China can't always be the scapegoat
China is the most convenient of scapegoats for American politicians. The relationship is so complex that accusations can be readily made to an unwitting electorate. US President Barack Obama, in his last state-of-the-union address before seeking re-election in November, has, like so many others, turned to what is tried and tested, taking square aim at the country which holds the key to helping the US from its economic quagmire. While his unveiling of a trade enforcement group that will investigate unfair practices looks good to voters, it is no substitute for bilateral dialogue.
Obama is in a quandary. His opposition Republican Party presidential rivals have all along faulted China for US unemployment, which, although falling, remains stubbornly high. Republicans are pushing his administration to label the nation a currency manipulator. Getting manufacturing jobs back to the US is a sensible way to reinvigorate the economy and that was a cornerstone of his speech.
But what is said on the campaign trail is not always practical in the cold light of office. China and the US need each other to surmount domestic challenges, and a trade dispute makes no sense. With leader-in-waiting Vice-President Xi Jinping visiting Obama at the White House on February 14, there is also a need to boost efforts for co-operation and partnership. China should honour its World Trade Organisation agreements and be convinced to further curtail counterfeiting and piracy of American goods, among the aims of the enforcement group. Currency revaluation, though, is quite another matter. The yuan should be revalued, but gradually, at a pace determined by Beijing, to ensure that the Chinese economy will not be unduly harmed. Americans should not see trade as the main driver of economic recovery and should instead be focusing on revising the taxation system and tackling the problems of excessive debt and inadequate savings. Winning an election is important for politicians, but it must not come at the expense of the relationship with China.