The Chinese Come Calling

What a hoot. The Chinese Communists invaded Washington on Monday demanding not that we sacrifice our freedoms but rather that we balance our budget. Creditors get to make that kind of call. And the Marxists of Beijing, who have turned out to be the world's most prudent bankers, are worried about their assets invested in our banana republic.

"China has a huge amount of investment in the United States, mainly in the form of Treasury bonds. We are concerned about the security of our financial assets" was the way China's assistant finance minister put it. Briefing reporters at the U.S.-China Strategic and Economic Dialogue, he added, "We sincerely hope the U.S. fiscal deficit will be reduced, year after year." Quite sincerely, one suspects, given a U.S. budget shortfall this year that is slated to reach $1.85 trillion.

Suddenly, it was U.S. officials who were promising deep reform to their disgraced economic system rather than demanding it from incompetent foreigners. President Barack Obama's economic team of Clinton-era holdovers, who a decade ago had hectored China on the virtues of fiscal responsibility, now were falling over themselves to reassure the Chinese that their $1.5 trillion stake in U.S. government-issued securities is safe, and that they should buy more at this week's $200 billion Treasury auction. If they don't, we're in big trouble.

U.S. Treasury Secretary Timothy Geithner promised to behave, saying the U.S. is "committed to taking the necessary measures to bring our fiscal deficits down to a more sustainable level once recovery is firmly established." Now let's hope that the Chinese Communists and their natural allies among congressional deficit hawks will be able to keep him to his word.

And don't blame any of this on peacenik liberals. The new conciliatory--nay, deferential--tone toward China precedes the Obama administration, having begun in bilateral talks during the last years of the Bush administration as the U.S. economy began its ignominious downfall. It was George W. Bush's treasury secretary, Henry Paulson, who set the course when the former Goldman Sachs chairman realized how dependent were his Wall Street buddies on Chinese goodwill.

But from all of this adversity may come something good: recognition that the United States is not the repository of all wisdom. Maybe the Chinese have found a model different from ours that also works? Might there not be an Arab, Latin or Indian one that also qualifies and need not be overthrown?

The tone of this week's talks, ironically held at the Reagan Building and co-chaired by Geithner and Secretary of State Hillary Clinton, finally signaled the end of the Cold War assumption that regimes with labels like communist and capitalist could not form profitable partnerships. On the contrary, as Secretary Clinton noted, it is time to move from "a multipolar world to a multipartner world." And President Obama in opening the conference made clear that the partnership between China and the U.S. is decisive: "The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world."

Mark it as a historic Rip van Winkle moment. For those who recall the rhetoric of the Cold War, the idea that we would someday be cooperating with Chinese Communists because they had humbled us economically rather than militarily is a startling turnabout. How did they get to be better capitalists than us, and being that they are good capitalists, why are we still spending hundreds of billions a year on high-tech military weapons to counter a potential Chinese military threat when the weapons they are using are all market-driven deployments?

A recognition that our tension with China is not military in nature came at this week's conference in an announcement by Adm. Timothy Keating, commander of the U.S. Pacific Command, that agreement had been reached with his Chinese counterparts on improving relations: "A statement was made by a Chinese delegation official yesterday [Monday] that no country can develop sound policy if they try and do so in isolation. And I think that's a great way of addressing the sense that all of us feel, the desire, to get back together again and discuss exercises, discuss personnel exchanges, discuss responses to humanitarian assistance crises and the provision of disaster relief."

Not bad for a start, and maybe we can help solve our economic problems by selling our latest high-tech weapons to China as we do to the rest of the world. Or better yet, we could do some serious damage to our deficits, and our dependence on the Chinese, by sharply cutting expensive weapons programs now that the Cold War is finally over.

Comments

[nomoredead]

Do you think the government will be good little customers and tighten their belt to repay that debt quickly.?.......I doubt it.
So wait for China to start seizing and nationalizing these shiny new factories corporate america built.

They already duplicate most american products.
Steal the concept then take the factories.

[RoloTomassi]

STEAL? jeez, here in the good ole USofA we don't think of it in such terms....

A kind of justice, really, as we never thought we would be the victims of our own snake oil economic policies.

