Minister Mentor Lee Kuan Yew accurately sums up U.S.-China relations in this opinion piece, and I think very few around are as perceptive of relations between the two, than Mr. Lee, the British-educated founder of contemporary Singapore of Hakka Chinese descent. There were two points raised that really piqued my attention. First, that despite all of the media overture on Chinese growth, it still only has a modest at best per capita GDP ranked at 104th in the world. Second, the Chinese are taking great care not to let the media paint a picture of them as tyrants – the peaceful rise is what they want to be seen as embracing – as this article points out, China wants to be seen as a loveable panda, whereas the US has always taken the menacing grizzly bear approach. An interesting analogy.
I also read with great interest this comment by a reader of the Forbes article below. He/She shares a very pertinent point – that misreporting occurs to feed economic agendas. Ah, the perils of transnational media corporations who paint pictures according to where the economic gain blows.
“US media has always misleading average Americans in China related issues. Most written articles are strongly politically bias. Of course, there is a deficit trade with China because almost all of US multinational companies had moved to China to take advantage of cheap labor & raw materials. Who made the big profit here? Not average Chinese workers (50 cents/hr or less) but US companies themselves. Because these companies are located in China so their revenues & profits will show as China GDP & Export. Not to blame the Chinese for the manufactering (sic) jobs loss since those jobs were deliberately moved out of US to reduce producing cost for the companies. If the Chinese did not get those jobs then they would move to other low labor cost markets: India, Malaysia, Indonesia…etc but surely will not come back to US. I love America & Americans but not the goverment & Wallstreet which make money for a few elites at all cost. Remember everyone of us want a decent life for out family no matter what country we are in. America is a great country. Media’s job is to present the facts & educate people not to confuse and brainwash.”
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by Lee Kuan Yew
Source – Forbes.com, published n.d. 2010
During an important policy conference president Barack Obama said the Chinese yuan (RMB) is kept at an artificially low level, giving China an unfair advantage in selling its exports. Obama did not call China a currency manipulator, but he said the U.S. has “to make sure that our goods are not artificially inflated in price and their goods are not artificially deflated in price.” U.S. exports to China in 2008 were $69.7 billion compared with imports of $337.8 billion, a deficit of $268 billion. Imports were five times the value of exports.
China has resisted calls to up-value the yuan, suspecting these are attempts to slow its growth. Yet Western economists unanimously agree that the yuan is undervalued by 24% to 40% and that the currencies of Hong Kong, Malaysia, Taiwan and Singapore also need to rise in order to correct their trade imbalances with the U.S. But as long as the yuan doesn’t appreciate neither can the currencies of other East Asian countries, unless they’re willing to lose their market share in exports.
Premier Wen Jiabao of China has said, “We will not yield to any pressure of any form forcing us to appreciate.” China has urged the U.S. to maintain the value of the dollar and has reduced its holdings in U.S. Treasuries by 3.7%, or $34 billion. China attacked the U.S. policy of selling arms to Taiwan, threatening sanctions against American firms and noncooperation on international issues. Thus, China resisted American initiatives on climate change in Copenhagen and has not backed tougher sanctions against Iran. Beijing has also expressed great anger over President Obama’s meeting with the Dalai Lama at the White House, issuing a terse statement that the U.S. had “grossly violated the norms governing international relations.”
At the Copenhagen summit on climate change Western media reported that Premier Wen refused to attend a meeting of key leaders called by President Obama, sending Vice Foreign Minister He Yafei in his stead. This meant that Obama, a President, had to call on Wen, a premier. The Financial Times ran a front-page photo capturing the moment: a U.S. President leaning forward with arms outstretched, apparently pleading with a Chinese premier, who remained seated with hands folded and fingers interlaced, looking stone-faced. Xinhua, China’s leading newspaper, knew the picture did not show China in a good light; it ran a photograph of Premier Wen looking less imperious.
What has changed in U.S.–China relations? The U.S. economy has tanked, with China holding more than $2.4 trillion in U.S. Treasuries and other assets, which means the U.S. needs China’s cooperation in order to stabilize its economy.
The increase in tensions between the two nations caused an American leader close to the White House to ask me why China’s posture has changed. I could not explain why. So when I met the Chinese state councillor in January, I showed him the FT photo. The state councillor responded that it was a misunderstanding.
I then added that foreign officials, including Singapore’s, in negotiating with Chinese officials on joint statements have found them to be pushier and tougher to deal with. The state councillor responded in succinct Chinese, “When we are not strong we should not be proud, and when we are strong we will still not be proud.” I agreed and complimented him on his speech in Jakarta in which he had pointed out that China’s per capita GDP was modest, ranking 104th in the world.
Tit for Tat
Meanwhile, various commercial disputes have arisen between China and the U.S., making people wonder if these developments will lead to more protectionism and affect the global economy. The issues include antidumping duties on U.S. chicken products; levies on Chinese-made tires and oil well pipes; allegations by the U.S. that China has raised the international prices of several raw materials through export restrictions while keeping input costs lower for manufacturers in China; and China’s censorship of Google ( GOOG - news -people ) and whether that constitutes an unfair barrier to trade.
In its quest to become a world power China has chosen to take the path of the “peaceful rise.” It projects the image of a cuddly Chinese panda, compared with the fierce American grizzly bear. Chinese leaders are in the midst of finding the right balance between keeping a low profile and exerting their growing influence. As a result, astute observers find China fumbling from time to time in its reach for the right balance in its public positions.
Deng Xiaoping summed up the U.S.-China relationship in an epigram in the 1980s: There are inherent limits to better relations and inherent limits to bad relations.
With its rapid economic growth and the concurrent shift in the balance of power, China has become more strident in its protests against U.S. arms sales to Taiwan and the President’s meeting with the Dalai Lama. But Americans expect this and are taking these barbs in stride. They know that the fundamentals of the two countries’ joint strategic interests will prevent the complete severing of cooperation. China needs the U.S. export market, investments and technology; America needs the low-cost daily necessities made in China to fill itsWal-Mart ( WMT - news - people ) stores.
The world’s monetary and political problems require both countries to take parallel policy paths. Cooperation and competition will continue, and relations will move forward, regardless of periodic conflicts.
Lee Kuan Yew, minister mentor of Singapore; David Malpass, global economist, president of Encima Global LLC; Amity Shlaes, senior fellow in economic history at the Council on Foreign Relations; and Paul Johnson, eminent British historian and author, rotate in writing this column. To see past Current Events columns, visit our Web site atwww.forbes.com/currentevents.
Filed under: Beijing Consensus, Charm Offensive, Culture, Economics, Forbes, Influence, International Relations, Media, Politics, Singapore, U.S.