Obama calls for balanced relationship with China

McClatchy NewspapersJuly 27, 2009 

WASHINGTON — President Barack Obama on Monday opened two days of U.S.-China talks by positioning the relationship as the most important to the world, while prodding America's largest creditor to advance its environmental, human rights and nuclear policies.

"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," Obama told an audience for the "U.S.-China Strategic and Economic Dialogue" in Washington. "That really must underpin our partnership. That is the responsibility that together we bear."

Obama also will travel to China later this year.

On Monday, he acknowledged China's role in helping contain the effects of the U.S. economic crisis.

"The current crisis has made it clear that the choices made within our borders reverberate across the global economy," the president said. "As Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation. Because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods."

Obama acknowledged wariness on both sides — fears of a too-powerful China, or of America seeking to limit China's rise — but said neither he nor President Hu Jintao sees things in those terms.

"I have no illusion that the United States and China will agree on every issue, nor choose to see the world in the same way," Obama said, but he urged dialogue and candor.

He quoted Chinese-born NBA star Yao Ming and the ancient philosopher Mencius in talking about resetting long-term relations, and recalled how China's reach has grown since President Richard Nixon's famous 1972 visit, when talks had focused "on our shared rivalry with the Soviet Union."

Obama said the two nations can team up to fight terrorist threats and disease, end suffering in Darfur and contain the nuclear ambitions of nations such as North Korea and Iran.

Without mentioning Tibet or the Uighurs by name, however, Obama said that "the religion and culture of all peoples must be respected and protected, and that all people should be free to speak their minds. And that includes ethnic and religious minorities in China, as surely as it includes minorities within the United States."

The two-day talks in Washington are part of a series of rotating meetings between top economic and foreign policy officials from both governments. These talks began in the Bush administration when then-Treasury Secretary Henry Paulson sought a forum to discuss what is widely viewed as currency manipulation by China that gives its exporters an advantage.

Even before China joined the World Trade Organization in December 2001, its economic fortunes became increasingly entangled with those of the U.S.

Trade deals forged by President Bill Clinton granted China greater access to the U.S. market and U.S. firms greater ability to produce in China for export back to the U.S.

The two-way merchandise trade with China — which excludes services and finance_ stood at $63.5 billion in 1996, but by the end of 2008, merchandise trade had grown more than sixfold to $407.5 billion.

This reflected that the U.S. consumer had become the engine of global growth, something U.S. officials said that they told their Chinese counterparts can't continue.

If China is going to grow, "it's not going to be able to grow by exporting to the U.S., and as far as we can tell to the rest of the world. China is going to have to promote more home-grown consumption growth," said David Loevinger, the Treasury Department's senior coordinator for China affairs.

China is poised to overtake Japan as the world's second-largest economy behind the U.S.

As trade with the U.S. grew, China's foreign earnings were reinvested in what are considered among the safest investments, U.S. Treasuries. China held just $66.4 billion in U.S. Treasury bills, bonds and notes in July 2000. However, in the latest reporting period, through May, that sum had exploded to $801.5 billion.

These huge numbers underscore the benefits of a two-way relationship. Both economies depend greatly upon each other, and China has felt a severe pinch because of the economic downturn of its largest customer.

Still, Chinese Premier Wen Jiabao crystallized U.S. debate over soaring federal budget deficits, wondering aloud in March whether China's investment in Treasury debt was a safe bet. His comments stirred international markets and spoke to the danger of depending on foreign governments to finance U.S. deficits.

Much like the U.S., China launched an economic stimulus program earlier this year equivalent to 14 percent of its total economic activity in hopes of generating more domestic demand amid steep drops in exports.

Briefing reporters late Monday, Loevinger said that Chinese and U.S. officials noted in meetings "how similar the policy response and outlook (were) . . . how the United States and China in some ways have acted more like each other than many of the other economies."


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McClatchy Newspapers 2009

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