The Future of the U.S.-China Relationship

Today Secretary of State Hillary Clinton gave a speech titled, “Principles for Prosperity in the Asia-Pacific” to the American Chamber of Commerce in Hong Kong in which she not only reaffirmed principles guiding America’s continued presence in the Asia Pacific region, but also directed veiled criticisms at China’s policies.  From the Atlantic:

She also outlined an encompassing vision of Asia-Pacific economic integration, with the United States at its heart, in contrast to the smaller, China-centric groupings that Beijing has promoted. Unless the Obama administration embraces a more vigorous trade liberalization agenda, however, Clinton’s message may fall on deaf ears.

Clinton insisted that the global economic crisis has underscored the need to “reach agreement on the rules and principles that will anchor our economic relationships in the coming decades.” Those principles include:

The Asia-Pacific economic system must be open–shedding rules that restrict trade  and create discriminatory markets. Exclusive trading arrangements fragment the regional economy. It is time for a broader Trans-Pacific Partnership that unites the region.
The regional system must be a free one, in which “ideas, information, products and capital can flow unimpeded by unnecessary or unjust barriers.” Just as the United States seeks to attract foreign investment, so others must be open to U.S. and other foreign capital.
Economic regulations must be developed transparently and communicated to all parties, rather than conjured up when convenient.
Finally, rules must be applied fairly to all, since “fairness sustains faith in the system. That faith is difficult to sustain when companies are forced to trade away their intellectual property just to enter or expand in a foreign market, or when vital supply chains are blocked.”

(This last critique was aimed squarely at China, which has alienated investors and trading partners through its “indigenous innovation” policies and its embargo on exporting “rare earth” metals to Japan.)

Secretary Clinton had undertaken the trip to Hong Kong and Shenzhen in part to reassure Asian  investors that the American economy is still strong. From Xinhua news:

U.S. Secretary of State Hillary Clinton has appealed to China and other Asian investors not to lose faith in the American economic model. Amidst domestic political wrangling over the country’s debt ceiling, Clinton paid a whirlwind visit to China, visiting Hong Kong and neighboring Shenzhen on Monday.

World financial markets are closely watching the deadlocked debt debate on Capitol Hill. As the largest foreign holder of U.S. debt, China is paying particularly close attention.

Speaking in Hong Kong to business leaders from the region, U.S. Secretary of State Hillary Clinton sought to reassure Asian investors.

Hillary Clinton, U.S. Secretary of State, said, “As I have travelled around the region, a lot of people have asked me how the United States is going to resolve our debt ceiling challenge. Well, let me assure you, we understand the stakes. We understand how important this is to us, and how important it is to you. We in the United States are in the middle of a necessary transition. We must save more and spend less, and we must not only save more and spend less, we must borrow less as well. “

July 26, 2011 9:52 AM
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