In yesterday’s State of the Union address, U.S. President Barack Obama acknowledged that China is the fastest growing region in the world today and that the United States cannot simply go on conducting business as usual. He also stated that the United States, and not China, should take the lead in setting trade regulations throughout Asia and the Pacific. In truth, however, the highest priority for Obama and the Democratic Party is to revitalize the U.S. economy and use the “economy card” to win back popular support. Enhancing cooperation with the ever-growing world’s second largest economy, China, is the United States’ best option to accelerate the upturn in its economy. If instead it views the U.S.-China economic relationship through the lens of Cold War jockeying, however, there will be no winners.
Former President Bill Clinton, a Democrat, had a famous campaign slogan: “It’s the economy, stupid.” That year, Clinton won the presidency based on the economy. Now, Republicans control both the House and Senate, and Obama is a lame duck president. An upswing in the U.S. economy has become Obama’s “ace in the hole” to regain support and turn the tide for the Democratic Party in the upcoming presidential election. At present, the U.S. unemployment rate has dipped below six percent and the economy is growing at its fastest rate since 1999, facts that Obama is citing as his political achievements to seize popular support. After the financial crisis, the United States was the first to increase the money supply as a means of saving the economy, and although it has seen a gradual recovery, a widening wealth gap has resulted in growing discontent among the population. Reports on wealth estimate that next year the aggregate assets of the richest one percent of the world population will surpass that of the other 99 percent combined. This situation is even more exaggerated in the United States. Consequently, Obama has urged Congress to implement tax policies aimed at redistributing wealth through raising taxes on wealthy households and financially flush enterprises while lowering the tax burden on the working class, as well as pushing for a series of reform measures that would benefit the middle class, a posture that some within the United States have termed “economic populism.”
But the Democrats will only gain this political capital if the economy continues to improve. Although it has emerged from the shadows, the economy still needs revitalized exports and strengthened international competitiveness to consolidate its recovery. China, as the world’s second largest economy, is now hot on the heels of the United States, and with its economic growth rate being highest in the world, it has naturally drawn extra attention from Obama. Obama mentioned China three times in his State of the Union address, stating that the United States should pass new trade agreements to combat China’s steadily expanding influence. He also emphasized that the United States should be the one setting trade regulations, and that it cannot allow a situation where China holds the reins. However, as the largest developing and developed countries in the world, China and the United States have established a highly symbiotic economic relationship, one in which their interests are intertwined and they must rise or fall together. If the United States does not change its combative mindset and abandon thoughts of interfering with China’s development, the mutually beneficial and cooperative U.S.-China trade relationship will inevitably suffer, as will U.S. efforts to revitalize its economy and peace and stability around the globe.
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