Americans and Chinese Take Positions by Forming New Acquaintances and Strengthening Old Ones

Chinese President Hu Jintao secured a deal worth approximately $20 billion for the French in Paris. American President Obama struck a deal worth about $15 billion in India. The British are preparing to go to China… Clearly, they will take a step further after the currency war.

Written by: Vanja Figenwald
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Long condemned to relay conventional clichés and calls for tolerance, understanding, and love, journalists may finally get their due during this week’s G20 summit in Seoul. It is hard to remember when a summit was anticipated with such interest – the reason being the increasingly heated atmosphere among the main players. The past ten days have been marked by many unusually open and honest statements from officials in several countries, as well as a long-unseen strategic reshuffling among the largest. The currency war, already underway despite the denial of many, threatens to escalate into a trade war. The first shock in this short period was delivered by the Chinese with their response to the recently presented American proposal at the finance ministers’ meeting in South Korea. Still obsessed with the thesis of ‘trade imbalance’, as they call their inability to compete with developing countries, they proposed to balance trade deficits/surpluses with a negotiated ‘ceiling’ of four percent of GDP and declared the silence of the Chinese a victory, which proved to be quite premature. A few days after the summit concluded, Cui Tiankai, Deputy Chinese Foreign Minister, issued a very sharp statement clearly rejecting that idea, among other things reminding the Americans that it reminded him of the days of planned economy.

His statement was interpreted as China’s official stance as he is not only the Deputy Foreign Minister but also the head of the negotiating team in the G20. ‘We believe that the discussion about current accounts misses the point. If you look at the global economy, you will see many problems that require greater attention, such as the issue of quantitative easing,’ Tiankai stated, evidently referring to yet another flood of market billions orchestrated by the Federal Reserve. This involves as much as $600 billion in new dollars that the Fed intends to unleash by purchasing long-term treasury bonds by the middle of next year, all amid its relentless multi-month campaign against China’s maintenance of an artificially low yuan exchange rate. Given that, according to many, liquidity is not a problem for the American economy at all, this move has evidently angered many, including some quite unexpected individuals.

Germans No Longer Silent
In an exclusive interview with Der Spiegel, German Finance Minister Wolfgang Schäuble surprisingly and unexpectedly attacked America quite openly. In a moment of relief, he listed everything that is known but not officially spoken, finally giving some truths a weight greater than a whisper and isolated opinion. He accused America of exacerbating global economic uncertainty and hypocrisy regarding the exchange rate, claimed that its economic model is in deep crisis, and labeled its economic policy as disoriented. The ‘pumping’ of additional dollars was clearly the straw that broke the camel’s back, well-filled with a completely naive, even rude, demand from America to limit trade surpluses/deficits. Of course, Germany found itself called out, just like China, as one of the countries with a high trade surplus. He dismissed Germany’s guilt by adding that his country certainly does not manipulate the exchange rate but achieves its surpluses through greater competitiveness. ‘Americans have lived on credit for too long, inflated their financial sector, and neglected their industrial base. There are many causes for American problems, but the German export surplus is not one of them,’ Schäuble succinctly and clearly diagnosed. Meanwhile, the two main opponents have begun to form new acquaintances and strengthen old ones, evidently preparing for a conflict that seems inevitable. Chinese President Hu Jintao first stopped in Paris and shared contracts worth $20 billion for the purchase of about a hundred airbuses and some uranium for Chinese power plants, and then piqued Portugal’s imagination by stating that China is interested in buying its debt. French President Nicolas Sarkozy did not miss that opportunity for classic European hypocrisy, and while pocketing Chinese dollars, he mentioned human rights in China. Perhaps out of courtesy to his host, Jintao did not respond with concern for similar issues faced by French immigrants.

India Saves America
Hearing stories about Chinese generosity, British Prime Minister David Cameron also decided to try to extract some money from the generous Chinese grandpa, or rather daddy, and announced leading a delegation of business and government heavyweights to China to strengthen exports and trade with that country. It is worth noting that he had offended China at the beginning of his term by leaving relations with that country to his deputy Nick Clegg, but now he will bring an army of 43 businessmen and officials to Beijing, the largest such delegation in the history of relations between the two countries. The Financial Times estimates that the total value will not even come close to that of Paris. The aforementioned human rights issue will be mentioned by Cameron during the ‘begging’ for money in a ‘moderate and reasonable manner’, being careful not to offend his host too much – because that stands.

Meanwhile, Americans are changing their tune in Asia and trying to curry favor with the Indians, first with light flattery about the importance of India’s role in Asia a few weeks ago, and then with President Barack Obama’s visit during which everything was bursting with renewed love between America and India, temporarily overshadowed by America’s affair with China. It is worth noting that Obama was actually ‘begging’ for about 50,000 jobs for Americans in agreements worth about $15 billion. In return, the Indians received a promise of a review of restrictions on the export of American technologies, although it seems they are doing well without it, but also a sign of unprecedented American submission to a country, a guarantee of support for a permanent seat on the UN Security Council. That support was previously held by Japan, but it should be noted that it is a vague promise that could be fulfilled one day. Furthermore, India would have to convince China and Russia for such a thing, which is a whole different ball game.

In conclusion, Michael Bloomberg, the mayor of New York, emerged with a snake in his bosom, who during his visit to Hong Kong, in line with the prevailing tone of general honesty, told his fellow countrymen to stop blaming the Chinese for their problems and to take a good look at themselves. In particular, he reportedly lashed out at conservatives in America, calling some members of Congress illiterate and ignorant, claiming that some of them do not even have passports.