What does U.S. gain in a yuan fight?

China could play a major and potentially very helpful role on a number of levels in the effort to control nuclear proliferation in Iran and North Korea, a top Obama policy goal.

The United States hopes China will take part at a senior level in a nuclear summit in Washington next month, but it is not clear this will happen. China may fear being embarrassed on the international stage if it sends a senior official, only to have the Obama administration take action over the yuan days later.

China is also the West's best hope of shepherding North Korea back to the nuclear negotiating table and has worked hard to reconvene six-party talks that have been suspended for more than a year. China is a crucial source of support for the otherwise-isolated North Korea, whose leader Kim Jong-il is reportedly considering a visit to China for discussions that could restart negotiations in early April.

In addition, China wields a potential veto on the U.N. Security Council, where the United States and its allies are trying to forge tougher sanctions against Iran over its nuclear program. That said, the West has so far made little progress in getting China on board for another round of sanctions. Beijing wants more diplomatic efforts before any escalation in action against Tehran, which the West says is seeking the means to make nuclear weapons, a claim Iran denies.

What Happens to G-20 with an Angry China?

Obama hosted leaders of the Group of 20 leading industrial powers in Pittsburgh in September and crucially secured Chinese acceptance of the need to better balance world growth. This achievement could be jeopardized by aggravating China. Without Beijing's collaboration, the G-20 will be just another pointless international forum.

“What China is doing with its currency is a problem. But the people who should be complaining are other low-wage producers like Mexico,” said Barry Bosworth, a senior fellow at the Brookings Institution in Washington, who said the right place to tackle the issue was the G-20.

“The United States is risking a lot by not exploring this through the G-20. Do we think we're the world's economic policeman? It is just a very arrogant position,” he said.

The Pittsburgh communique implicitly acknowledged the problems caused by China's massive trade surplus with the United States, and the challenges of the corresponding U.S. trade deficit. These require action on both sides to solve, with greater U.S. savings, investment and exports, combined with stronger Chinese domestic demand and higher imports.

1|2

PrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email