THE STASH NOVEMBER 17, 2009
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As I mentioned yesterday, I'm somewhat skeptical of the benefits of "getting tough" with the Chinese on issues like currency manipulation and our trade deficit. (I think you need to do it, but you've got to be sophisticated about it.) But Obama's town hall meeting in Shanghai, which was heavily stage-managed by the Chinese, is one place I think the administration really should have gotten tough. From the NYT:
The event in some respects signaled a retreat from the reception given at least two earlier American presidents, Bill Clinton and George W. Bush, who both asked for, and were granted, the opportunity to address the Chinese people and answer their questions in a live national broadcast.
One local television station broadcast Mr. Obama’s session live. But the official Xinhua news agency offered only a transcript of the exchange on its Web site instead of the live Webcast it had promised. The White House streamed the event live on its Web site, which did not appear to be blocked inside China. But that site is not a common destination for most Chinese looking for breaking news.
I obviously don't know all the back and forth that went into negotiating the protocol for this event, and so I hate to second-guess. But this strikes me as a bluff by the Chinese that we probably could have called. Given the precedent with Clinton and Bush, it doesn't seem like the Chinese were going to blow up the whole trip over our insistence on a live national broadcast. Likewise, I'm not sure when the administration found out that Xinhua would only provide a transcript rather than stream the event live, but, if it was beforehand, it seems like it would have been worth standing our ground. And if it was afterward, it seems like it would be worth retaliating in some small but unmistakable way. This all just seems like classic salami tactics by the Chinese...
P.S. Of course, it's possible that the administration is planning to do just that. Worth keeping an eye on.
6 comments
If the Chinese want to keep their standard of living low, why should we stop them? Let's focus on getting our people employed by supporting domestic demand, not unemploying poor Chinese laborers or exporting our hard work to other countries. It's way past time to increase the stimulus.
- acria multa
November 17, 2009 at 5:09pm
http://neweconomicperspectives.blogspot.com/2009/11/should-america-kowtow-to-china.html
- acria multa
November 17, 2009 at 5:42pm
Hi acria - that's a good article, but it only deals with the trade deficit. Somewhat off topic for the post: The Budget deficit IS financed by the Chinese (in that we are mortgaging what we spend the deficit on). If the future return in taxation from what we invest our deficit spending in does not cover the interest on the debt (likely, since its mostly tax cuts and wars), aren't we the ones who are impoverishing ourselves?
- Nari224
November 17, 2009 at 8:16pm
what acria said
- blackton
November 18, 2009 at 1:43pm
Hi Nari, I also replied to your comment in the previous post. I disagree that that budget deficit is "financed" by the Chinese. The Chinese don't print dollars, so we can't/don't get our money from them. Only the US Treasury /Federal Reserve can and do provide dollars. They had to sell us their products in order to receive the dollars they hold now. We only offer them a safe savings account that pays an interest rate we set and we call it a treasury bond. If we don't like the interest rate, we should change it. If they want to spend their dollars it's only fair, I mean we did get stuff from them in the first place. And since unemployment is 10% and clearly our government isn't interested in keeping our economy running, the Chinese spending their dollar pile wouldn't cause a problem. I think we are impovershing ourselves but it's not the trade deficit, it's because we are wasting human capital and time with millions of people unemployed, and the solution to that increase demand by either cutting taxes or increasing spending or both.
- acria multa
November 18, 2009 at 1:51pm
One more comment, perhaps an oversimplification, but the government can't tax or borrow dollars it didn't spend first. A lot of people like pointing out that medicare is a "unfunded liability" of I think 30 trillion was the last number I heard. Do the Chinese have 30 trillion dollars somewhere? Does anyone? So if we were expecting to "borrow" from the Chinese, what are we going to do? Do you have 30 trillion that I can collect in taxes? Of course not. The government has to spend it first, then it can collect the taxes.
- acria multa
November 18, 2009 at 3:29pm