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Escalating political ire fuels China’s US fire
07 February 2010
If the past seven days are any indication of future trends, US President Barack Obama was not merely posturing when he pledged to put China under ‘‘constant pressure’’ to open its markets to US business.
Last week, Washington officials managed to trigger just about every significant Chinese issue, from Taiwan to Tibet, and currency revaluation to controlling Iran’s nuclear ambitions - further souring already testy relations between the world’s two largest economies. The two superpowers have been bickering since December, when each blamed the other for collapsing the Copenhagen talks aimed at achieving a deal on climate change.
As Washington ramped up the rhetoric, the tensions threatened to boil over into a trade war - with Beijing readying a string of sanctions and levies against US companies.
S parking the current spat was an announcement from Washington last Saturday of a $6.4billion deal to sell high-tech weapons to Taiwan.
China regards the self-governing island as a renegade province, and has long aimed to ‘unify’ it with the mainland - by force if necessary.
Nevertheless, relations between the neighbours had warmed considerably over the past several months, and discussions had been due to take place later this month on developing a cross-straits free-trade zone.
Last Monday, however, Beijing postponed those talks and announced that it would impose sanctions on any US companies involved in selling arms to Taiwan. More ominously still, an official at the foreign ministry said that the deal ‘‘had severely undermined the core interests of China and China-US relations’’.
‘‘China-US cooperation on some major international and regional issues will inevitably be affected," said foreign ministry spokesman Ma Zhaoxu. The mood between the two giants became frostier still last Tuesday, when White House officials confirmed that Obama would meet the Dalai Lama when the Tibetan leader visited the US later this month.
A Chinese spokesman said that Beijing was ‘‘resolutely opposed’’ to the meeting, and said that President Hu Jintao had ‘‘requested the US in explicit terms not to allow ‘Tibetan independence’ separatist forces to engage in anti-China splitting activities on the US territory’’ when he met Obama last November.
Obama himself rounded off a triptych of diplomatic disputes last Wednesday, when he waded into the long-simmering currency controversy by renewing calls for Beijing to revalue its currency, the yuan. Critics argue that Beijing maintains the yuan at artificially low levels to give its business sector an unfair advantage on the global stage.
‘‘One of the challenges that we’ve got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price. That puts us at a huge competitive disadvantage," Obama told the Senate Democratic Policy Committee.
‘‘The approach that we’re taking is to try to get much tougher about enforcement of existing rules, putting constant pressure on China and other countries."
His comments followed his recent pledge in his annual State of the Union address to double US exports in four years, a target many analysts said was impossible while the value of the yuan remained low. China, though, rejected claims that its currency manipulation was harming trade relations.
‘‘I want to point out that the RMB exchange rate is not the main cause for the US trade deficit with China," said Zhaoxu.’ ‘We hope the US side will view the problems in China-US business ties in an objective and rational perspective ... finger-pointing and pressuring obviously does not help."
Last Friday, Beijing revived and quickly pushed through long-threatened anti-dumping levies against US poultry producers. The move, combined with the recently announced sanctions against major US companies that were involved in the Taiwan arms deal, such as Boeing and Lockheed, will further worry US analysts, who already fear rising protectionism in the Chinese market.
US business organisations have said they have grown increasingly dismayed at the business climate for US companies in China. Late last month, more than 20 chambers of commerce and other business associations wrote to secretary of state Hillary Clinton to raise their concerns.
In the letter, the groups said that China had ‘‘a long-term plan to exclude a wide array of US firms from a market that is vital to their future growth and ability to create jobs at home’’.
The signatories - which included the American chambers of commerce in Shanghai, Hong Kong and southern China - said that they were ‘‘increasingly alarmed by the means China is using to achieve those goals’’.
Despite those concerns, in public, at least, US officials remained sanguine about relations with their largest trading partner.’ ‘We expect that our relationship with China is mature enough where we can work on areas of mutual concern, such as climate, the global economy and non-proliferation, and discuss frankly and candidly those areas where we disagree," White House spokesman Bill Burton said last week.
But behind the edifice of diplomatic concord, officials and observers are now watching for signs of hardening attitudes and tougher stances from China in the weeks ahead.
Upcoming discussions at the UN on potential sanctions against Iran are being seen as an important bellwether of relations. Washington is currently driving a move to impose hardline sanctions against Iran as punishment for its refusal to halt a uranium enrichment programme.
It had hoped to thrash out an agreement with China that would see its tough moves approved at the Security Council without veto within the next month or two. But with common ground between the two already a scarce commodity, chances of a deal in the immediate future seem slim.
‘‘To talk about sanctions at the moment will complicate the situation, and might stand in the way of finding a diplomatic solution," China’s foreign minister, Yang Jiechi, said last week.’ ‘The whole thing is still evolving."
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