Sunday, February 14, 2010

The year of the Iron Tiger

The previous US president was regarded by many as a bad guy, while his successor is considered by most as a nice fellow. A question however arises: can a ‘good guy’ rule over the lone superpower of the earth? At least in dealing with China, the events of the past year have proved that it may not be sufficient.In 2009, the Obama administration tried the Indian (bhai-bhai) way, accepting to drop a meeting between the Dalai Lama and later forgetting all contentious issues during the November presidential visit to Beijing. But it did not pay off; Beijing hardened its stance on all fronts.Wei Jingsheng, the Chinese dissident, knows well the way the apparatchiks in Beijing function. He spent 18 years in jail for proposing, in the ’70’s, ‘democracy’ as the fifth ‘modernisation’ (Deng Xiaoping had spoken of Four Modernizations). In an article in The Christian Science Monitor, opposing the prison sentence for the dissident Liu Xiaobo, he noted that because China ‘now sits prominently at the tables of global governance’, its leaders think thus: ‘Since you made a fuss about releasing Liu after his arrest, we will punish him even more severely’.Wei explains: ‘Now that China’s leaders believe their prospering nation has emerged as a player in world history just as America’s prestige has been weakened by the Iraq war and the recent financial meltdown, the hardliners have been able to wrest the upper hand once again’.In 2010, Barack Obama has no choice but to show Beijing that the US remains a power to reckon with. First he will meet the Dalai Lama when the Tibetan leader visits Washington. During a press conference in Beijing, Zhu Weiqun, the executive vice-minister of the CCP’s United Front Work Department affirmed that the meeting would ‘violate international rules’. He threatened that China will take ‘necessary measures’ to counter it. Having once shown a great weakness (he was the first US president in 18 years to refuse to receive the Dalai Lama), Obama can’t afford to kowtow to Beijing’s diktats anymore. The Washington Post pointed out that many American analysts believe that ‘the Obama administration — with its intensive outreach to Beijing — tried too hard in its first year to cultivate ties with China. Playing hard to get might have helped smooth out China’s swagger’.Another US expert explained: “We’re in the role of the supplicant” while a senior US trade official mildly threatened: ‘If (Beijing) continues on this particular path in a strong and inflexible way, there will be a significant political backlash not just in the US. China needs to be aware of that’. With the Iron Tiger year being celebrated, Obama is keen to change his image, in foreign policy at least. The sale of Black Hawks and anti-missile batteries to Taiwan is an occasion. No sooner had Washington announced the $6.4 billion package to Taiwan, Beijing was up in arms, threatening retaliatory measures. Deputy foreign minister He Yafei called the US ambassador, telling him that China will stop all scheduled military exchange programmes and may impose sanctions against any American company involved in the production of weapons for Taiwan. Although Obama’s approval of the sale of the missiles is only the implementation of an agreement signed by the Bush administration, Xinhua reacted sharply, asking the US to immediately stop arms sales to Taiwan ‘in order to avoid damaging bilateral cooperation in key fields’. But Washington is going ahead.The Quadrennial Defense Review Report (QDR) published by Pentagon made things between Beijing and Washington worse. It stated that while the US welcomes a strong, prosperous, and successful China, ‘however, lack of transparency and the nature of China’s military development and decision-making processes raise legitimate questions about its future conduct and intentions within Asia and beyond’. Beijing was quick to counter. “The QDR is playing the same old tune on China’s military construction,” said Ma Zhaoxu, foreign ministry spokesman. Ma expected the US to take a fair and objective view towards China’s development and its military construction and ‘stop making irresponsible remarks’. The one issue which preoccupies the leadership in Beijing more than anything else is the rate of the yuan. The fate of the communist regime depends on the continuation of China’s growth rate which itself largely depends on the low rate of its currency. During a meeting with Democrat senators, Obama affirmed that the US has “to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage”. The New York Times commented that Obama ‘stopped short of saying China manipulates its currency, but his words on China’s economic policies were harsh’. Ma strongly objected that the ‘wrongful accusations and pressure will not help solve this issue’. It is generally admitted that the yuan is undervalued by 25 to 40 per cent compared to the dollar. Since July 2005, when the Chinese government allowed its currency to slightly float against the dollar, the yuan has appreciated 21 per cent. Since the beginning of the financial crisis, it has kept the same value.Beijing will have to re-evaluate its currency, sooner or later. Even in China many agree that there is no choice. Zhang Bing, a researcher at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, wrote in a research paper that the government’s current yuan policy of gradual reform is wrong. He admitted: ‘a 10 per cent appreciation in the yuan against the dollar should have a limited impact on the Chinese economy. It would reduce speculative fund inflows by effectively eliminating expectations of a yuan appreciation’. Whether China decides to re-evaluate or not, the decision is inescapable and this will have incalculable consequences for the Middle Kingdom.All this tends to demonstrate that the Iron-Tiger year won’t be easy for the Middle Kingdom. From the US perspective, even if he is keen to remain a nice guy, Obama has to be tough if he wants the US to be respected as Superpower No 1. This may irritate Beijing, but the Chinese leadership ire will fluctuate (according to their ‘national interests’).A year ago, Beijing was furious with Sarkozy who met the Dalai Lama against their approval. The spokesperson threatened, some Carrefour supermarkets were even attacked. Now China’s foreign minister Yang Jiechi has said: “We are delighted that the French leader (Sarkozy) would visit (China) in April or May. …it is a new page in Sino-French relations”. Yes, President Obama you can, you should be a tiger while dealing with the tigers.

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