Perhaps I’m seeing trends that don’t really exist. Let’s see . . .
Steve Forbes warns that U.S. corporations are investing in China because America is too socialist. The threat to Obama: be nicer to corporations or the private sector will punish you.
Coke going to China is a very good thing in the sense that it’s a good market. But here at home, Obama’s taken the fizz out of free markets and Coke sees a flat future here. No wonder it’s looking around the world. We have more socialism here, less socialism in China, what’s the world coming to? (Fox News)
This is an example of the new China threat, delivered by conservatives in the U.S. In this case, the message is about investment. If the U.S. doesn’t play ball, then folks will just go elsewhere.
It makes little difference that Forbes is full of shit here and knows it. Coke is not expanding in China because of anything happening in the U.S. China is a huge market and is growing rapidly. The reason why the U.S. economic growth rate is much slower, for the most part, has nothing to do with tax policy or government regulation, but rather the different stage of economic growth in which the U.S. finds itself.
The way Forbes and his Fox News friends talk, the U.S. could match China’s torrid GDP rate with a few policy fixes. Absurd.
Forbes isn’t the only one playing this game. Some energy companies are using the China bogeyman to their benefit as well:
The U.S. oil industry is playing the “China card” in urging the American government to quickly approve TransCanada Corp.’s proposed Keystone XL pipeline project, which will deliver oil sands crude to Gulf Coast refineries.
In a letter to the U.S. government, the head of the American Petroleum Industry made this thinly-veiled reference to China:
Other nations will aggressively develop this key strategic resource for their future energy needs if we fail to act[.]
So let me get this straight. The U.S. government needs to not only bend over for the energy sector (more than it already does), but it also needs to become much more “business friendly.” If not, bad things involving China will happen.
Still not seeing it? Here’s another one, my personal favourite.
James Pethokoukis, blogging for Reuters, says that China really wants the U.S. to rein in government spending. Interesting how that dovetails nicely with the demands of Republicans.
I recently returned from a fact-finding mission to the Middle Kingdom. And my big takeaway is that Beijing isn’t too bothered by the Washington back-and-forth over raising the debt ceiling — provided the result is a long-term budget fix. For that, even a delayed interest payment might be acceptable. But brinkmanship in Congress that only punts the issue, and shirks from meaningful reform, would quickly turn investors in Beijing and elsewhere off.
Ah, the fact-finding mission. Also known as a boondoggle, a dog and pony show, a vacation. Would Reuters actually pay one of their U.S.-based business journalists to come to China for a few days? Sounds unlikely to me, but whatever.
What conclusion does Pethokoukis arrive at? Hmm, this sounds suspiciously like a Republican talking point:
So my advice to the spending hawks on Capitol Hill — of both parties — is to listen to China, stand firm and get something big in return for raising the debt limit. At minimum this would be getting at least $1 in spending cuts for every $1 increase in the debt ceiling[.]
Listen to China? I’m not sure I’ve ever heard an American pundit use those words before. To the chest-thumping American exceptionalist types out there, those sound like fightin’ words! Interesting, though, that when the message is that China wants the U.S. to cut spending, then yes, by all means we should listen to the wise men in Beijing.
By the way, the underlying threat in Pethokoukis’ post stems from China being the holder of a zillion dollars of U.S. government debt (you probably guessed this already). And no, I don’t believe for a minute that anyone in a position of authority here in China told this journalist that China would like the U.S. to make dramatic spending cuts. Beijing wants to protect the value of its dollar assets, but the folks here also understand that if the U.S. dips back into recession, that wouldn’t be such a good thing for China’s exports.
I’m not going to get into a discussion about the U.S. government budget — a bit boring and very complicated. I’ll sum up my opinion by saying that the current crop of “deficit hawks” who suddenly got religion on this issue after Obama was elected are completely insincere. That they would push spending cuts during a time when unemployment is still very high also makes them idiots. It looks like Pethokoukis has been a business journalist for a long time, so I’ll chalk up his position to naked ideology as opposed to ignorance.
Anyway, this seems to be a trend these days, at least among American conservatives. With Osama bin Laden dead, China is the biggest bogeyman left standing, a useful threat to use when justifying policies that otherwise might make little sense.
Not to say ‘I told you so,’ but this leads me back to that whole ‘zero-sum’ way of thinking that I’ve written about before. If your whole world view is U.S. vs. China, then you might end up supporting stupid things solely to edge out the competition.
Coke is ramping up its investment in China? I guess we better lower their taxes. A questionable energy development project might go to a Chinese firm? I guess we better fast track the approval on that sucker.
Strange, though, that when a liberal politician in the U.S. pulls a full Friedman and asks for more money on clean energy or education (like China is doing), all of a sudden, the China threat doesn’t have the same effect with conservatives. It’s almost like they don’t really believe their own rhetoric. Hmm.
More China law, biz and econ online at chinahearsay.com and on Twitter @chinahearsay.
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