11.13.09

In his current Asian trip, President Obama visits Japan, then addresses a forum of leaders in Singapore, and eventually ends up in Seoul to discuss nukes and North Korea. But make no mistake, the axis of this week is the time Obama will spend in China, which has catapulted to the forefront of international affairs and is on its way to joining the United States as the alpha and omega of the global economic system.

That China has emerged is secret to no one, but the consequences haven’t been fully integrated - either by the United States or by China. The level of intertwinement between the two economies has reached the point where they have effectively merged, forming what I’ve called an economic “superfusion.” But that fusion hasn’t yet altered political and cultural mindsets.

The ministers of the world still beseech the United States to “do something” about a weakening dollar, and U.S representatives on the eve of this trip announced that after the financial morass of the past 15 months, the United States “is back.” Yes, the United States remains the world’s largest economy - though technically the combined income of the European Union is greater. But size isn’t everything - just look at Japan, which is still the world’s second largest economy but whose influence and impact are substantially less. China may be poor on a per capita basis (perhaps $5000 per person relative to nearly $50,000 in the United States), but it is changing more rapidly and consuming more hungrily that any other society in the world. It is the change factor in the global system.

Chinese leaders, however, have a tendency to downplay their outsized presence and retreat to a combination of false modesty (”Who us? We’re just a poor, developing nation”) and baton-passing (”The Americans are the ones who messed up the system and they are the ones who have to fix it, and oh by the way, make sure that our $800 billion in Treasury bonds and $500 billion in other investments don’t lose value!”). Their doctrine of non-interference in the internal affairs of other countries is a welcome relief for some who have grown tired of the American tendency to do the opposite, but it also is an increasingly ineffective dodge of the responsibilities that come with hundreds of billions of dollars of investment in Africa, Latin American and Central Asia, as well as hundreds of billions of dollars in trade with the United States, Japan, Korea, the EU and the rest of the world.

Americans, however, still don’t quite get it. China represents the first time in any American’s lifetime that the United States is faced with a country that it cannot coerce. Even the Soviet Union was vulnerable in its way to American military might. China doesn’t even pretend to compete with the United States militarily (though it is aggressively spending on “asymmetric” warfare such as disruptive communications technologies and other methods that would impede the ability of the U.S. military to operate smoothly in the Pacific Rim). And there is no real stick for Americans to wield when it doesn’t like how China behaves, whether that is in the realm of human rights or intellectual property. For America, China is a ‘welcome to the real world’ phenomenon, a case where the United States has to do what most other societies have learned to do for centuries: deal with things they don’t like in other countries without being able to force them to behave differently.

The issue for American going forward has little to do with China and everything to do with America. Can Americans rediscover the energy and innovation that brought such power and prosperity in the first place? Can the United States respond constructively to a changed global status that sees the rise of wealth and prosperity everywhere from Brazil to India to China? And can the U.S. government remove its collective head from the sand and act with the urgency that everything from climate change to economic competitiveness demand?

The problem of China for America is that it is a large but amorphous issue, unlike Afghanistan (do we send troops NOW?) or health-care, with its endless and acrimonious battles in the beltway. There is no vote, or quick resolution or unitary policy that will “solve” China. That allows it to linger as a concern, but not to shape action.

So while Obama’s visit is important in form and a start, it cannot be a one-off, full of pomp and devoid of substance. Somehow, the United States must shake of the collective grogginess of Cold War, terrorism, financial crisis and inequalities and grapple with a world that is evolving and changing around us whether we like it or not. There is still time, but that clock is ticking and midnight is approaching.

Tags: Beijing, China, currency, global economy, Hu Jintao, international affairs, Obama, renminbi, trade, U.S. dollar, United States

This entry was posted on Friday, November 13th, 2009 at 9:45 am and is filed under All posts, BRIC, China, Economy, Obama, Politics, U.S. economy, United States, economic crisis, foreign policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.