Do you think for one minute that the US government would hesitate to seize foreign property if the situation were reversed?

[greyhound2]

The Chinese insist that the US be fair to protect their assets. The Chinese themselves have engaged in currency manuplation and unfair trade practices for years. So sorry.

[mjc]

The Chinese certainly ought to be able to trust Geithner, just as the Obama administration seems to. After all Geithner represents Wall St interests, along with Larry Summers, better than any ambassador we might send to engage the Chinese in talks and save ourselves from foreclosure. The Chinese worker has perhaps a bit more of a problem with their government than we do and with those in China who have made a small fortune on building sub-standard school buildings that collapse under even a moderate earthquake. The Chinese will get their money, or maybe the special hardware they need to become the too-big-to-fail nation in the Far East...or maybe the world.

[jsarets]

China didn't beat us by being better capitalists, they beat us by being better mercantilists. They invest far more of their capital collectively and strategically, whereas we allocate most of our capital using high-speed computer trading algorithms that react to market volatility.

They exert enormous pressure on government contractors to cut costs and improve performance. Corporate executives dread their meetings with government bureaucrats. GE's Jeff Immelt has said that dealing with the Chinese government is nothing like dealing with the U.S. government. There's no good-ole-boy's club where government and business insiders pat each other on the back. They're shrewd and detail-oriented. They exert leverage and they don't have much patience for excuses.

The Chinese compete against the world. Americans compete against each other. We have no strategy for competing in a global economy. All we have is a strategy for sophisticated investors to profit from our uncompetitiveness.

[AbrahamSadegh]

"Our banana republic!"

How bad can it get?

When are we going to wake up?

I am glad Joe McCarthy isn't around to witness our follies -- Our capitalist system owing nearly 800,000,000,000 dollars to a Communist government.

[LMPE]

We spent over twenty years acting afraid of China...and now we have a reason to be. Just not the reason that we thought.

[Winning09]

That isn't what happened.

[hyjanks]

In all this I see a way for ignorant Red Staters who don't tire at calling Obama a Socialist or a Communist to now get on his side. I mean, what better way to deal with those Chinese Commies than having a president who,according to them and by his very political leanings, would instinctively know how best to deal with them economically, militarily and culturally.
Of course, in the Dixiepub's mind, there's still that very real prejudice they harbor against people of color, especially black and yellow. So, I guess we'll have to wait until they evolve into something other than racists for them to appreciate Obama's worth in international relations.
Did I say evolve, as in evolution? Yet another barrier to over come ;>).

[autobotalex]

The word "Communist" throws people off more than anything else about China, and this need not be so. The West has an idea about what "Communism" is, and whenever you think about China and Communism in the same sentence, the West is in the habit of trying to apply their understanding of "Communism" to their understanding of "China". I would like to argue that this is a mistake of paradyme, and that the exact reserve should have been the case: the West should instead try to apply their understanding of "China", with its history and culture and civilization, to their understanding of "Communism" in China. We should not forget that what's essentially Chinese--the Chinese culture and value system--has persisted and affected the Chinese civilization for far longer than the political philosophy of "Communism", which is not even Chinese in its essense at all. Rather, Communism to China is just another foreign import, made in Europe, and Chinese people did not invent nor proselytize this idea, but rather, was proselytized on this idea by certain intellectuals in Europe at the time. The key to remember is this: by the end of the day, it is the large and deep Chinese civilization that will amalgamate a foreign idea coming into China, rather than a foreign idea that's going to change China in any fundamental way. In other words, you should think that it is China that will change Communism, rather than Communism that's going to change China.

[Aaror]

Precisely!
In fact, Chinese communism has more in common with 1790 US governance than the system envisioned by Marx and put into practice by Lenin.
1. Everyone is a communist, so they are all part of the communist party.
2. Local communist party members (everyone) pick representatives. Those reps get together and appoint regional reps, who appoint national reps, who pick the leader.
Communism has just replaced Confucianism as the philosophy that everyone pays lip service to while doing what they always have done (and actually Confucianism gets more respect).

[shanghaislim]

China from the inside is even more impressive.

