Archives: Obama’s criticism of China is about politics, not policy

Originally published in November 2011
Simon Nguyen

In a news conference at the Asia-Pacific Economic Cooperation summit, President Barack Obama forcefully called for China to behave like a “grown up” on economic matters. The president insisted that the world’s second largest economy needs to cease its protectionist policies. For someone who has yet to show a determination to act against China’s trade and currency manipulation in his three years in office, Obama’s sudden criticism of China is more about politics than policy.

Coming out swinging against highly unpopular political targets appears to be the core strategy of the president’s reelection campaign. In the last couple of months, Obama has criticized Wall Street, Republicans and Bank of America. It is only natural that China – the bogeyman in American politics – is his next political target. Unfortunately, it is important to separate Obama’s rhetoric from his action.

The president has had three full years to take actions against China’s currency manipulation. Yet, his administration has taken no meaningful step to stop this unfair trade practice. Obama’s first order of business with regards to China was to send Secretary of State Hillary Clinton to the communist state to plead its leaders to continue to buy U.S. debt. The administration also initiated the so called U.S.–China Strategic and Economic Dialogue, which unsurprisingly has not done much to create or save American jobs. In fairness to the president, it is tough to take real actions against the U.S. biggest foreign creditor.

To combat the country’s high inflation, China has actually been allowing the Yuan to appreciate slightly in the last few quarters. Ironically, China’s inflation is partly caused by the U.S. ultra-loose monetary policy and elevated government spending. How can the U.S., with a straight face, criticize China for “gaming” the system while it is essentially doing the same thing?

According to the BBC, China’s inflation moderated considerably in the past three months. It won’t be long before the country returns to its currency-manipulation way. In the meantime, President Obama will continue to tout how bailouts have saved the U.S. economy and the Federal Reserve will carry on its zero-interest-rate policy.

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