The U.S.-China relationship is changing

Reading Time:

Selected articles on the eve of president Xi Jinping's visit to the United States

America’s painfully outdated approach to China

Then there are the recurrent calls for a “G-2.” It is sometimes proposed that China and the United States should reach a broad strategic accommodation allowing them, together, to guide the affairs of the world. This idea gained strength during the financial crisis, when China appeared to be the economically strongest partner for the United States. More recently, Xi’s repeated proposal for a “new type of major-power relationship” seems a variant of the old calls for a “Group of 2.”

But such formulations overlook larger realities. They implicitly downgrade the interests of U.S. allies and friends (Japan, India, South Korea and the European Union, for starters) who would naturally feel threatened by the notion of the United States and China teaming up without them. They also ignore fundamental differences in values and political systems. ...

... The truth is, the United States’ China policy is already changing at the working levels of government and at the grass-roots level, but our overriding ideas about this relationship have not kept pace. Over the next few years, a new U.S. policy toward China is sure to emerge, but it may do so gradually, from the bottom up. ...

... The United States and China are in a new era. It’s time to develop policies and ideas that don’t try fruitlessly to replicate the past.

November 2014: China’s ‘New Type’ of Ties Fails to Sway Obama

Henry Paulson: Why China’s economic reforms are critical to the United States

One byproduct of China’s recent stock market volatility has been the emergence of a veritable army of “perma-bears” who believe the Chinese economy is essentially falling off a cliff. Growth in China is slowing and will continue to do so in years to come. But the stock market drop in itself tells us little about China’s real economy.

All markets, of course, incubate asset bubbles. In that sense, the summer’s collapse, while a tragic and painful experience for many Chinese investors, has brought equity values back to earth in Shanghai and Shenzhen. ...

... The United States, for all its differences with Beijing, should be rooting for China’s economic reformers to succeed. And as a large holder of Treasury securities and a major funder of U.S. structural deficits, China has a lot at stake in whether the United States undertakes urgent fiscal, tax and structural reforms that will allow our economy to grow faster.

Second, U.S. and Chinese companies need expanded opportunities in each other’s markets.

From agribusiness to medical devices, the U.S. and Chinese economies are increasingly complementary. What is missing are policies to better enable direct investment and to provide companies a level playing field. ...

... we ignore at our peril the shared economic interests that benefit millions of Chinese and Americans ...

Obama and China: Trying to play well with a close frenemy

“We should not roll out the red carpet for him,” said Sen. Marco Rubio (Fla.), one of several Republican presidential candidates who say Obama should cancel or downgrade Xi’s visit.
West Wing advisers called such a move unthinkable at a time when the White House is counting on Beijing’s commitment to a major agreement to slash greenhouse-gas emissions by 2030 and its backing of the U.S.-led nuclear accord with Iran.

... In November 2009, Obama visited Hu in Beijing, eager to project a new era of U.S. engagement abroad. But at every turn, Hu appeared determined to thwart the American president.

At a town-hall-style meeting in Shanghai, Chinese officials refused White House requests to stream Obama’s remarks live online. The hosts further undermined the event by planting milquetoast questions with a pre-screened audience.

WSJ: "When Chinese President Xi Jinping heads to the U.S. for a state visit this week, he will travel with the CEOs of 15 of his country’s biggest companies, representing a combined market cap of nearly $1 trillion. " (video)

Ignoring politics can be bad for business

When they look at China, it's easier for them to see the country through Chinese companies like Alibaba. If Alibaba collapses, to them it means China's economy is doomed too. It is that simple.

That may also explain why Xi will travel to Seattle - together with more than a dozen Chinese businessmen including Alibaba's founder and chairman Jack Ma Yun - on Tuesday, before going to Washington to meet President Barack Obama and concluding his trip in New York a week later.

Xi understands there is no short cut to improving the image of China in the eyes of the US media and public. There are too many political problems ranging from cybersecurity to growing tensions between Chinese and American interests in the South China Sea that Xi does not want to talk about. But, in terms of business, China is so important that no American corporate can ignore the market.

Reuters: China vows to loosen market access 'negative list'

China's economy must open wider to the world to fuel national growth, President Xi Jinping said on Tuesday, as the country's reformers vowed to gradually loosen a "negative list" regulating foreign market access.

China has repeatedly pledged to slacken restrictions on its manufacturing and service sectors as it tries to improve inefficient state-owned firms by adopting market-friendly policies to stave off slowing growth.

(Presented without implicating that this type of data should guide anyone) Why Donald Trump is smart to talk about China, China, China

Democrats view China more favorably than do Republicans. Half of Democrats view the country unfavorably, compared to 63 percent of the GOP. The GOP is also more likely to be worried about nearly all of the issues Pew asked about -- they're more worried about the debt, about cyberattacks and about the trade deficit.

China Eyes ‘Feel-Good Moments’ on Xi’s U.S. Trip

Tie-up between General Electric Co. and state-owned China National Machinery Industry Corp. for clean-energy projects in Africa, including 60 wind-power stations in Kenya valued at about $327 million.

U.S. and Chinese companies will contribute to a planned $3 billion fund to invest in energy-efficient projects in China.

China’s strategy for Mr. Xi’s visit has been to try to focus public attention on the economic relationship, and to project a positive image of China

President Obama's remarks at the Abe-Obama joint press conference in April, 2015:

we welcome China’s peaceful rise. We think it’s good not only because China is a booming potential market. We think it’s good not only because it allows China potentially to share some burdens with us in helping countries that are not as far along develop. But we think it’s just good that hundreds of millions of Chinese citizens have been able to rise out of poverty at incredible speed over the last several years. They could not have done that had it not been for a stable trading system and world order that is underwritten in large part by the work that our alliances do.

Photo credit: APEC

Weekend links

FT: Review of Rich People, Poor Countries Hall, Kendrick and Nosko: The Effects of Uber's Surge Pricing: A Case Study Transcript of the second GOP debate...

Xi Jinping on the way to Washington

Speech in Seattle: Full transcript "development remains China's top priority. To any one charged with the governance of China, their primary mission is to focus...