No one is electing me President of the United States anytime soon, but that doesn’t stop me from talking about what message I’d have sent to the Chinese if I had been in President Obama’s shoes on his trip to China this month. As an American businessman who maintains offices in China and the U.S., and who works closely with Chinese businesses going public on U.S. stock market exchanges, I have a point of view on the challenges and opportunities that can be met by greater cooperation and understanding between our nations.
Clean energy, human rights, global economic recovery, and nuclear non-proliferation were the major topics of discussion between U.S. President Barack Obama and Chinese President Hu Jintao. U.S. media coverage of Obama’s trip has been somewhat negative, chiding Obama for failing to gain major concessions on human rights, Iran’s nuclear program and climate change. The US media, and our population at large, still believe that we are the global leader and that our government should have the ability to act with strength. Unfortunately, that time has passed and the best we can do now is act as a partner. I have often said to people, going down the scale in life is never easy – whether it be in a job, pay-rate, or as a global leader. I don’t blame Obama for this; I blame the previous two administrations for not taking action. On the other hand, the Chinese media, by and large, have issued positive feedback on the visit and are heartened that Obama administration’s has made it clear that the two nations have much in common, and while different in many areas, are not destined to be adversaries. They are seeking cooperation and a partner – especially since they keep us afloat.
The key for Obama is to focus on key issues - deal with the escalation in trade and currency disputes as these are the biggest issue facing our countries. These disputes are the most important to our partner and if we can resolve these, we can then make progress on the rest. The passage of a new bi-partisan anti-China currency bill planned by both Republican and Democrats could result in the Chinese no longer showing up at our Treasury auctions. China holds a large amount of U.S. government securities. Of China's $2.27 trillion in official reserves, it is estimated that about two-thirds is held in U.S. dollar assets. With U.S. unemployment at a new high, Obama faces political pressure to pass this bill. With the economy still in a tailspin, the U.S. is dependent on China to finance a big chuck of its budget deficit.
We can no longer act freely here – our budget situation limits what we can do. China’s president has continued to keep the value of the yuan currency low which diminishes the competitiveness of U.S. businesses and imports. However, President Obama must see the consequences that the passage of punitive tariff legislation pressuring the Chinese to float its currency will have. As our U.S. jobless rate hit a record high of 10.2 percent in October, China presents an easy scapegoat as the source of the problem. Chinese trade partners now face more charges of protectionism which is detrimental to our bilateral relations and global economic recovery. Rather than blaming other nations for our unemployment – when we only have ourselves to blame, the United States should be creating jobs that expand on our exports to other nations including China.
America and China represent two economies that have become so intertwined that neither can extricate itself without considerable harm. We must act as a partner, we must take responsibility for where we are today and only once we do that will we find the way to a more prosperous future.