Seeking International Solutions for America's Economic Problems

Since China and the United States established the strategic and economic dialogue mechanism in April 2009, both countries have already had two rounds of dialogues. Whether looking at the perspective of seeking cooperation or from the standpoint of resolving conflicts, this Sino-U.S. strategic and economic dialogue mechanism is no doubt an exchange platform between two giants: China, presently the largest developing country in the world, and the United States, currently the largest developed country on earth. It is not an exaggeration if this platform is called G2; therefore, it has a certain nature that cannot be duplicated.

Although other countries cannot copy the Sino-U.S. strategic and economic dialogue mechanism, China and the United States are repeatedly conducting the dialogues one round after another. It was reported that Chinese President Hu Jintao’s special envoys, Vice Premier Wang Qishan and State Councilor Dai Bingguo, already left Beijing for Washington on May 8. They, together with President Obama’s special representatives, Secretary of State Hillary Clinton and Secretary of Treasury Tim Geithner, will co-host the third round of Sino-U.S. strategic and economic dialogue from May 9 to May 10.

When looking at all the topics associated with the third round of Sino-U.S. strategic and economic dialogue, it seems that the contents mainly cover four areas. As I can see, promoting trade and investment cooperation, as well as perfecting the financial system and strengthening financial regulation, are the two subjects that can be easily touched up as stereotypical stuff. On one hand, the issue of renminbi appreciation will continue to be the focus of this dialogue. Even though renminbi appreciation accelerated its rhythm in the past six months, and the reminbi’s exchange rate against U.S. Dollar already made a breakthrough of an important barrier — one U.S. dollar traded for less than 6.5 yuan of renminbi — it looks like that the United States has a much bigger appetite. It has strongly demanded that the Chinese financial regulatory agency permit the renminbi to appreciate at a much faster rate. On the other hand, Sino-U.S. trade friction is also a must-discussed subject in this round of strategic and economic dialogue. China accumulated a $1.02 billion trade deficit in the first quarter this year. This was the first time that China had a quarterly trade deficit in six years. But what the U.S. was more concerned about was whether this recent trade deficit was directed at them. That is to say that as long as it can improve the U.S.’s situation in foreign trade balance, the United States is not concerned whether China’s foreign trade has a surplus or deficit.

Over all, I feel that on the third round of Sino-U.S. strategic and economic dialogue, all the gestures that Americans have made so far indicate that they, as usual, overly pursue self-interests, which is excessively stated when compared with the last two rounds of Sino-U.S. strategic and economic dialogues. In contrast, the United States seems to just walk through perfunctorily on issues of seeking common ground. The reason that the United States side has been so aggressive in this round of Sino-U.S. strategic and economic dialogue is largely due to its consideration on resolving domestic economic issues.

As we all know, after the international financial crisis exploded, what the Americans have been doing for years — focusing on developing a virtual economy but neglecting the tangible economy — was declared impossible to continue, a dead end direction. However, since for many years U.S. domestic spending ability has far exceeded productive capacity, it is in fact not an easy task for Americans to handle the fact that suddenly they have to again adopt a tangible economy, which has been hidden away for a long time. Presently, it looks like even though the U.S. economy was already out of the most difficult period after the explosion of the international financial crisis, such recovery was largely stimulated by, and benefited from, the execution of the quantitative easing monetary policy with zero interest. As a matter of fact, there are so many problems in the current U.S. economy that urgently await a fix. A high unemployment rate and high federal deficit are among the most troublesome problems facing Obama administration.

However, there are always more solutions than issues, and that’s exactly where Uncle Sam shows off his cleverness. In order to bring its current economy out of an awkward and sluggish situation, the U.S. government has been placing its hopes more and more on adjusting international economic relations. Logically speaking, the United States should not be criticized for invigorating its domestic economy by expanding international markets. The United States does it this way, and so too does China, as well as other countries. Two years ago the U.S. Congress passed a law, called by other countries a “Purchase of Goods Made in the U.S.” act, which did its best to not allow other countries to share the commercial opportunities brought by the $780 billion economic stimulus package. Then one year ago the U.S. government passed a five-year plan to double its exports, and the hope is that the expansion of exports will move the U.S. economy forward. Presently, the U.S.’s quantitative easing monetary policy is near its end, and it is critical and imminent that the ways and patterns of economic growth must be changed in an American way. Under such circumstances, there is no doubt that the U.S. side will utilize the third round of Sino-U.S. strategic and economic dialogue platform to push its difficult domestic economic problems toward the world.

