The USC U.S.-China Institute hosted a discussion on American and Chinese aims and tactics in the US-China trade war as well as its impact and potential costs.
Talking Points: June 3 - 17, 2009
June 3 - 17, 2009
Two top American officials, House Speaker Nancy Pelosi and Treasury Secretary Timothy Geithner, visited China this past week. The visits symbolize the centrality of the U.S.-China relationship and eagerness to forge stronger ties to address pressing problems. China has loomed large in the lives of both officials, but in strikingly different ways.
Nancy Pelosi was a 49 year old first term lawmaker representing San Francisco when protests erupted in Beijing and elsewhere in the spring of 1989. After they were violently suppressed, Pelosi became one of the most outspoken of China’s critics. She irritated President George H.W. Bush by introducing and passing by large majorities legislation permitting Chinese students studying in the United States to opt to stay permanently and legislation requiring that the President certify that China had made progress on human rights issues in order to renew China’s most favored nation trade status. The elder Bush saw these measures as limiting the executive branch’s foreign policy options. The administration charged that such measures would isolate China and foil efforts to work with Chinese leaders to strengthen regional security and improve conditions within China.
In 1991, Pelosi went to Tiananmen Square with others and unfurled a bilingual banner to honor “those who died for democracy in China.” The congresswoman continued to focus attention on human rights conditions in China. Her confrontational approach won praise from many, but it also infuriated Chinese officials and upset many American officials and academics who described it as grandstanding and sometimes accused her of using the issue to further her own political career. Last year, following unrest in and near Tibet, Speaker Pelosi urged President George W. Bush to consider not attending the Beijing Olympic Games.
Speaker Pelosi didn’t bring any banners to unfurl on this visit. Her focus this time, she insisted, was on learning how the U.S. and China could work together to address climate change. But she also said that, as speaker, she can now meet with China’s president and express her concerns about human rights directly. And she reminded her American Chamber of Commerce audience in Shanghai, “protecting the environment is a human rights issue…. We hope to send a clear message that transparency, accountability, enforcement, and respect for the rule of law are essential if we are to protect our planet.” After her return to the U.S., the speaker reported that she’d given Chinese leaders a list of prisoners of conscience and requested their release. On Tuesday, Pelosi was among those who successfully pushed a House resolution offering sympathy for those who died in Beijing on June 3-4, 1989 and calling for a United Nations inquiry into the crackdown.
Timothy Geithner, 48, began learning about China three decades ago. He studied Chinese and double majored in Asian studies and government at Dartmouth before earning a masters degree in international economics at Johns Hopkins. He worked for former secretary of state Henry Kissinger (long a staunch advocate of “constructive engagement” with China) for three years. Geithner joined the Treasury Department in 1988. He spent the next 15 years taking on increasing responsibilities at Treasury and the International Monetary Fund. In 2003, President Bush appointed him to head the New York Federal Reserve Bank. During the banking meltdown last fall, Geithner was thrust into a leading crisis management role. His appointment as Treasury Secretary was one of President Barack Obama’s first.
On the campaign trail, Obama suggested that China’s currency and trade practices were neither transparent nor fair. If elected, the senator said his administration would carefully examine and enforce agreements with China, including international trade pacts.
In preparing for Geithner’s January confirmation hearings, a staffer drew on Obama’s campaign positions in responding to a Senator committee member’s written question about China’s currency policy:
“President Obama … believes that China is manipulating its currency. President Obama has pledged … to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices.”
This triggered an outcry from Chinese leaders. Premier Wen Jiabao complained that “some countries who have been overspending then blame those who lend them money for their spending.” He further noted that the value of the Chinese yuan had grown more than 21% against the U.S. dollar in the past four years. Later, he expressed concern that economic instability in the U.S. put China’s massive investments in American government debt at risk. The head of China’s central bank suggested that perhaps a new reserve currency was needed to replace the U.S. dollar.
Obama and Geithner quickly backed away from the currency manipulation charge and the administration asserted that investing in U.S. government debt was the safest bet anywhere. Through the April G-20 meeting in London and this week’s meetings in Beijing, the emphasis has been on cooperation. Geithner claimed that Chinese leaders had “a very sophisticated understanding” of the U.S. administration’s decision to endure record budget deficits in order to stimulate the economy. He said Chinese leaders were confident Americans would “solve this crisis, … get growth back on track, [and] go back to living within our means.” And Geithner spoke highly of China’s own economic stimulus plan and its critical international economic role, "China is playing a very important stabilizing role in the international financial system now, through among other things their efforts to strengthen domestic demand."
The charts below hint at how intertwined our economies have become. Click on them to see larger versions at our website. On the left, one sees the dramatic rise in U.S.-China merchandise trade from $5 million a year on the eve of President Nixon’s trip to China to $409 billion last year. Trade accelerated rapidly from China’s ascension to the World Trade Organization in November 2001 but has declined dramatically since fall 2008.
The first chart also shows that China has long sold much more goods to the U.S. than it has bought. China’s 2008 trade surplus with the U.S. was $266 billion. The second chart shows where a significant share of that surplus has gone. China’s foreign reserves now total approximately $2 trillion. More than 82% of this is invested in dollar-denominated assets, with the largest share invested in U.S. Treasury Securities. The chart at the right shows how China’s Treasury holdings have risen since 2000. The Chinese government is the largest foreign owner of American debt. In March 2009, the government owned $768 billion of Treasury securities.
