The Obama administration has been at pains to sell the kick-off meeting of the US-China Strategic and Economic Dialogue as a revamped, bigger and better version of the Bush-era Strategic Economic Dialogue. But a tweaked name and a few new agenda items won’t resolve a basic problem: Until Washington frankly addresses tough issues facing the relationship, Beijing won’t budge on much of anything.
That was the main lesson of former US treasury secretary Henry Paulson’s meetings with his Chinese counterparts. For two years, Paulson focused on the twin phantoms of exchange rate targets and trade imbalances. The US Congress embarked on a spree of protectionist talk and China bashing. In return, Beijing did little to further liberalize its markets to foreign trade or address its corruption-ridden banking system.
This year’s meeting isn’t shaping up to be much different, aside from the fact that US secretary of state Hillary Clinton seems to have wrested some of the China portfolio from the US treasury, which is now co-hosting the two-day meeting with state. Their mission is to “focus on addressing the challenges and opportunities that both countries face on a wide range of bilateral, regional and global areas of immediate and long-term strategic and economic interests”. In other words, nobody in Washington is quite sure what exactly will be accomplished, or when.
The main agenda item, as during the Bush years, is to push for “balanced and sustainable” economic growth—diplomatic code for more wrangling over meaningless trade statistics. A more productive discussion would focus on trade protectionism and the fiscal profligacy of the Obama administration and its effect on the value of the world’s global currency, the dollar.
China seems keen to put both issues on the table, given that its top officials have been publicly fretting about them for months. For good reason: Beijing is one of the world’s largest holders of dollar-denominated assets and one of the US’ largest trading partners.
Clinton, who is nominally in charge of the “strategic” part of the dialogue, has sticky issues to confront. Chinese President Hu Jintao’s administration has led crackdowns on minorities, jailed human rights activists and tightened the Communist Party’s grip over the judiciary. Abroad, China has done little to help resolve the Iranian nuclear crisis, is ramping up assistance to Myanmar and has proved the main enabler of Kim Jong Il’s regime in Pyongyang.
Clinton seems more eager to talk about climate change than any of these other issues—some of which directly threaten US security. These priorities play well on Capitol Hill, where the US Congress is talking about exchange rate “adjustments” again and the newest form of protectionism: global warming legislation. The US House of Representatives is proposing protectionist tariffs on nations that don’t limit emissions.
But soft-peddling around Beijing for the sake of scoring a few political points at home isn’t the way to build an honest relationship with an authoritarian state increasingly intertwined with US strategic and economic interests. It’s good to encourage more communication between the US and China, but not if both sides are going to ignore the most difficult issues.
THE WALL STREET JOURNAL
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