Problems that Hu and Obama cannot solve in 2 days19 January, 2011, 18:40. Posted by Zarathustra
Tags: Fun, United States
So China President Hu Jintao is in the United States meeting with President Barack Obama.
Before going through the sample of issues about US-China relationship and world economy, I have to make some confession that whenever there are world leaders flying around and attend summits, shaking hands with other world leaders, I can’t help but remember the “Ministerial Broadcast” Episode of the classic British sitcom “Yes, Prime Minister”. The fictional British Prime Minister Jim Hacker MP returned from the United States after meeting with the President of United States. At 10 Downing Street, he talked to his fictional Head of Civil Service Sir Humphrey Appleby:
Jim Hacker: I felt frightfully tired at my big meeting at the White House, scarcely remember a thing he [the President] said!
Sir Humphrey Appleby: He didn’t really say much, Prime Minister, he was frightfully tired too.
Jim Hacker: Worrying, isn’t it? Statesmen such as myself, jetting all over the world, attending major conferences which could affect the future of mankind, and they are zonked?
Sir Humphrey Appleby: Well, it would be, Prime Minister. Perhaps that’s why such negotiations are nearly always completed in advance by humble servants such as I, it would hardly be left to the hands of the zonked.
So President Hu is frightfully tired, and possibly so is President Obama. Certainly that is a bit of a joke, but I guess there is a certain reality. And just before Hu arrived in the States, Times Square in New York was taken over by the PR afford of China. I leave that for you to judge if it is a PR success or disaster.
There are no shortages of analysis and predictions of what is going to happen or what the meeting will mean to the bilateral relationship. Of course, there will be massive trade deals to be signed, but on the whole, the meeting will more likely to change nothing.
Here are a list of problems to consider.
1. Democracy. As jokingly put here, the state dinner will be “where a Nobel Peace Prize laureate is hosting a banquet for a leader who is imprisoning another Nobel Peace Prize laureate”.
2. Currency & Trade Deficit. The meeting is unlikely to change anything on Chinese Yuan. The Chinese will continue the liberalisation of the currency in their own pace (will it take 5 years to open the capital account?)
3. Rebalancing World Economy. To ask Chinese consumers to buy more and American consumers to spend less are next to impossible. This is the core of the problem really, but cutting deficits (US) and surplus (China) will take a while unless they stop trading with each other.
4. North Korea. The United States want China to exercise their influence, but China might just have less influence than everyone else think. This report says China has cut off oil supply to North Korea after it bombed South Korea, so perhaps that’s why North Korea looks a bit more normal these days (?).
5. Taiwan? They had a failed missile testing yesterday.
6. US: Please buy my debts! But the Chinese seems to be dumping them. If it continued, China would be proved to be the super bond vigilante for the United States.
7 China: Stop that bloody Quantitative Easing! But Ben Bernanke would not care.
8. Military: Stealth Planes and aircraft carrier? Well, not sure if the United States would ever be worried by that, but people are certainly getting worried by the military expansion of China.
and the list goes on and on…
If you like, also do consider this cable – Contacts assess Hu Jin Tao’s strength after the party congress (7 November 2007) – which suggests that perhaps Hu Jintao is less powerful than people think.
Check out my China Economic Predictions 2011.