March 24, 2006

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Mr Smith goes to Beijing

According to the SCMP, the three protectionist American senators visiting China have undergone a miraculous conversion and now see the light:

The two US senators behind proposed legislation to impose punitive tariffs on Chinese products have shifted from seeing "China as a threat" to a potential "close ally" after meeting top mainland leaders yesterday.
New York Democrat Charles Schumer and South Carolina Republican Lindsey Graham said they had achieved significant understanding through their "amazing three days" in Beijing.

"It's been an eye-opener in many ways. And it's an amazing country with a depth of history that is just profound with an amazing present and vast potential for the future," Senator Schumer said.

"The vice-premier was a lot of fun. She's really direct. She would do well in an American forum. I like her a lot," Senator Graham said..."Is China a threat? [It] could be. Is China a friend? Yes. Is China a close ally? [It] could be. That's what's changed for me about this trip," he said.

When asked about the bill they have proposed that would impose a 27.5 per cent tariff on US imports of Chinese products, the senators said the jury was still out.

Bowled over by Wu Yi but still hedging their bets. The senators are doing what politicians do best - changing their message according to the crowd. You can bet as soon as they land back in Washington it will be "I've seen the enemy up close" again. And the Chinese have very politely told the Americans to piss off. This WaPo article also points out that the senators' visit and the bid to impose currency and other reforms is backfiring:
...in strikingly moral tones, they [the senators] pledged Washington's resolve to pressure China to liberalize not only its yuan regime but also its political culture, using trade as a wedge for an almost evangelical campaign for US values...

"In my country, we're very arrogant, and I admit to it," he [Sen. Lindsey Graham] said. "You have to understand that Americans have for 200 years fought and died not just for our freedom, but for other people's freedoms."...But when the time came for questions, the reaction from students and faculty revealed how the American campaign for a free-floating yuan has backfired in some quarters. Many in China resent the specter of the world's lone superpower seemingly attempting to dictate how Beijing manages its economy and the values that should govern Chinese society.

The bill has gained momentum as China's trade surplus with the United States has grown, swelling to US$200 billion (HK$1.56 trillion) last year. But many economists assert that even a significant revaluation would do little to alter the trade balance, noting that many of the goods China exports, such as clothing and furniture, have not been made in large quantities in the United States for years.

"This is just complete posturing," said Pietra Rivoli, a trade expert at Georgetown University. "This is the classic thing with trade: you make outlandish demands that are impossible for either side to satisfy, and then you get points for standing up."

But the reception the senators are receiving attests to the gravity of the issue for China's leaders, who are cognizant of the angry mood in Washington. The senators dined Wednesday with People's Bank of China governor Zhou Xiaochuan. They met Thursday with Vice Premier Wu Yi...

"I've learned that you've got 700 million people who need employment, that the interior of your country is not developed," Graham told the students. "I've learned in coming here that for you to change your system very quickly would be very hard for your country. I understand that better now."

If all it takes to open the eyes of these politicians to the folly and potential consequences of these protectionist measures, China should fly the entire US Congress out for a visit. I'm sure Wu Yi can spare the time.

posted by Simon on 03.24.06 at 09:22 AM in the China economy category.




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Comments:

China could easily shut America's mouth if it were to start threatening a purge of its US currency reserves.

I'm quite sure the politicians in Washington would not be complaining one bit if the trade imbalance were tilting the other way.

posted by: THM on 03.24.06 at 10:48 AM [permalink]

"I've learned that you've got 700 million people who need employment, that the interior of your country is not developed,"

You had to fly there to find that out? Clearly there is less oxygen at the rarified altitude of US Senator.

This scene has been replayed over and over for the last thirty years. Posturing, nothing more. There will be some cosmetic legislation, and the two sides will go right on trading.......

Michael

posted by: Michael Turton on 03.24.06 at 11:08 AM [permalink]

Gee, does anyone think it might help if these guys had actually studied the issues a bit before leaving? If it takes this trip to see the light, so be it, but I tend to agree with Simon that they will be whistling a different tune by the time they return stateside.

posted by: China Law Blog on 03.24.06 at 12:46 PM [permalink]

Gee, can the American politicians be more creative. We have been bored by the same tricks and posturing again and again. Eye opener? They haven't seen the real China!

posted by: Gloria on 03.24.06 at 01:55 PM [permalink]

This is the typical American visitor cycle
Step 1: Dang those green-suited bastards in Red China

Step 2: Visit Beijing and or Shanghai, get taken out to lavish banquets, construction sites, all the most modern places (definitely not the grubby countryside), see beautiful women, have your hosts tell you that they secretly are liberalizing everything but that there's too many Chinese to allow them to have rights that they don't want anyway. Incredible business opportunities will be promised, and your hosts will promise you can sidestep the typical regulations, using their connections, as their special favor to you.

Step 3: Go home and tell everyone how China's the greatest place in the world, that it's more capitalist than the US, with a more visionary government than anyone.

Step 4: Get F-ed in the A when your hosts backstab you, proving that their gracious hosting was an act to get what they wanted from you.

posted by: A. West on 03.25.06 at 01:37 AM [permalink]

Quotes from today's China Daily:
"China consumes too little and saves too much, while the opposite is true for the US," Schumer said... Graham admitted that a lot of the US trade deficit comes from the United States' domestic policy, which over-emphasizes investment and consumption instead of exports.

posted by: Gloria on 03.25.06 at 09:21 AM [permalink]

"Gee, does anyone think it might help if these guys had actually studied the issues a bit before leaving? "

if they did, there won't be the 27.5% bill from the start. :)

stephen roach has some amusing comments about his meeting with them.

posted by: sun bin on 03.26.06 at 02:00 AM [permalink]




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