Good to be back on HUFFPO. (from China)

They will only began to grow more open as the years go by, until they have reached a level that provides both security for the government and freedom for the people.

[jhNY]

And when the fiscal requirements of the Chinese bond-buyers run headlong into the American electorate's wishes for a restored safety-net, who will our politicians serve?

[KillTheMessenger]

It's not even clear that there is a majority in the American electorate which has that wish. Just yesterday I heard from a guy who was genuinely happy that Obama's health care plans got delayed and who wishes nothing more than that they get derailed.

The man is in the pharmaceutical business... a trivial business case analysis will tell you that with public health care in place pharmaceutical companies would make more, not less money... and still, the ideology in this business man trumps his ability to see an earnings opportunity.

That's the reality of the American electorate for you... 47% voting for McCain/Palin. Today it might be back to 51%... we just might have caught a lucky break in the public's permanent delusion.

[RoloTomassi]

Typically, your take is based on anecdotal evidence and not-very-well hidden elitism.

Polls have shown FOR DECADES that a 60%+ majority would embrace a much stronger social safety net.

As usual, you no earthly idea of what you speak.

[menmykoko]

The newest attention to "high frequency trading" is an example of the type of mentality that has bankrupted America both financially and ethically. This notion that capitalism and instant gratification is something to aspire to will be our downfall. We no longer produce anything of substance and importance in large volumes other than militaristic products and stupid needless inventions like the "snuggie" and the "slapchop". We need to manufacture real world goods and items of intrinsic and extrinsic value. We won't matter much if our primary training and expertise is relegated to having the majority of our talent working in the service industry and in buying and reselling goods from other parts of the world--namely from the one country that we owe the most to(thanks, Walmart).

[joebaggadonuts]

And Shanghai dropped 5% yesterday in China. Get a clue. When they come to call it's to protect their position at home with their people. They went overboard with their stimulus and recognize that they need to start pointing fingers before the chickens come home to roost in Beijing.

[KillTheMessenger]

Can you spell "wishful thinking" for me, please?

:-)

[joebaggadonuts]

I think you are the only person who still reads my posts.

w-i-s-h-f-u-l t-h-i-n-k-i-n-g.

We will see, won't we? And it seems that things would be better if the Chinese don't fall into recession. At least short term.

Wishful thinking is that I could get HuffPo to update my email so I could get notice when people respond to my email.

[joebaggadonuts]

er, ...when people respond to my posts, I could get notified by email.

[Poboy]

After WWII, the US engage in a "cold war," I guess as oppose to a hot war where stuff is blown up and people die, where we spent money on weapons we will never use against a non-existant enemy, the Russians who were our allies, that we had to pay to assemble and disassemble and where we spent our "enemies" and ourselves into poorhouse.

We pannicked the nation with the "red-scare" by having our school children run drills to hide under their desks.

We engage in a witchhunt run by McCarthy to find and weed out the communists in our government and society. Many people's lives were ruined in the process.

We shifted vital resources away from human needs to play soldier and enrich the soldiers.

We divide the world into warring camps, the precursor to "with us or against us," the capitalists vs the communists, NATO vs WARSAW PACT.

Now all these communist haters have been transformed into communist lovers, after these capitalists SOLD our countries resources to the Communists Chinese.

Which begs the question:

Was communism ever really a threat?

[KillTheMessenger]

"Was communism ever really a threat?"

As someone who was born in a communist country, let me answer that for you. Yes. It was a real threat. Any ideology which is not self sufficient but wants to expand beyond the boundaries of its own realm is a threat. That, by the way, is just as valid for US style capitalism. You can ask the people in the Muslim world about that. Especially the people in Afghanistan got a quadruple whammy: USSR style Communism, followed by Capitalist sponsored religious fundamentalism of the like of the Taliban, followed by a CIA war against our former "allies" followed by a lengthy but inefficient occupation by a military sent in to make up for the sins of the past...

:-)

[KillTheMessenger]

Looks like "Communism" is winning this round. Of course, the Chinese variation has very little in common with Communism as we used to know it from the USSR. These are highly educated people with actual technical knowledge running the show and they have a billion plus people to work with. We better watch our act...

:-)