Obama’s Visit to Asia: What Are the Economic and Strategic Reasons?

U.S. President Obama will pay a visit to India, Indonesia, South Korea and Japan from November 5 to 14, during which he will be present at the G-20 Summit in Seoul and the APEC Summit in Yokohama. This visit is clear in its economic and strategic intentions.

First of all, with this trade-oriented visit, the first in his presidential term, Obama aims at the promotion of U.S export and the expansion of overseas investment, as well the creation of more jobs for the American people. This is an indication of a major change of policy by Democrats, who have previously supported slightly anti-commercialist policies.

To the disappointment of Americans, after the devastation of the global financial tsunami, the U.S. economy still hasn’t fully recovered, with its unemployment rate at 10 percent and the federal budget deficit and trade deficit still high.

Without effective measures to stimulate the economy, Obama’s administration may have to face a new “lost decade.” The Democrats’ setback in the midterm election is a good reminder to Obama of the possibility that, without drastic reforms, he may have no chance to win re-election in 2012, certainly a failure in U.S. presidential history.

In the sense of trade, it is no doubt that the India visit is valued most by Obama. This visit begins with his address to the U.S-India Business Council that stresses India’s great population of 1.2 billion and its potential to become the third largest economy in the world in 10 years, which means a great number of new jobs for the United States. Following his address, a trade deal valued at $ 10 billion is struck between the two sides, thus creating 53,600 jobs for Americans.

Secondly, his visit to Asia suggests the U.S. economy will rely on Asia, and its national interests are to be bound with Asia from now on. It is true that emphases have been placed upon Asian affairs by recent presidents, with only Clinton as the exception, including Reagan, George H. W. Bush and especially George W. Bush, who transferred heavy military equipment from Europe to Asia in the armament deployment.

Before taking office, Obama and his administration had recognized the need for allocating more labor and resources in Asia, based on the evaluation of overseas circumstances.

So it is clear that, after Bush’s fair treatment of Europe and Asia, Obama has shifted the emphasis of U.S. diplomacy and security from the former to the latter. The White House National Security Council believes that issues in Europe and the Middle East have been a huge drain on the U.S., and, in the long run, what counts more for White House are the economy, politics and strategies of China, Japan, India and other Asian nations. However, it is a conundrum for Obama that the U.S. has been trapped in economic recession, hardly in a position to allocate sufficient resources to Asia. So he chose to warn China off of threatening its neighboring countries with a display of U.S. military power and providing his Asian allies and partner countries with spiritual support.

Thirdly, in this visit, however, Obama will give more practical support to his Asian allies and partner countries. For instance, Washington will reassure Japan at the APEC Summit of the importance of a security treaty and military alliance between the two sides. And furthermore, after the victory in the House by Republicans, who advocate free trade, the U.S.-Korea Agreement signed in 2007 is expected to gain the approval of Congress, thus providing Obama a chance to double U.S. exports to Korea in five years.

In India, Obama will make a deal on the sales of 33 Boeing 727 airplanes and 10 C17 cargo planes. The two sides reached an agreement on high-tech arms sales, which feed India’s need in its national defense.

In Indonesia, as is suggested by Bader, the senior director for Asia-Pacific affairs in the National Security Council, Obama will strengthen cooperation with Jakarta in aspects of national security, economy and non-governmental exchanges, further proof of the partnership between the two countries.

It is noted that China is not on the list of Obama’s destinations during his visit. This is widely believed to be the effect of Washington’s recent complaints about Beijing. But we don’t think this has much to do with the RMB exchange rate, despite Obama’s promise to raise the yuan issue in every country during this visit; over the past two years, leaders from the two sides have met several times, and it is unnecessary for Obama to include China in his visit this time. What’s more, Obama is expected to talk with Hu Jintao, the President of China, at the G-20 Summit in Seoul.

More importantly, since the signing of the U.S.-China Joint Statement in November 2009, the two sides have been in constant disputes concerning their core interests and the yuan issue; it would be more reasonable to put aside these disputes, if not to be settled at present, and to find common ground at various levels and through more channels.