Friday, April 27, 2012

Obama Administration’s Prebuttal on Its Record With China

Treasury Secretary Tim Geithner’s speech Thursday in San Francisco is designed to be a preview of key concerns he’ll address next week in Beijing during the fourth round of the U.S.-China Strategic and Economic Dialogue, the three-year-old forum for the two countries to discuss economic and security issues.
It could also be read as a preview of the Obama administration’s defense against criticism (regarding its engagement with China) during the presidential race over the next six months.

Ahead of the diplomatic gathering, Geithner hit all the usual notes: The world’s two largest economies share “complementary” economic strengths. China faces a “very complicated set of challenges” as it opens up. What the U.S. wants from China (on the exchange rate and intellectual property) is “fundamentally in China’s interest.” And, to keep the focus on what the U.S. can do, Geithner says the strength of the U.S. will not depend on China’s decisions “but on the choices we make here at home.”

Then he runs through no fewer than 11 points highlighting what the U.S. has accomplished in pressing China over the past three years. The list appears to touch on just about every complaint from U.S. businesses, lawmakers and the GOP’s presumptive nominee, former Massachusetts Gov. Mitt Romney, about whether the U.S. has pushed China hard enough.

Among the “significant progress” Geithner cites:

–U.S. exports of goods to China have almost doubled since early 2009, twice as fast as exports to other countries.
–China’s exchange rate has appreciated about 13% against the U.S. dollar after inflation since June 2010. Its trade surplus fell to less than 3% of China’s GDP last year vs. 8% in 2008. –China has committed to protecting U.S. intellectual property rights, by ensuring that government agencies use legitimate software and agreeing that technology transfer will not be a precondition for accessing China’s market.
–China agreed to unwind an indigenous innovation policy that limited government purchases to Chinese domestic products, locking out U.S. companies.
–China opened up new sectors, such as auto insurance and bond underwriting, to foreign firms.
–China cut some tariffs and taxes on services, and “appears to be prepared to negotiate” new rules for government-backed financing of exports. (China routinely undercuts other countries.)

He also cites the administration’s legal cases against China, including 36 antidumping and countervailing duty orders on imports from China, a trade case to protect U.S. tire-industry jobs and challenges at the World Trade Organization.

Geithner says the U.S. will keep pushing China on just about all of those points, along with pressing the country to open up its financial system (now dominated by state-owned firms) and to end preferences for state-owned businesses.

Romney, during his primary campaign, pledged he would take on China even more forcefully from his first day in office. For fall debate prep, Romney now has President Barack Obama’s arguments neatly compiled in one place.