Under Obama, Sino-American Trade Disputes May Increase

Democrat Barak Obama was elected America’s new president amidst a financial tsunami; without a doubt, resolving the country’s economic problems will be his principal mission. America is China’s most important trading partner, and scholars believe that in the early stages of Obama’s term he will take steps to reduce America’s trade deficit with China and that the “Trade Imbalance” will become an important focus of the Sino-American relationship. However, analysts do not expect his China policy to be very different from previous mainstream Democratic and Republican policies.

Trade with China was certainly not a major focus of the recent U.S. presidential campaigns, but, because the two countries are so important to each other as trading partners, and are so important to the global economy, the rest of the world will also pay close attention to his trade policies toward China.

The Democratic Party has taken a relatively tough standpoint on Chinese trade problems in the past, and Obama has publicly referred to America’s large trade deficit, saying that it is the result of “manipulation of the Renminbi exchange rate,” also saying that “China needs to change its policies, including its exchange rate policy.” He has also said that the Chinese economy needs to reduce its dependence on exports and depend more upon domestic demand to achieve growth. He said that he would do his best to use every diplomatic measure to spur China toward carrying out the reforms listed above.

China’s foreign ministry immediately responded that the Renminbi exchange rate was not a fundamental cause of America’s trade deficit with China; the problem of the trade deficit was caused by the economic globalization and accelerated developments in the division of industrial labor.

After Obama takes office, Sino-American trade may experience more friction, mainly over product safety, the Renminbi exchange rate, intellectual property rights and the American trade deficit. But Cha Xiaogang, an expert on the United States at the Shanghai Institute of International Affairs, believes that this will absolutely not impact the true fundamentals of the Sino-American relationship After the onset of the financial crisis, with America possibly facing the most serious economic recession since the 1930s, it especially needs China’s aid. Cha Xiaogang points out that, as China is currently the biggest overseas holder of American debt, America needs to maintain China’s trust.

After Obama’s victory was announced, Chairman Hu Jintao congratulated him on television. In a statement published on its website, the Chinese foreign ministry said that China and America share extensive common benefits, and that the development of a long-term, healthy relationship between the two countries – in line with the fundamental interests of world peace, stability and development – is of great significance.

He said that he and the government of China view the Chinese-American relationship with a high degree of importance, and that they expect to work hard with Obama to strengthen the dialogue between the two countries, increase mutual cooperation and bring Sino-American relations to a new heights.