Expert Analysis on Sino-US Trade and Currency Issues in the United States: Policy Impacts and Future Directions
Clarke, Ryan, China: An International Journal
Introduction and Aims
2010 was a tense year in Sino-US relations on various fronts with spats over issues such as disputed territory, US arms sales to Taiwan, the Dalai Lama, American frustrations with Chinese "inaction" over North Korean provocations, and the activities of Google in China. However, Sino-US trade and currency issues have surged to the forefront of the consciousness of many American policymakers. As Washington sees the United Kingdom, its closest ally, scrapping major defence programmes and contemplating sharing an aircraft carrier with France, America has received a strong reminder that the primary determinant of a nation's comprehensive national power and its ability to sustainably project that power is the economy. As many of America's top politicians and strategic analysts are more fully appreciating this link, a substantial portion of them are taking more hard-line views towards China. While some of this can be explained by more narrow, short-term interests of locally-oriented politicians, it can also be put down to a lack of consensus and, in the views of some, inadequate theorising by America's top economists who both the public and leadership look to for untainted, objective analysis.
Also complicating the matter is the nature of American strategic thought and practice that emphasises an almost "bodyguard" role for American military forces in defending key American economic and commercial interests, namely energy supplies and sea-lanes. The latter are viewed as a key enabler for the continuous spread of market economics and on the back of that (as the theory goes), democratisation and the development of robust, wealth-generating middle classes to underwrite this new political structure. Clearly, the decisions that are made and the actions that are taken in Washington as well as Beijing will resonate beyond the financial districts of Asia and the West.
This study has collected the views of America's top economists from industry (e.g. Goldman Sachs, Morgan Stanley), think tanks (e.g. Peterson Institute, Carnegie Endowment for International Peace) as well as the country's most prestigious universities such as Harvard, Columbia and others. The primary aim is to identify the relevant consistencies and variations in their views regarding topics such as the Sino-US trade deficit, broader American trade disputes, the "true" value of the yuan, Chinese intervention in the foreign exchange markets, as well as other explanations for American economic difficulties, such as the spiralling economic costs of modern-day, American-style warfare. The study then concludes with several key policy-relevant findings. It seeks to inform and inspire similar research on this particular topic as well as on the various other components of the Sino-US relationship. It also seeks to increase the understanding of the role that American expert opinion plays in domestic politics as well as in American foreign policy.
What are the Primary Causes of the China-US Trade Deficit?
In a speech in early 2011, US Secretary of State Hillary Clinton underscored the importance of US-China cooperation on economic challenges, saying it was "frightening to think about" the consequences, had the two economic powers not worked together in responding to the global recession. (1) However, she conceded that the two countries will continue to have disagreements, growing from "profoundly different political systems and outlooks". (2) Treasury Secretary Timothy Geithner has also said that the United States is ready to do its part both domestically and bilaterally. For example, he claims that the US is ready to grant China wider access to US high-tech products and the US market. But the US "ability to move on these issues will depend on how much progress we see from China" on crucial US concerns such as protection of foreign intellectual property and currency manipulation. (3)
Geithner's speech at Johns Hopkins University occurred not long after Clinton's and he stated that "we have a great deal invested in each other's success". …