April 12, 2010

IT'S NOT ENOUGH TO RECOGNIZE THAT THE DRAGON HAS NO TEETH...:

China's Reign Ends Tomorrow: As Chinese President Hu Jintao travels to Washington for Obama's Nuclear Security Summit, Gordon G. Chang on why the visit proves the superpower is more bluster than bite. (Gordon G. Chang, 4/12/10, Daily Beast)

Why did he finally decide to come? The most likely explanation is that he saw pressure building in Washington to cite China as a currency manipulator in the Treasury Department’s report due April 15. Beijing’s renminbi is deliberately undervalued to make China’ exports competitive, and this has cost American jobs. Hu knew the Obama administration would not name China if he accepted the invitation to the nuclear summit, scheduled to conclude just two days before Treasury Secretary Timothy Geithner was to issue his list of currency bandits.

At about the same time Hu announced he would show up, Beijing reversed another long-held position and said China would participate in American-led discussions to sanction Iran. China watchers rejoice that Beijing and Washington have patched up relations this month, but the big story is that the Chinese acceded to American pressure.

Although most Americans believe China is the world’s new superpower, the Chinese leadership realizes that’s not the case. Beijing’s top officials also understand that, despite what most people think, China remains especially dependent on the United States.

Last year, for instance, every analyst had predicted that Chinese exporters, concerned about the ailing U.S. economy, would diversify away from the American market. They were dead wrong. In 2009, when China’s total exports fell an astounding 16 percent, exports to our shores dropped just 12.5 percent. Moreover, China’s trade surplus against the U.S.—$226.8 billion—was 115.7 percent of its overall trade surplus. That’s up from an already stunning 90 percent in 2008. In short, the Chinese ran a trade deficit with the rest of the world to build up a surplus against us.

China’s increasing reliance on the American market means that Beijing will not stop buying Washington’s debt anytime soon.


...we need to slay it.

Posted by Orrin Judd at April 12, 2010 7:24 PM
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