It is said that even heaven and earth would find it difficult to accept that a country does not pursue its own interests. However, in practice the United States just wants to benefit itself on the basis of hurting others’ interests — this simply cannot be complimented. But to Americans this is not the first time that they benefit themselves by damaging others’ interests. When Nixon announced 40 years ago that the U.S. dollar would stop having a gold standard, it hurt everyone. Then the U.S. did it again in 25 years ago when it forced Japan to sign the Plaza Accord. Finally, not long ago the U.S. Federal Reserve carried out two rounds of its quantitative easing monetarypPolicy, which, again, harmed other countries’ interests.

The United States is such a country: In order to maximize its national interests, it not only can turn its internal economic problems toward the whole world, but it is also able to upgrade other countries’ internal economic issues as international issues. As revealed from certain American officials prior to the dialogue, the U.S. side will bring up subjects such as credit issuance, the interest market and bank reform during the third round of Sino-U.S. strategic and economic dialogue. Looking from a positional perspective, these issues should be regarded as China’s internal problems, but now it will be “internationalized.” Perhaps this is another way to resolve domestic problems: let them be internationalized. However, the original intention of seeking such a resolution has revealed, to a large degree, America's pragmatism and opportunism hiding behind their unreserved talks of market economy theories.

We are against the U.S. earning profits for itself at the expense of the others during the process of resolving domestic economic problems not because we are afraid of talking about internal issues but because we want to place the internationalization process of both China and the U.S.’s domestic economic problems in a justified, fair framework and seek resolutions. Otherwise, during the process of finding international solutions for both China and the U.S.’s domestic economic issues, China will fall into a unilateral situation where all matters will be centered around Americans’ national interest. Thus the base of a win-win situation will disappear and the significance of this dialogue will be greatly reduced. In fact, many problems facing either China or the United States can be regarded as each other’s internal issues as well common international issues. Looking at the present situation, it seems that both China and the United States have made great efforts domestically in regard to developing low-carbon economy, promoting environmental protection and developing new energy. Therefore, the third topic of this round of Sino-U.S. strategic and economic dialogue will focus on pushing the economies moving forward strongly and sustainably and keep them in balance. At the same time, European sovereign debt crisis, as well as Middle East and North Africa’s situation, will have impact on regional and world economy, while Japan’s exceptionally big natural disaster will bring challenges to the current state of the macro economy. If both China and the United States took these commonly concerned domestic issues to international forums and seek solutions, it will largely allow each party to utilize its own advantage and to overcome one's weaknesses with the other’s strength; it is thus possible to yield twice the result with half the effort. This is just another topic that should be addressed in this round of Sino-U.S. strategic and economic dialogue.

As we review all topics for the third round of Sino-U.S. strategic and economic dialogue, it seems that during the process of seeking international solutions for its domestic economic problems, the United States made numerous secret calculations and even was willing to harm other countries’ interests in order to gain profits for itself. However, we should not simply exclude internationalization as a way to resolve domestic economic issues. As a matter of fact, during the economic development process, China also has many problems and cannot extricate itself but has to largely rely on foreign countries to help push forward. It seems now that if the United States can adopt practical measures to relax the restriction of exporting high tech products to China, allow Chinese enterprises to expand investments in the United States and reduce trade barriers, then Chinese companies will be greatly benefited. I should point out that negotiation is an art of compromise. Speaking from this perspective, if the U.S. hopes to discuss and seek solutions to its domestic economic issues at the Sino-U.S strategic and economic dialogue platform, then China should also bring its own domestic economic problems to the dialogue platform and find answers. It would not be appropriate if we do not reciprocate.