Recently I posted on Timothy Geithner’s warning that China was manipulating its currency. And undoubtedly Geithner is correct in this assertion.
Nevertheless, the question has arisen if Geithner’s public condemnation of the Chinese is wise, especially in light of China’s prominent role in financing this country.
While I hope that the Obama administration can view China as a “friendly competitor,” and not a rival, I think that Geithner’s comments won’t amount to much (and I hope that I am right); China needs the US, and the US desperately needs China.
Today’s world has become defined by the international, hegemonic entity refered to by Niall Ferguson as “Chimerica.” China and the United States have become so interconnected that it is unlikely that even Timothy Geithner can divide the two.
Yet even still, on Saturday, China blasted Geithner’s accusations and proudly defended itself.
From WaPo:
Su Ning, vice governor of the People’s Bank of China, called Geithner’s remarks misleading and “out of keeping with the facts,” and said they could sidetrack efforts to manage the global financial crisis, the official New China News Agency reported.
“We should avoid any excuse that might lead to the revitalization of trade protectionism. Because it will do no good to the fight against the crisis, nor will it help the healthy and stable development of the global economy,” Su said during a visit to a Beijing business newspaper.
The exchange underscored both a tougher stance by the Obama administration on China’s trade policies and China’s concern that protectionism in the United States could be on the rise. It also serves as a reminder of how the financial crisis has complicated diplomatic relations between the two countries.
Again, Geithner’s “tough talk” may not amount to much in the long run. Notwithstanding, the Obama administration would be wise to carefully engage China from here on out. Alienating such a powerful economic ally could be devastating, particularly for future efforts to “stimulate” our economy.
- Marc
