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Opinion: Perilous U.S.-China games

February 19, 2010

By Kevin Rafferty
Special to The Japan Times
February 17, 2010

BEIJING -- Beijing is increasingly playing
hardball on every issue that brings it into
contact and potential conflict with the rest of
the world: democracy in Hong Kong; U.S. arms
sales to Taiwan; the visit of the Dalai Lama to
the White House; sanctions against Iran; the
value of the renminbi; the sickly dollar; human
rights; censorship of the Internet; Google and
hacking; greenhouse gas emissions and climate
change; the U.S. budget deficit; and a blossoming variety of trade issues.

Its strident comments, brooking no opposition on
any issue, are reminiscent of an arrogant
adolescent sprouting his first facial hair and
muscles, full of hormones and attitude of nervous
hostility toward trespassers on his space. But
China, though adolescent in its attitudes, is a
full-grown country with an ancient history and
civilization, growing industrial muscle, the
world's biggest exporter and, equally important,
a nuclear-armed power with the biggest military
in the world and rapidly growing and ambitious
global outreach with plans for conquering space.

Larry Summers, Obama's chief economic adviser,
raised an important question before he joined the
Obama administration: "How long can the world's
biggest borrower remain the world's biggest power?"

What is surprising and potentially frightening is
that the United States, as the leading antagonist
of this touchy China feeling its strength,
clearly has no clue about how to deal with
Beijing. In many ways Obama is doing less well
than his much-maligned predecessor, George W.
Bush, in understanding China. Indeed, it seems
that Beijing senses the shifting political sands
under Obama at home, and so is stepping up the pressure.

After all, Bush and his predecessors had sold
arms to Taiwan with protests but without evoking
the battery of threats that Beijing has just
launched against the U.S. Indeed, the $6.4
billion package of helicopters, Patriot missiles,
minesweepers and communications gear is the
second half of a package announced by the Bush
administration. China had known for months about
the deal, said U.S. officials, the Taiwan
Relations Act legally obliges the U.S. to provide
arms for Taiwan's defense, and these are defensive weapons.

Yet this time, claiming that Taiwan is part of
China's internal affairs, Beijing has threatened
American companies supplying arms to Taiwan that
they will suffer, and there are rumors that
Chinese President Hu Jintao may cancel a planned visit to the U.S.

Obama treated China respectfully as a member of
the G-2, the world's most important budding
alliance. Visiting China in November, he
deliberately refused to provoke Beijing. He
snubbed the Dalai Lama by refusing to see the
Tibetan spiritual leader before his visit, and
raised none of the awkward questions of human
rights that his predecessors had raised, for
which failure he was accused by Republicans of "kowtowing" to China.

Now Obama is singing a more hostile tune. Apart
from the arms sales to Taiwan and the belated
visit of the Dalai Lama, Obama promised
Democratic Party senators that he would be much
tougher and would put "constant pressure" on
China to make sure that it keeps its markets open
to trade with the U.S. Leading senators from both
parties have urged Obama to label China as a
"currency manipulator" and impose sanctions for this.

Obama also faces demands from American companies
complaining of their difficulties of doing
business in China. Currency manipulation, alleged
Chinese pirating, subsidies for their own exports
and restrictions on exports of key raw materials
are just a few of a growing number of trade spats between China and the U.S.

Perhaps Washington sees itself as the prickly
parent prepared to take only so much from the
increasingly stroppy China. But what is
surprising is that Obama and his team have shown
ineptitude in building friendships that could be useful to the U.S.

One small but symptomatic issue is the May summit
between the U.S. and European Union in Madrid.
Obama has snubbed Europe by saying he will not
attend. You can understand Obama's reluctance to
go to a summit where he has to shake hands with
three different Europeans, each bearing the title
"president." Yes, Europe also has to get its act
together, but Obama might get a reluctant
listener next time he calls Europe for help, whichever number he dials.

More surprising was the outburst by U.S.
Secretary of State Hillary Clinton last month
when, according to American press reports, she
warned China that it risks "diplomatic isolation"
as well as disruption to its energy supplies
unless it joins other U.N. powers in stepping up
sanctions against Iran to deter Tehran from developing nuclear weapons.

Even making allowances for U.S. frustration over
Iran, and indeed over Beijing's continuing
obstruction of united action to prevent Iran from
blowing a hole in efforts to contain nuclear
proliferation, this was not only undiplomatic but
rather silly. Diplomatic isolation? Is that a
threat to China? And how would Washington go
about it, and what would it achieve? Would
Washington pay off its debts to China first?

In his speeches, Obama has recognized that the
U.S. is part of a multipolar world. In toughening
his stance toward China, he drew the line at
protectionist measures against China, saying, "to
close ourselves off from that market would be a mistake."

Indeed it would, and a trade war between the G-2
would be not a mistake but a disaster for them
and for the world. But in the old saying, "It
takes two to tango." Obama is constrained by
domestic politics and by Republicans determined
to press home their attack, while Beijing is in
its adolescent sulk and in no mood to concede
anything. It is indeed a dangerous time for the world and the global economy.

Kevin Rafferty is a former managing editor of publications for the World Bank.
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