U.S. Secretary of Treasury Learns from Hilary Before Visit to Beijing

At the end of this month, United States Secretary of Treasury Timothy Geithner will set out for Beijing. This will be his first trip to Beijing since he took office. Acting as the Obama administration’s leading figure in trade policies regarding China, Geithner’s trip highlights the importance of strengthening cooperation in trade against the backdrop of the current economic crisis. A change with respect to Geithner’s recent meddlesome remarks also reflects a subtle shift in America’s long-standing and adeptly performed “complaint diplomacy” towards China.

The United States Treasury has issued a statement saying that the focal point of Geithner’s visit with Chinese foreign policy-makers will be to hold discussions on “a range of issues of importance to both countries,” including ways to strengthen China-US.. economic relations and advance the steady, balanced and sustainable growth of both nations.

This kind of statement clearly differs from Geithner’s own attitude towards China before and initially after taking office. Geithner’s claim that China was manipulating its currency caught everyone off guard and ended up triggering the American foreign currency market to severely fluctuate. Currently, the most important task in China-U.S. relations is to act together amidst the larger atmosphere of world economic crisis. While the U.S. is falling deeper into economic straits and is seeking China’s help with its national debt and other problems, to make an issue of China’s currency exchange rate, even to the point of fabricating talking points for no good reason, is clearly unwise.

In view of this, the U.S. has begun to adjust its position. Geithner appears to have started to let go of the unilateral “complaint diplomacy,” and is instead offering a positive assessment of China’s performance.

On the eve of the London G20 summit, Geithner used “three verys” to describe China’s performance in the global economy: very strong, very stabilizing, and very important. He also emphasized that the U.S. will be “working very, very closely” with China. In a report submitted to Congress last month, Geithner clearly expressed that despite the existence of an undervalued Chinese currency, China has not manipulated the Renminbi exchange rate.

Geithner has changed his tone, allowing China-U.S. relations to avoid potential twists and turns and achieve an “open high and trade high” market situation.

In light of Geithner’s first trip to Beijing, the American media have recommended that he take a page from Hilary Clinton’s book. During her first trip to Beijing, Clinton “did not preach or complain and she thanked China three times for buying up the U.S. national debt; moreover, she encouraged them to buy more.”

Perhaps this reflects how the Obama administration is currently pursuing “Smart Power” policies together with the more often used Big Stick diplomacy of former eras. The Obama administration has chosen to lay equal stress on both Big Stick and Carrot approaches, even to the point of placing extra emphasis on the latter, thereby forcing their opponent to change its policies, and achieving victory over the enemy without ever initiating a fight.

Of course, China has also effected new changes towards U.S. policies. Now that China is also moving towards the U.S. dollar value, it has expressed its concern over looming U.S. protectionism and other problems.

Due to the economic crisis, China-U.S. relations have entered a completely new phase. While viewed as a relationship between mature and cooperative partners, it’s completely natural that there will be differences, controversies and even friction between the two. If the earlier-described relationship was based on the U.S. relying on complaints and China adopting a position of defense, then a new phase now requires that both take away experience and lessons, improving the means by which one can play the game, allowing for a more equal and effective exchange.

Naturally, to a certain degree, China’s “progress” is also the result of being “well-taught” by the U.S. Former U.S. Trade Representative Susan Schwab remarked to me that China has learned a great deal from the series of trade-related complaints filed against China by the U.S. Consequently, in the past two years, China has started to file complaints against the U.S. with the WTO. From Schwab’s look of admiration, China’s hard-line approach has contributed to winning its opponent’s respect.