The Great Debate

The United States and China have been searching for a new way to frame their relationship.  President Barack Obama’s trip this week to Southeast Asia, the focus of much U.S-Chinese tension, reminds us that with new leadership now set in both countries, it is time for them to carry on with that important task.

The new head of China’s Communist Party Xi Jinping called for a “new type of great power relationship” when he visited Washington last spring. Secretary of State Hillary Clinton has said that Washington and Beijing “are trying to do something that is historically unprecedented, to write a new answer to the age-old question of what happens when an established power and a rising power meet.”

Obama’s China policy has been successful in securing U.S. interests. What’s missing, however, is the two nations’ shared understanding of how they can co-exist in peace decades into the future.

Instead, many Americans envision a stronger, more aggressive China that Washington may need to confront. Many Chinese, meanwhile, fear a United States that will seek to preserve its waning power by lashing out.

As China grows stronger, uncertainty about what will come next in the bilateral relationship may only increase.

In every U.S. presidential election, the major party candidates vie to see who can appear tougher on China. Once the election is over, however, the substance of U.S. policy toward China usually changes little and is far more pragmatic than the campaign rhetoric. There are ominous signs, though, that things could be different this time.

The accusations have been among the most caustic ever. Republican presidential nominee Mitt Romney has denounced the Obama administration for being “a near-supplicant to Beijing” on trade matters, human rights and security issues. An Obama ad accuses Romney of shipping U.S. jobs to China through his activities at the Bain Capital financier group, and Democrats charge that Romney as president would not protect U.S. firms from China’s depredations.

In large measure these jabs resemble a quadrennial political ritual. Ronald Reagan repeatedly criticized President Jimmy Carter for establishing diplomatic relations with Beijing. Bill Clinton excoriated the “butchers of Beijing” in the 1992 campaign and promised to stand up to the Chinese government on both trade and human rights issues. Candidate Barack Obama labeled President George W. Bush “a patsy” in dealing with China and promised to go “to the mat” over Beijing’s “unfair” trade practices.

By Ron Kirk, U.S. Trade Representative Ron Kirk. The opinions expressed are his own.

Right now in Geneva, Switzerland, a test is underway.  It is a test of the willingness of World Trade Organization (WTO) members to move the decade-long Doha Development Round negotiations into the “end game” – as President Obama and other G20 Leaders have directed negotiators to do this year.  The window of opportunity for the talks to avoid decline into futility is a narrow one.  The United States will leave no stone unturned in its quest for an ambitious and balanced outcome.  But key negotiating partners must share this motivation.

The world has changed since the Doha negotiations began in 2001.  To succeed today, WTO trade talks must address the world as it is and as it will be in the coming decades.  The remarkable growth of emerging economies like China, India, and Brazil must be reflected in a final Doha outcome.

- Wei Gu is a Reuters columnist. The opinions expressed are her own. -

The U.S.-China tire dispute threatens to spill into other sectors and squeeze Chinese exporters’ already razor-thin margins further. It might seem mind-boggling to many that Chinese manufacturers are still hanging on to weak overseas markets even though the domestic economy looks much healthier and surely offers more potential.

But there are structural reasons why the grass is greener outside China. The risk of not getting paid, or getting paid late, is significantly lower when dealing with foreign buyers. The cost of international shipping has dropped so much that it can be cheaper to send goods over the Pacific Ocean than across the country.

In addition, selling to large buyers such as Wal-Mart creates volumes large enough to compensate for weak margins. Moreover, Chinese exporters get all sorts of export rebates and local government incentives which help to lower their costs.