China: Usa: Trade and foreign policy, the "crossroads" of Hu Jintao in the U.S.

world | Jan 18, 2011 | By Asia News

 Washington - Chinese President Hu Jintao is going to visit the United States again.  As in the past, the Chinese Embassy is distributing bonuses for attracting Chinese students to attend the welcome ceremony.  But this time there are new programs.  Students at the University of Maryland, which is near the US Capital Washington DC, are being offered $55 each.  This amount is obviously less than the past $100 each.  However, they are much luckier than the Chinese students in Philadelphia, which is more than 200 km away.  Those students are offered only $20 each.  So, there are people screaming out loud that it is not fair.  Some decided not to use their own money to subsidize these activities.  Probably, there will be a few people who would pay out of their own pocket to welcome President Hu whom other people will think are sick.  Over all, these welcome ceremonies are not the same as before, which could be related to the officials in the Foreign Affairs faction losing favor nowadays.  President Hu has long since declared that they will no longer engage in activities like these welcome ceremonies, so others can justifiably not give enough funding.  But nose browning is important, so the result of "self-financing" is this "unfair treatment".  We have to feel sorry for these people who try so hard to brown their noses.

Putting these funny things aside, there is some significance in this US visit by Hu Jintao.  The biggest difference from before is that Hu has to make major concessions and engage in substantive negotiations under heavy internal and external pressures.  He will not be successful by simply making a show.  Instead, it is for sure that Hu must make concessions.  The issue is only regarding what will be put on the table and how much.  Not only are the Americans expecting him to make concessions, the Chinese people inside China are hoping concessions as well.  Concessions on the currency exchange rate and the foreign trade system are related to the interests of both the Chinese and the Americans.  When one has prosperity, the other will also have prosperity.  When one loses, the other also will lose.  So this time, the interests of the average people in both countries are indeed integrated together.

So what concessions can Hu make this time?  Both sides know the first is the economic concession.  There are too many pressures from the American people demanding the rise of the Chinese currency RenMinBi's value and the lifting of China's import restrictions.  These concessions are a must.  The Chinese currency value went up a little before Hu's visit, as a small token to the USA.  Yet, obviously, it was far less than the expectation of the USA and thus unacceptable.  It could only be counted as a start; what follows will be depend on Hu's dialogue.  

So which kind of choices does Hu have?  He basically has two strategies to choose from.

The first is to make the least possible economic concession, but to make some major concession in international affairs to meet the needs of American politics, such as the North Korea issue, Iran nuclear issue, Pakistan's nuclear issue, and the South China Sea issue, etc.  That means, if Hu does not sell out his friends, then he has to sell sovereignty.  Further, after he sells out friends, the problems are only delayed instead of solved.  However, by then, for Hu Jintao these problems would become someone else's problems.  By next year, he will not have to worry about it, so it is just as well to let those who take over have the headaches.

The advantage of doing so is not offending the big capitalists both inside China and outside.  However, after he steps down, will these big capitalists still give him face and offer him favors?  Can he get some promises in advance like some American politicians do?  If not, then probably no one would be grateful to him, because his successor must make the concessions that he is not doing now.  Otherwise, it will not only be unfavorable to the USA, but also unfavorable to his successor in maintaining the Communist regime.  By then, no one will remember that it was Hu who allowed economic conditions to persist for one more year.  The capitalists who benefited will not remember his benefits, while his successor will resent him for such a mess.  However, from Hu Jintao's rigid and inflexible character, he's likely to play such a role that does a hard but thankless job.

If Hu Jintao really takes this strategy, then the Americans are pushed to a corner.  The hardliners in the US Congress will clearly have the upper hand.  A trade war centered on increasing the import tariff will be started.  To protect its own interest, the USA will not tolerate anymore of the Chinese government's trade policies which benefits only itself at others' expenses.  This is both reasonable and beneficial.  No one could prevent the USA from protecting its own interest by using tariff barriers.  By then, Chinese exports will have dropped sharply, yet without gain the benefit of an appreciated Chinese currency.  Meanwhile, the inflation and shortage of goods inside China will force China to increase imports.

Then, the only difference is that there will be no buffer period to adjust the economic structure normally.  Everything includes its timing and how will be determined by the Americans and China will have lost its initiative to control the economic pace.  To summarize: to survive by relying on the others.  Whoever the successors are will be out of luck and scolded by the others.  How then could not the successors hate Hu Jintao?  Not only the successors will hate Hu, the average people in China will hate him too.  That is because he only took care of the interest of the big capitalists, thus lost opportunities for the country and the people, and causing China to be cornered.  By then, even the big capitalists who could not earn excess profits will scold him.  So choosing foreign policy concessions over economic concessions will be a decision that harms others yet not benefit himself.

If Hu has a wise team of assistants, then they should take the second option.  That is to persuade him to seize the opportunity to gain, in the way of pushing the boat with the current, making major economic adjustment through international pressure by trading the rising of Chinese currency and opening trade relationships in exchange for favored policies over technologies.  This action will be greatly benefit China's economic restructuring and technological upgrading, as well as gaining the buffering period to gradually expand the domestic market.  The American society will also find this option more acceptable.  So the results would be happy for both.  I think the Americans will also give Hu enough face to be able to show his list of successes when he returns to China.  This is what Deng Xiaoping did when he visited the USA back then, which we should not say had an unsuccessful outcome.  As a matter of fact, the Chinese Communist regime was able to extend another 30 years largely due to Deng being able to treat the interests of the USA fairly.

Probably the only unhappy group would be the young "patriotic cynics".  This model which is of benefit to both sides does not fit dreams of hegemony expansion for these young patriotic cynics.  The group of young Chinese patriotic cynics is a very special group, due to the poverty of the society and their own misfortunes.  There is no place for them to vent their extreme anger, yet they have no guts to challenge social injustice.  Therefore, they release their hatred in the name of patriotism and racism, which is not as easy to be punished by the government.  This is true in all society.  When the economy is bad and even getting worse, there is an increase in the degree of xenophobia, even Nazism.  In ancient China, revolt and dynastic change would occur.

So it will be only wishful thinking for the Chinese government to rely on these patriotic cynics to maintain its hold on society.  In the end, it will be shooting itself in the foot.  I wish the Communist successors would think very carefully.

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