Locke and Biden: The Two Hidden Weapons of U.S. Economic Strategy

Two Americans came this week – one to stay for several years and one for a few days.

The one staying is the new Ambassador Gary Locke, of Chinese descent.

According to Reuters, upon his arrival in Beijing, Locke assured China that its American assets are safe. Despite their economic and political differences, the world’s two great economic powers may still find something in common. When asked to comment on China’s worries about the U.S. economy and credit rating, he said that President Obama and Congress have already mapped out a “path ensuring fiscal integrity of the United States” and that the U.S. Treasury still has buyers despite the credit rating downgrade.

Chinese officials are concerned about his comments, but the people seem much more concerned about something else. Locke had attracted the attention of the Chinese online community before his arrival in Beijing, thanks to a photograph showing him buying coffee at Sea-Tec Airport without the presence of security or assistants. The photograph spread like wildfire through microblogging, initiating responses of admiration – an official who actually sees people!

Of course, Locke’s job is not an easy one. AFP describes the position as “prestigious and difficult.” Despite the optimism regarding his Chinese ancestry – which acts as a bonus in his work as ambassador – his position at the crossroads of two different cultures is precisely the challenge that he will have to surmount in the future.

American-based MarketWatch pointed out that this is an appointment that will be beneficial for expanding the U.S. corporate presence in China. Locke has been appointed as ambassador just as China has overtaken Japan as the world’s second largest economy, with U.S. companies often complaining about being left out for the Chinese market.

The one leaving in a few days is U.S. Vice President Biden.

The public does not seem too bothered about whether his lifestyle is as simple as Locke’s, though the U.S. media have been very concerned about his visit. The New York Times opined that American economic troubles have cast a shadow upon Biden’s visit. This visit has not seen Biden putting pressure on Beijing about the value of the Chinese yuan; instead, Chinese officials have been putting him on the spot about the stability of the U.S. dollar. Having seen the trouble that President Obama had behind the scenes over convincing Republican congressmen to raise the U.S. debt ceiling, the Chinese will be actively attempting to assess Obama’s capability.

Americans are not merely concerned about their diminishing power in the U.S.-China relationship; they also have problems of their own. The news of British riots has brought about some American introspection. Atlantic Monthly pessimistically poses this question: Britain today, America tomorrow?

The riots in London were a result of the political elite’s indifference toward the working classes in a country on the decline. As the Atlantic Monthly pointed out, does this description not apply to the U.S. as well, with its widening income gap, unemployment levels, the desperation of the underclasses?

While the British and American media sing their songs of sorrow, and the Chinese media sings its songs of praise, the German media stands out with its voice of reason. An article that appeared in the German Badische Zeitung on August 14 pointed out, without mincing words, that Chinese confidence about the crisis in the West may be presumptuous.

The article continued by pointing out that China may already be feeling an optimistic sense of victory — certainly feeling more optimistic than the Americans with their sense of defeat. That said, getting drunk on victory may be dangerous, as it blinds you to the full picture, even before the final results are in.

The article then goes on to opine that there are no winners in this crisis, only losers of different degrees. Although China-U.S. relations in the last few decades have seen political confrontation, their economies are closely entwined. Americans are the major buyers of Chinese products, and the current U.S. economic instability also affects the livelihoods of tens of thousands of Chinese workers employed through the export industry. If Chinese exports decline, these people lose their jobs. China has realized that this threatens its societal stability.

According to an article in the Los Angeles Times, the greatest challenge China faces in international and domestic arenas is that of the so-called economic “rough spot.” When recession hits Europe and the U.S., the demand for Chinese products will fall; if a second downturn hits again, China will once again be unable to experience positive economic results. The answer to this problem is for China to increase its domestic consumption for the sake of economic growth.

U.S. personal consumption expenditures are 70 percent of the total GDP; China’s are only around 40 percent.