Today is the 20th anniversary of the bloody crackdown on demonstrators in and near Tiananmen Square. We noted last week how the Chinese government has thus far not been willing to permit open discussion of the origins, nature, and course of the demonstrations in Beijing and elsewhere or the appropriateness of the government response. The message from the Party-State is that those questions were answered long ago. The official verdict is that passionate and inexperienced young people were used by domestic and foreign enemies, “black hands,” to try to overthrow the Communist Party and the government.
For weeks, news organizations have offered retrospectives and reports on the legacy of the movement and its suppression. Films have been screened and plays performed. Protest leaders, scholars, and officials have spoken at symposia on what happened 20 years ago and to what extent the political and economic demands made by protesters then have been addressed. The Congressional-Executive Commission on China session today features several extremely knowledgable individuals on the subject. The USC U.S.-China Institute website features many documents and presentations on related topics (e.g., human rights, civil society, and rule of law issues). One segment of our recent documentary focuses on these questions. This fall Institute assessments of “The PRC at 60” will include discussions of how and why spring 1989 matters. We are also producing a new documentary, called Reporting China, which examines how those and other important events were covered.
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06/18/2009: Journey from Zanskar
USC, Taper Hall 202, Los Angeles, CA 90089
Time: 7:00PM - 9:00PM
Filmmaker Frederick Marx, producer of Academy Award nominated “Hoop Dreams,” will be premiering a rough cut of his new film.06/18/2009: Journey from ZanskarFilmmaker Frederick Marx, producer of Academy Award nominated “Hoop Dreams,” will be premiering a rough cut of his new film.
07/27/2009: 2009 Summer Residential Seminar at USC
USC, Davidson Conference Center
Los Angeles, CA 90089
For more information please visit:
An intensive nine-day equivalent of our "East Asia and New Media in My Classroom" professional development seminar for K-12 teachers employed outside of the greater Los Angeles area.
06/09/2009: The Global Financial Crisis: How Did We Get Here? How Do We Get Out?
Westin St. Francis Hotel
335 Powell Street San Francisco, California
Cost: $55 Students, $95 Members, $135 Non-Members
A conference which examines the measures governments in Asia and the U.S. are taking to address the global financial crisis.
06/10/2009: Who was Lu Xun's First Love?
11377 Bunche Hall, Los Angeles, CA
Time: 12:00PM - 1:30PM
UCLA's Center for Chinese Studies presents a talk by Professor Zhang Enhe on the Chinese author Lu Xun, one of the major Chinese writers of the twentieth century.
06/04/2009: The 20th Anniversary of the Tiananmen Square Protests: Examining the Significance of the 1989
Dirksen Senate Office Building, Room 628
Time: 2:15PM - 4:00PM
Demonstrations in China and Implications for U.S. PolicySenator Byron Dorgan presents a hearing on the 20th anniversary of the Tiananmen Square protests and their implications for U.S. policy.
02/12/2009 - 06/07/2009: Noble Tombs at Mawangdui: Art and Life in the Changsha Kingdom, Third Century BCE to First Century
China Institute Gallery
125 East 65th St., New York , NY
An exhibit featuring treasures of the Marquis of the Changsha Kingdom and his family.
04/11/2009 - 07/13/2009: Treasures through Six Generations: Chinese Painting and Calligraphy from the Weng Collection
Boone Gallery, The Huntington Library
1151 Oxford Road, San Marino, CA
An exhibition of Chinese painting and calligraphy highlighting works spanning 900 years
04/22/2009 - 07/15/2009: Eternal Sky: Reviving the Art of Mongol Zurag
IEAS Conference Room
2223 Fulton Street, 3rd floor
The Institute of East Asian Studies at UC Berkeley presents an exhibition of the work of artist Narmandakh Tsultem, who paints in the traditional Mongol Zurag style.
02/10/2009 - 08/09/2009: Asian Journeys: Collecting Art in Post-war America
Asia Society and Museum
Address: 725 Park Avenue, New York, NY 10021
Asia Society and Museum in New York presents John D. Rockefeller 3rd's exceptional collection of Asian art, as well as that of their adviser Sherman E. Lee.
11/03/2008 - 11/03/2009: Ancient Arts of China: A 5000 Year Legacy
2002 North Main Street, Santa Ana, California 92706
Bowers Museum presents a collection that portrays the evolution of Chinese technology, art and culture.
11/14/2008 - 11/14/2009: Chinese Art: A Seattle Perspective
Seatle Asian Art Museum
1400 East Prospect Street , Volunteer Park , Seattle, WA 98112–3303
The Seattle Asian Art Museum presents an opportunity to see a collection with representative works from each dynastic period.
11/15/2008 - 11/15/2009: Masters of Adornment: The Miao People of China
2002 North Main Street, Santa Ana, California 92706
The Bowers Museum presents a collection of exquisite textiles and silver jewelry that highlights the beauty and wealth of the Miao peoples of southwest China.
02/12/2009 - 02/12/2010: Art of Adornment: Tribal Beauty
2002 N. Main, Santa Ana, CA
An exhibit featuring body adornments from indigenous peoples around the world
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Please join the USC U.S.-China Institute for the screening of Better Angels (善良的天使), a documentary film written and directed by two-time Academy Award winner Malcolm Clarke. Post-screening discussion will be with Clarke, co-executive producer David Dreier, and producers William Mundell and Han Yi.