What Did Hu Jintao's Visit Mean?
The Hu Jintao visit last week to the White House and President Obama's reaction to it were predicated on three realities: 1) the Chinese economy is growing at a far faster rate than the U.S.; it is the world's largest creditor, America is the largest debtor nation in the world; 2) stung by the November election and stubbornly high unemployment, President Obama has dropped all the fat-cat them/us anti-business talk and spread the wealth lingo that terrified business and prolonged the recession, and is now desperately trying to create more jobs, mostly through exports to places like China; 3) one American still produces three times the goods and services as three Chinese and enjoys a standard of living that won't be reached by 1 billion in China for decades more—if it avoids social chaos, environmental disaster, and political disruption.
Add that all up and we end up with the current passive/aggressive attitudes toward China and vice versa. We feel we are in decline, they in ascendency, but our decline is still far more affluent than their rise. We worry about their muscle flexing, but understand financial clout earns political influence and so don't like what we see as inevitable. And we know the trade imbalances are both unsustainable and mostly our fault not theirs, but believe that even a symbolic small trade concession will, in some measure, mean more American jobs and therefore improve Obama's reelection chances. For Obama, human rights, Tibet, or North Korea are simply not part of the present short-term picture.
A person from Mars would advise us to cut entitlements and spending, balance budgets, curb regulations and unleash American commerce to restore America's fiscal health, and then most of our political problems with China would disappear, but that would entail ending the entire big government, Keynesian, redistribute the wealth philosophies that are inseparable from Obama's political career.
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Aug '10
Re: What Did Hu Jintao's Visit Mean?
Dr Hanson
Do you think its possible to rebuild our manufacturing base ? If we did it without unions, multinationals, and some heightened trade restrictions could we actually start making things in America like nails, bolts, tvs, clothing again ?
To watch the Administration try to obstruct that movement would be like watching Sartre (with two good eyes) doing gymnastics.
Jan '11
Re: What Did Hu Jintao's Visit Mean?
Debt is like holding a gun to the airplane pilot's head. If you shoot, you both die. The only credible threat is if you're willing to go down with the plane, and China doesn't want that.
On the other hand, China is perfectly free to refuse taking on more debt, and that's why Obama is careful. He plans on more borrowing. That's revealing, because it means that Obama doesn't believe that "unleashing" American commerce will return us to solvency. That leaves the question, then, about what he thinks will lead us to growth. More government spending? Isn't working so far ...
Dec '10
Re: What Did Hu Jintao's Visit Mean?
Which is why the Hu Jintao visit is substantively meaningless. The Chinese leadership likely considers Obama an ineffective neo-socialist wanna-be. They probably laugh at him in private.
China's interests are as follows.
Also, they want their own economic influence and military power to steadily increase relative to ours.
Over time fewer in the world will care what the US says and does and more will care what the Chinese say and do.
Dec '10
Re: What Did Hu Jintao's Visit Mean?
Cynicism alert. The only rational reason I can come up with for the left to care one iota about "unleash[ing] American commerce to restore America's fiscal health" is to expand the tax base and increase the inflow to the public coffers. They do not see this as a necessary part of providing a common defense or supporting the general welfare, but rather as a means to peddle influence, buy voting blocks, and consolidate their power over the great unwashed masses. I suppose that dovetails well with the professor's final point.
Re: What Did Hu Jintao's Visit Mean?
Victor, you're absolutely right about both the challenges that China poses and the obvious counter-moves we can make. A leaner, more competitive America means an America with a sharply reduced regulatory state, a freer flow of capital with greater incentives (like major tax cuts and a flatter tax all around) for risk, and a rigorous re-thinking of our education system, to produce smarter, more nimble, more adaptable students at all levels (not just college, which is for many a giant waste of time and money).
And yet, my fear is that the Obama administration wants to use the China Challenge to increase the bad stuff -- regulation, taxes, educational subsidies -- instead of unleashing the good stuff.
Jun '10
Re: What Did Hu Jintao's Visit Mean?
I don't know what the Chinese visit means. It's my understanding that agreements are the result of many months of behind the scenes negotiating prior to the actual meeting between heads of state. The pomp and circumstance is merely window dressing.
Our Chinese policy is less important for Obama's reelection chances than a conundrum of Obama's own making. If we get a jobless recovery, the persistence of unemployment will damage his prospects. On the other hand, if the economy begins to recover and the cost of energy rises due to increased demand, we could see gas at four to five dollars per gallon. Much of this would be due to having placed domestic oil and gas off-limits to domestic producers. No administration can survive five dollar gas at the pump. Rhetoric can't solve the problem.
Hu Jintao to Obama: "Mr. President, may you live in interesting times."
May '10
Re: What Did Hu Jintao's Visit Mean?
Victor Davis Hanson:
A person from Mars would advise us to cut entitlements and spending, balance budgets, curb regulations and unleash American commerce to restore America's fiscal health, and then most of our political problems with China would disappear, but that would entail ending the entire big government, Keynesian, redistribute the wealth philosophies that are inseparable from Obama's political career. ·
If you can produce this "person from Mars" I'd be happy to vote for him/her/it.
How sad and revealing that the phrase to indicate "someone with intelligence, common sense, and an objective viewpoint has become "a person from Mars."
May '10
Re: What Did Hu Jintao's Visit Mean?
Free-market economics teaches us that exchanges are not necessarily zero-sum; the market, with perhaps a few exceptions like derivatives, operates so as to maximize the probability that each exchange will be a positive-sum exchange. As the productive capacity of China increases, the gains to be made in commerce with China increase. Plus as our trade volume with China increases, their cost of waging war against us (which is already extraordinarily high) increases even further. I don't think the Chinese government desires to witness U.S. economic decline because such a decline would negatively effect Chinese exports and, therefore, the Chinese economy.
Dec '10
Re: What Did Hu Jintao's Visit Mean?
I want a T-shirt:
"YOU may be big in Japan...
,,, bu't I'm HUGE in TAO!"
May '10
Re: What Did Hu Jintao's Visit Mean?
It's always good be friendly towards one's bank manager. If he drops in, make sure to offer him afternoon tea, even though he may be truly barbaric to members of his own family at home.
(Love the T-Shirt idea Stuart, were you also referencing an Alphaville song from the 80's? I will avoid the double entendre of Down Under jokes for the moment)
May '10
Re: What Did Hu Jintao's Visit Mean?
Everything you say may make sense if everyone in the world, including the Chinese, viewed the world through glasses colored to show only economic issues.
The Chinese realize they need prosperity, and they want it. But war has a funny way of happening even when it doesn't make economic sense (or sense by many other measures). There are those irrational things called "animal spirits" still in us, which is why the markets so often fail to find the optimal equilibrium. As for war, China is already nursing many grudges against the West. If they experience any major crisis-- Taiwan declaring independence, say; or an economic crisis, which is bound to happen eventually; or anything that halts their national "rise to greatness"-- conflict could easily break out.
China has a history of civil war and internal turmoil. This is their biggest risk if their economy tanks. But it also means a paranoid national leadership could be eager to deflect criticism to a foreign scapegoat to defuse internal tensions.
Edited on January 26, 2011 at 5:45am