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Beijing Has Changed, Washington Has Not

New America Media, Commentary, George Koo Posted: Feb 16, 2010

President Barack Obama's refusal to cancel his meeting with the Dalai Lama despite China's demand to do so is the latest of many geopolitical activities that suggest that Obama is playing his China cards the way his predecessors did. But should he?

Obama came into office facing the biggest financial crisis since the Great Depression. He knew he had to take swift and drastic actions and he did. He also knew he had to change the international image of the United States to a more humble and gentle one, and in concert with Secretary of State Hillary Clinton, he has been largely successful.

In particular, he dispensed with the usual antagonistic confrontations that previous administrations indulged in at the beginning of their relations with China. Instead he stressed the importance of collaboration with Beijing in solving challenges facing both nations.

Clintons first trip abroad was to China and she said all the right things. Energy secretary Stephen Chu and commerce secretary Gary Locke visited China more than once in the first year, partly because of the importance of their portfolios to the bilateral relations and partly because their ethnic Chinese background is regarded as useful for building goodwill. Defense secretary Robert Gates made overtures for military exchanges that China accepted and relations between the Pentagon and the Peoples Liberation Army began to warm.

Of course, as we would expect between the debtor and the creditor holding most of the notes payable, treasury secretary Timothy Geithner has devoted more face and phone time to Chinese officials than any other cabinet officer. He had to work hard to assure his counterparts in Beijing that the United States would control the deficit and protect the value of the dollar so that China would have reasons, not only to hold onto the trillions of IOUs, but to continue to buy treasury notes and bills in the future.

But the dynamic between the two countries changed after Obama came back from his trip to China in November. Since then, collegiality has been replaced by increasingly strident exchanges of words, threats and counterthreats. Obamas administration has demanded that China revalue its renminbi and open its market. He also announced the intent to sell arms to Taiwan and to meet the Dalai Lama. Its almost as if Obama had planned to build up a cache of goodwill with China in order to spend it in the second year.

Piling on is the Pentagons latest Quadrennial Defense Review, which discussed potential military threats from China. Despite the protestations to the contrary, the U.S. military continues to look at China through a Cold War lens. It is obsessed with the "lack of transparency and the nature of China's military development and decision-making processes." It is fixated on the need to understand Chinas military capability and intentions and to be able to measure it against Americas own.

China, on the other hand, is unlikely to oblige. According to "The Art of War," the classic tome on strategy written in the 6th Century BC by Sun Tsu, the weaker power will always cloak itself in deception and ambiguity and hide its vulnerabilities. The United States may have nothing but benign intentions in wishing to know Chinas strength and plans, but it is not in Chinas self-interest to make it easy for the United States to sleep at nightcertainly not when the it comes across with so much hostility.

No one outside of Obamas team can really know what prompted the White House to change its tactics. One obvious explanation is that with domestic political setbacks, such as the loss of Ted Kennedys senate seat as well as other potential losses looming, Obama felt the need to strengthen his ties to his core constituency, a key part of his support being well-established China bashers.

If so, it would be disappointing because Obama should have the intelligence to see and the courage to tell the people of the United States that blaming the valuation of the renminbi will not bring jobs back homelow-paying jobs that nobody wanted for decades. Furthermore, since the financial crisis began, the bilateral relationship has undergone a fundamental change. China no longer sees itself as the 95-pound weakling that needs to absorb a periodic pummeling just to tag along and hang around with the big bully.

Having seen how China weathered the financial storm relatively unscathed, the people of China now believe that they have a system that works better than the West's and they expect to be treated with the respect of a peer and not dismissed as a junior flunky. Right or wrong, this is increasingly their attitude. Given that, Chinas leaders could hardly be seen to back down before hard-nosed demands from Washington.

Unilateral actions such as arms sales to Taiwan and meeting the Dalai Lama are particularly sensitive issues because China views those acts as direct interference in their internal affairs. In the past, Beijing might protest for a while and then let it fade away. This may no longer be possible because the Chinese have heightened expectations consistent with their new self-image. Their intention to impose sanctions on companies that participate in arms sales to Taiwan reflects the desire to back up rhetoric with real punishing consequences.

Similarly the confrontation over the valuation of the yuan could lead to mutually assured destruction of both economies with devastating global impact. Since a strengthening of the renminbi is equivalent to a devaluation of the dollar in Chinas possession, if backed to a corner, it may decide to walk away from supporting the dollar rather than be seen as acquiescing and do something against its own interest. Most recently, Vice Premier Wang Qishan rather ominously told Geithner not to bother making another trip to Beijing to explain the same tired U.S. position.

As one columnist in the Wall Street Journal recently asked, How many enemies do we need? If cooler heads in Washington wont prevail before the two empires get too close to the brink of confrontation, only disaster awaits.

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