Monday, August 18, 2008
TWO VOICES, ONE NATIONAL INTEREST
This is not an earthshaking episode in international entertainment history; nothing like the infamous wardrobe malfunction, let’s admit. But it does tell us a lot abut the Chinese system. Astoundingly, this was a high-level political decision in China. The Politburo – the highest body of the Chinese Communist Party -- intervened with Chen Qigang, the musical director of the opening night extravaganza, to make clear that getting cute little Miaoke on TV was, as he told the media, a “matter of national interest.”
That’s like the national committee of one of our major parties “suggesting” to the networks who should sing the national anthem at next year’s Superbowl. That’s a matter of “national interest”? Any network eager to recoup its investment in the event will of course make that decision on its own without regard to the wishes of the government or any political party.
That hypothetical comparison might suggest two important lessons to be learned from an otherwise inconsequential blip. First and most obvious, the Chinese Communist Party still tries to micromanage its vast and complex country. Not just the economy or news coverage, but which little girl scores higher on its cuteness scale. You don’t have to be a Westerner to see the ridiculous excess in that. The second lesson is more subtle. If Beijing goes too far in asserting the national interest, Washington stops way short of what’s needed. On this side of the Pacific, the “national interest” seems to begin and end with national and homeland security.
I’m happy to let the networks decide who shall sing the anthem while I’m still in the kitchen getting ready for kick-off, but I’m eager to see someone in Washington accept responsibility for defining the American national interest in economic terms. Somewhere between the excesses in Beijing and the deficiencies in Washington lies a happy medium that would serve each country far better.
Charles Blum
Labels: China, national interest
Thursday, June 12, 2008
CURRENCY SWAP
The exchange arose in the course of the annual trade policy review of the United States conducted this week. China challenged the US to explain the “causal link between dollar depreciation and food price hike, and possibly global wide inflation,” according to a text used by the Chinese representative at the June 11 session.
The US took an obdurate stance in response. First, the dollar exchange rate is “wholly market determined.” China didn’t challenge this.
Second, the USTR-led delegation would not comment on activities of the Federal Reserve, referring the Chinese to the Fed’s Web site. The Chinese understandably found this irritating. The spokesman carped: “it has been the practice of the Review Mechanism that leading agency of a Member would coordinate with and seek response from all other relevant authorities, including those in charge of monetary policies.” That seems not only reasonable but essential to any sort of meaningful policy discussion.
Third, China says the US took the position that “international discussion of these topics would occur in the IMF and the WTO is not the appropriate forum to discuss the US monetary policy.” On this point, the Chinese took great umbrage. They noted that “a continuous depreciation of the US dollar … would obviously affect economy and trade of other [WTO] Members, particularly the developing ones.”
Recalling our comment on Steve Hanke’s analysis of the dollar/rice nexus, that point seems entirely fair. But then the Chinese unloaded on the American “double standard,” noting that at last month’s review of Chinese trade policies, the US had insisted repeatedly on tying to draw China into a defense of its currency policy. The US position, he chided, seemed to be that the “WTO is an appropriate forum to discuss monetary policies of other Members including China, but not of the US.” Ouch!
The WTO’s predecessor was sometimes derided as the Gentlemen’s Agreement to Talk and Talk. The Trade Policy Review Mechanism is one of the best features of the Uruguay Round reforms of the GATT. It forces each country to expose itself periodically to world public opinion. That’s not legally binding, of course, but it does have its uses.
In this case, it has helped China abandon its unreasonable position that exchange rates are “internal matters” that “fall within a country’s sovereignty.” Now, perhaps playing to the developing country majority in the WTO, Beijing takes the sounder position that exchange rates do affect commodity prices and trade and as such fall within the purview of the WTO. That is, exchange rates are a trade as well as a monetary issue. The Treasury would be wise to seize on this opening – whether completely sincere or not-- and convene a closed door meeting with China and other countries with undervalued currencies. An acceptable solution can only be found through negotiation. China’s new position has cracked open the door to real progress. Will the US be pragmatic enough to respond positively?
Charles Blum
Tuesday, June 10, 2008
COMPOUNDING THE CURRENCY PROBLEM
Charles Blum
Tuesday, April 22, 2008
“We Can’t Live Like This”:
Earth Day Wisdom of a 13-Year Old
One unbearably muggy, smoggy summer day several years ago, I met a young Chinese girl and her father on then brand-new magnetic levitation train that runs to the
Annie and her dad, a monolingual environmental engineer, drove home several lessons that are quite apt for today, Earth Day. First, it’s just plain wrong, as some like to assert, that the Chinese have no ecological conscience.
Second, these efforts by themselves are patently inadequate. The evidence of that is everywhere. From air and water unfit for human consumption to dry river beds across
Third, there is hope. There’s no lack of money in
But this problem is not only Chinese. All the big polluters – including the
Charles Blum
Labels: China
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