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Trade, Currency Tensions Mask Growing Convergence
By Tim Shorrock
WASHINGTON, Sep 29 - The furore in Washington over the rapid expansion of Chinese exports and allegations that China's yuan is undervalued masks a growing convergence between the United States and China in diplomatic affairs, scholars and Asian experts say. Earlier in September, two Washington interest groups usually at polar opposites on political issues - the National Association of Manufacturers (NAM) and the American Federation of Labor-Congress of Industrial Organisations (AFL-CIO) - tentatively agreed to join forces on a complaint that China has manipulated its currency to gain an unfair advantage in its trade with the United States. Their action is likely to be joined by large multinational corporations as well as agribusiness groups. It follows complaints from Congress and high-level officials in the Bush administration that China should revalue its yuan to slow its exports to the United States, which rose 22 percent in 2002 to create a bilateral trade deficit of 120 billion U.S. dollars. NAM estimates the yuan is overvalued by 40 percent, a figure that has been seized upon by many members of Congress and is likely to become an election issue next fall. But those trade and currency issues threaten to derail U.S.-China relations at a time when U.S. and Chinese diplomatic relations are closer than at any time since President Richard Nixon first visited Beijing in 1972. The most obvious sign is the recent diplomatic conference in Beijing to settle the dispute between the United States and North Korea over Pyongyang's nuclear weapons programme. According to Ezra Vogel, a long-time expert on East Asia, the convergence between the United States and China is best observed on the campus of Harvard University, the United States' best-known institute of higher education. There, hundreds of Chinese, including mid-career government officials and officers from the People's Liberation Army, are studying medicine, public health, urban planning, comparative democracy, journalism, business, public administration and other subjects once considered controversial in the communist nation. "They are full of questions about everything, and drink up ideas like sponges," Vogel told a Washington seminar on China organised by the Sasakawa Peace Foundation USA. "We are witnessing (in China) the largest-scale intellectual renaissance in the world today." Vogel retired from Harvard in 2000 and is now a professor emeritus at the university. Even members of the Chinese Communist Party School, which Vogel compared to the U.S. Army War College, must take courses abroad before they begin their work, he said. Some of them attend classes at Harvard's Fairbank Centre, where Vogel once served as director, as well as the school of marketing and Harvard Law School. The Dalai Lama met with them during his September visit to the United States, Vogel said. The intellectual curiosity does not diminish the fact that China remains an authoritarian state where freedom of speech is suppressed and the government's propaganda bureau censors books - even popular U.S. works like Sen Hillary Clinton's recently published biography. And "of course there's deadwood in China" and systematic corruption, said Vogel. But at the same time, bookstores are filled with foreign works previously considered unfit for Chinese eyes and publications and intellectuals frankly discuss the problems of corruption. Yet amidst these changes, U.S. popular opinion is rapidly swinging against China. Five years ago, after the North American Free Trade Agreement went into effect, many U.S. industrial workers lost their jobs when factory owners took advantage of Mexico's lower wages to move across the border. Now the big sucking sound is coming from China and its rock-bottom wages, which are far lower than Mexico's. The big increase in Chinese exports is becoming a serious political issue for President Bush. During the summer, he sent three cabinet members on a cross-country trip to talk to workers and businesspeople about the economy, and they returned with bitter complaints about how the surge of Chinese imports was destroying the manufacturing sector. In response, Bush formed a manufacturing task force and has promised to raise the currency issues in talks with the Chinese leadership. But many in Congress say talks are not enough. Some legislators are co-sponsoring a bill that would impose a 27.5 percent tariff on all Chinese goods if China refuses to revalue the yuan, which is now pegged at 8.28 to the dollar. During the Sasakawa event, Vogel was asked about the possibility of a surcharge by Paula Stern, the former chair of the U.S. International Trade Commission and now a trade consultant. Vogel, who wrote a famous book - 'Japan as Number One' - at the height of Japan's export drive in the 1960s - replied that China's exports are not nearly as destructive to the United States' core industries as Japan's were in the 1960s and 1970s. But as the mood in Congress shifts towards being anti-China with "human rights and trade becoming the focus, we can't rule out anything", he said. "There is a danger, if the mood is such, there might be an action, and that would be dangerous." Damaging U.S.-China relations would be harmful to the Korea peace process, said Don Oberdorfer, the author of 'The Two Koreas' and an expert on U.S.-Korea relations. Speaking from the audience, Oberdorfer observed that "China is playing an absolutely remarkable role" in the Korean situation. "Certainly the U.S. vacuum has played into that. Within just months, China has become the centre of these negotiations. If it's a success, it clearly will enhance China's reputation." Mike Mochizuki, a Japan specialist at George Washington University, observed that Japan and China are moving away from their post-World War II antagonisms and reshaping their relationship. "At the state level, Chinese and Japanese relations are moving towards a new equilibrium," he said. But Quansheng Zhao of American University disagreed, saying the Japanese foreign policy remains overly influenced by the United States. "Many people in China sill believe that to deal with Japan its better to deal with the U.S. first," he said. (Inter Press Service) |
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