “break the ice”, so to speak, Obama walked away with neither. In fact, just recently, China has talked of boycotting foreign made vehicles (which in China means American) because of Americas use of trade embargo’s against Chinese pipe. Of course those at the steel mill celebrated this and were happy China wasn’t “dumping” pipe onto our shores, but how much business is actually gained if whole countries don’t buy our cars (not that I blame them in this instance)? Just another instance where free trade is shown to prevail, and another instance where our embargo’s will ultimately hurt ourselves more than China. But regardless, the point of this isn’t about free trade, but about our relations with China.

Of course I’m not strictly blaming this all on Obama. Trade protectionism has become far too common in our country, and he’s just following suite.

However, a quote from Xue Chen, a researcher on strategic affairs at the Shanghai Institute for International Studies, sums up the trip fairly well: “The U.S. has a lot to ask from China…on the other hand, the U.S. has little to offer China.” Naturally Chinese people were enthused by Obamas pragmatism, as many in America also are, and just as naturally the Chinese government censored a nationwide broadcast and censored Web transcripts of a town hall-style meeting he held with Chinese students in Shanghai.

China is yet another reason why America needs to pull it’s collective head out of it’s arse and start back down the path of economic growth. Chinese leaders aren’t stupid, and they see that they are beginning to emerge as the new super power. We send the most popular President in over a decade over to China, and what do we receive? No concessions on trade, no straight answers on anything (especially global emissions standards, kudos to China on that one), and if we were lucky a t-shirt reading “I went to China and all I got was this t-shirt and lead poisoning.” Let me reiterate my statement above: this isn’t Obamas fault, my friends. It wouldn’t have mattered if that was McCain or Palin or Huckabee or Paul or Romney or Bush or Reagan over there right now. They are holding pocket aces, and we have seven three off suite, and our hands are both showing right now. We can’t bluff it. We have to make some serious economic changes and beat them at the money game. Period.

Comments (11)

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Comment by kevintracy on November 18, 2009

Connan had a really great joke the other night:

President Obama is expected to take questions from the Chinese. The first among these that is expected is… “Why would ANYONE have TWO daughters?”

Our only leverage over China is that we’re keeping their people employed by buying most of their exports. They can’t afford to lose us as a market more than they can’t afford to continue financing our debt.

(The joke was just funny… it had nothing to do with my thoughts on the news)

Comment by Travis Gearhart on November 18, 2009

I agree, but I don’t think its so much as a leverage, and more of a “mutually insured destruction” type thing. We want cheap Chinese products just as much as their workers need us to buy them, as far as retail, but when it comes to larger things like pipe and automobiles…well, thats where it goes from “mutually insured destruction” to a staring contest.

Comment by kevintracy on November 19, 2009

The thing is that there is a lot we could do domestically to lower the price of consumer goods that will let US manufacturers play on a level playing field. We’re in a mutually assured destruction environment now, but there are obvious ways out of it that won’t kill US Consumers.

Comment by Travis Gearhart on November 19, 2009

I agree completely, Kevin, and would much prefer to buy American. But realistically, at least with this administration, those things that need to be done aren’t going to happen in the near future. We can cross our fingers and “hope” though.

Comment by briand on November 19, 2009

At one point I read that China holds $800 Billion in debt. Then I read the amazing statement that “free trade is shown to prevail”. If it were working for us we would not be in so much debt to them. It could well be argued that we do not have free trade because they block their markets to our products. Why is it that we are always the bad guy when we do the same to them? It sounds like most Republicans are simply lobbyists for China, they are never at fault. Let us have real free trade or let us have protectionism but lets not keep things the way they are now, call it free trade, and watch our nation implode. We have been begging for them to open markets since I was in diapers and it never seems to happen. They will never do it, why are we so dense on this. I suppose we should expect them to act in their own self interest, could we once think of acting in ours? It is time to try protectionism. You are right about them winning the game, just wrong about how we can turn it around.

Comment by Travis Gearhart on November 19, 2009

I disagree completely, Brian. Free trade does prevail, yes, when it is truly free trade. We haven’t allowed certain imports since damn near the beginning of this country. Sugar is a huge one, and steel has been another huge one and is mostly the one that I focus on. I work out at US Steel, and the antique machinery that is used is only used because they are not forced to innovate. And why would they innovate? Politicians have made it clear that cheaper Chinese steel won’t be allowed in. The American steel companies have a government created monopoly. I don’t blame China for being restrictive when it comes to trade with us. On the other hand, I have no problem with us manufacturing our own goods and lessening our dependence on China IF we start making it profitable to become an American business again (and I don’t see that coming on the horizon). Don’t get me wrong, as I stated, I would certainly like everything to have a “buy American” label, but realistically, unless we have some major economic reforms, thats not going to happen.

Comment by Travis Gearhart on November 19, 2009

And actually, Republicans have been the opposite of lobbyists from China recently, mostly because of the Bush administrations to limit foreign steel imports.

Comment by briand on November 20, 2009

Travis,

So if free trade works so well for us why are we $800 Billion in debt to the Chinese? Why do they get to follow a different set of rules than us? Why do we have 17% unemployment and a declining standard of living? Why has our manufacturing base been wiped out? If you look at the results you will realize that it does not work. A nation that looses its ability to produce is destined to become dependent on others. This has implications for sovereignty and security. Put your nation above party and ideology. We are Americans first.

Comment by Travis Gearhart on November 20, 2009

Were $800 billion in debt not because of free trade, but because we needed them to purchase our debt in order to pass that worthless stimulus bill. Our unemployment rate isn’t because of free trade. Trade accounts for almost 30% of private sector jobs. Our manufacturing base has been wiped out because, as I noted before, the are propped up by government dollars and have no reason to innovate. That, and the fact that because of a tax system that treats businesses like monsters, they often go overseas. We’ve haven’t lost our ability to produce, we are just becoming a different nation. More and more people are going to college after high school, and those that don’t feel “to good” to step into production and so work at McDonalds while picking up check sfrom the government. If we want to become a nation that starts producing more things on our own (which I agree, would be great), we have to realize that free trade isn’t the enemy. The way in which we handle economic problems is, combined with a new path. More people are becoming bankers, lawyers, and investment brokers, and less are going into blue collar jobs. Thats just a fact, and if we try to fandangle with that, we begin to fall into the behavioural control argument.

Comment by Travis Gearhart on November 20, 2009

As far as the lower standard of living, I disagree completely. Even among some of the poorest, many still have more than one TV, often times cable, and often times more tahn one vehicle. The problem is the difference between “surviving” and “living comfartably” have become merged so that a person can be happy being poor, not go hungry, and not have to worry. On top of that brian, you know for a fact that I’m not an ideologue and quite frankly I’m a little offended you would suggest such a thing.

Comment by briand on November 23, 2009

Cable television is hardly a measure of standard of living. I am looking at all the houses in foreclosure on my street. I am looking at all the debt that people have. I am looking at high unemployment and low GDP. Bankers, lawyers, and investment brokers do not really produce anything, they simply exploit and extract from producers. They are a part of the problem. But I completely agree that high corporate taxes drive away capital. I believe that we could very easily arive at a balance of trade if marginal changes were made. If corporate tax rates were cut by 20% and tariffs raised by 20% we could have a revenue neutral policy that could balance trade and shift production to this nation.

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Obamas Trip to China Shows Just Who Has the Upper Hand

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