Broader point about Geithner, Obama, China, and "manipulation"
Here's what increasingly bothers me about the recent flap over Timothy Geithner's "currency manipulation" criticism of China. I am showing this in "extract" format below not because I am quoting someone else because I am quoting the thought that has been running around in my head:
Because Barack Obama has been so knowing-sounding and aware of complexities on so many issues, it's natural to assume that he and his team will display the same sophistication when it comes to dealing with China. But in reality, virtually nothing that the President or his appointees has said or done on the subject has shown much sophistication at all. I made this point at various stages in the campaign. But as time goes on you inevitably start wondering: If these people are so smart, when will they get around to acting smart about the country whose cooperation they need more than any other's to avoid true financial catastrophe?
Now, the reasoning behind that assertion:
- During the campaign, Obama did not (to my knowledge) give a speech about relations with China, unlike his major addresses on his European tour or his speech about Israel when at AIPAC. Fine: it wasn't a big, direct in the campaign. What he did say was pretty much confined to "I won't buy poisonous Christmas toys for my kids" in early campaign debates. Meanwhile, his web site did have an all-points China policy, noting the various ways in which the countries cooperate and compete.
- Since the election, there has been one indirect but important signal of the new Administration thinking creatively about how to handle China. That is the nomination of Steven Chu as energy secretary.This was significant not because Chu's parents were immigrants from China (though that was huge and celebrated news inside China) but instead because in recent years Chu has been deeply involved in efforts to work out US-Chinese collaboration on environmental and climate-change issues. Anyone who has thought about this problem understands that if America and China are not both seriously committed to dealing with this issue, it's not going to be dealt with.
- The all-star economic team we're relying on to avoid true financial/economic catastrophe will need to work with China on just about every aspect of this plan. China has been the main buyer of Treasury notes (as you might possibly have heard). It has its own domestic economic emergency to deal with, and the tools it chooses in responding to that crisis will either ease or aggravate other countries' problems.
- Yet what is the most famous thing we've heard about China from any member of the Administration since the time the transition began? This, as reported in the China Daily:
As I argued here recently, China's management of the RMB's value (as opposed to the huffy and hyperbolic term "manipulation") is one part of the economic snarl that the US, China, Europeans, and others need to contend with. And it could become a more important and more dangerous part, if the Chinese authorities decide for their own reasons that they will try to push the RMB's value back down again, after letting it rise for years. (For details, here.)
But at the moment the exchange rate is not the most important element of US-China relations, even the financial aspect of those relations. And it most certainly is not the only element in US-China relations, which is the impression the Chinese readership and leadership could get from recent Obama Administration signals. This would be as if the only thing Obama had said about Mexico so far was, "Stop flooding us with illegal immigrants." It may seem unsporting, but it's worth pointing out that the reason Geithner's tax problems are being overlooked is that his expertise is thought to be so necessary in dealing with China among others.
So where does this lead? Mainly to a hope that the Administration will start recognizing all the different elements of this important relationship -- good and bad, financial and otherwise, business and academic, scientific and purely personal, ones where the US needs to adjust its policy (after the Bush years) and ones where China does too.
There are lots and lots of areas where Chinese government policies deserve criticism. (For a recent example, ridiculous censorship policies.) But there are many other where it deserves support -- and most of all there are areas where the US simply needs China's cooperation for its own and the world's survival. So: less gum-flapping about "manipulation," and more serious recognition of the thousand other issues where, no joke, the two countries really do need each other. Save the harsh criticism for the questions that really deserve it.