It disgusted me to see Paulson bowing and scraping to the Chinese, a fascist capo regime with one of the worst human rights records on the planet.http://www.huffingtonpost.com/robert-l-borosage/a-new-us-strategy-in-the_b_107696.htmlAmerica's banker isn't happy. At the WTO, China's representatives call on the US to halt the decline of the dollar that has contributed to the rising price of food and oil (and racked up staggering losses in the value to China's $1.5 trillion in dollar reserves). China's leaders blame Washington's "warped conception" of market deregulation for the financial crisis that is rattling the world economy. Liu Mingkang, the chairman of the China Banking Regulatory Commission, scorned distorted US policies: "Does moneymaking or doing business justify the regulators in ignoring their duty for prudential supervision and their job of preventing misbehavior?" Perfect. The Bush administration is so lame, it is getting lectures from the communist governors of China on how best to regulate the market.
And when China talks, the US better start listening. Our trade deficit with China last year jumped to an all-time high of $256.2 billion, the largest deficit ever recorded with a single country, and the equivalent of nearly one third of America's total trade deficit. The Chinese have over $1.5 trillion in US dollar reserves, and are now creating sovereign investment funds to purchase US companies and properties at bargain level prices. China's willingness to lend us the money we use to buy the goods they make with the jobs our companies have taken there enables us to spend far beyond our means. When your banker calls, you answer the phone.
This week, Treasury Secretary Paulson meets with his Chinese counterparts in Annapolis for what is called the Strategic Economic Dialogue. Generally the US comes with a list of complaints about Chinese mercantilist economic policies -- the manipulation of their currency, the violation of copyright and patents, the protection of their markets. The Chinese deny or ignore the accusations, offer a few criticisms of the US and go on with business as usual.
As Annapolis will once more demonstrate, US policy towards China is simply befuddled. The problem is that while the Chinese have a clear economic strategy, the US global strategy is the byproduct of corporate lobbies and Wall Street political muscle. The Chinese routinely flout the rules of the global marketplace, but under the Clinton administration, the US -- driven by companies eager to set up shop in China and bankers eager to cut the deals -- gave China permanent most favored nation trading status and then let them into the World Trade Organization without insisting on reforms or setting up decent enforcement mechanisms for standards everyone knew the Chinese did not and would not follow. About the only thing the US pushed for in the negotiations was to try to open up Chinese financial markets to US banks, a clear reflection of a trade policy that, in Barack Obama's words, has been made for "Wall Street, not Main Street."