The Hidden Agenda Behind Obama’s Demands Toward China

According to a report published by the United States Department of Commerce on March 11, the U.S. trade deficit had grown from $181.4 billion in December to $183 billion in January, while Chinese exports to America were reduced by 17.6 percent. That day, President Obama, in a rare move, published a statement pressuring China on the exchange rate issue. Chinese People’s Political Consultative Conference (CPPCC) member and Bank of China Vice President Su Ning stated on March 12 that appreciation of the Chinese yuan would not suffice to solve economic imbalance, and that the exchange rate of the yuan should not be politicized (March 13, Shanghai Securities newspaper).

The media has referred to this motion by Obama as “rare,” because he has seldom weighed in on the exchange rate. This time, he not only clearly made use of the word “demand,” but the data of the Department of Commerce has issued its first “pressure” signals, indicating that the exchange rate issue has now gotten the attention of President Obama.

The United States has a long tradition of putting pressure on the yuan. In recent years, whether it be American political figures, congressmen or certain thinktanks, America is always blaming other countries — especially certain favorable countries —for its trade imbalance, although always with very few results.

At the start of the National People’s Congress (NPC)-CPPCC session on March 5, Premier Wen Jiabao clearly expressed that in 2010 the exchange rate calculation method of the yuan would continue to be improved, the yuan would be kept basically stable at a rational and fair level. The statements of the “Government Work Report” on the yuan’s exchange rate were in fact no different from those of 2009. Appreciation of the yuan would be detrimental to Chinese exports, since the American dollar is appreciating while the euro and Japanese yen are depreciating. This writer believes that Obama’s “demands” are not only useless, but might worsen trade friction between China and the U.S. and broaden the gap between the two countries.

Then why is President Obama acting against his better intuitions and making “rare” demands on the yuan? This writer believes that these words are propaganda, not so much aimed at China as at the public at home in America.

The America of today bears striking similarities to the America of 2006. It is facing the same sort of midterm elections, the ruling party is in a similar crisis and the economy is again faltering indefinitely. Now that Obama has been elected, the biggest project of his party, health care reform, has come to a standstill and Republicans have threatened to filibuster against it. One year into his presidency, Obama has not been able to come through on his major campaign promise, and he has greatly disappointed the American people. Recently, while the White House has been dealing tough cards to the outside world, Obama has also been getting tough feedback at home. But pressure from the president won’t necessarily compel the American people. For this reason, Obama seems to be treading carefully at home, seizing on the opportunity to call out certain countries that are “malevolent” toward the U.S., and in the process stirring up the American spirit. Obama’s “demands toward China” have managed to cleverly transfer the blame for domestic quagmires and have garnered Americans’ sympathy for the plight of his party. When it comes to hidden agendas like this, sadly, no one thinks much of it.

Of course, China’s talk of the yuan remaining basically stable does not mean it will not change; rather it will be tweaked appropriately according to the situation. No matter how the yuan is adjusted, this is China’s sovereign task, and it is open to recommendations, but cannot be forced. Using the power of force is determined to fail.