Thursday, February 4, 2010

China's View of the Current Administration

China Daily published a piece today that is reflective of internal Chinese views of US relationships. Specifically one paragraph is quite perceptive:

Li Wei, a scholar on US studies with Tsinghua University, said that Obama is consistently riling China up these days because he wants to please voters and reverse his declining popularity as midterm elections draw near.

China's role as a rising power has also made the US feel uneasy, he said.

The China Daily is an in house organ which sends messages across the Pacific. It thus is worth while to see how they are positioning the current Administration and its positions. Yet this statement was prefaced by:

"China does not seek a trade surplus with the US," said Foreign Ministry spokesman Ma Zhaoxu yesterday.

The yuan's exchange rate against the dollar is largely at a reasonable level, he added, and the yuan's value is not a major element in the US trade deficit with China.

US President Barack Obama has vowed to "get much tougher" with China on trade and currency issues to fuel US exports and narrow its trade deficit with China, the world's largest exporter. With the US promising to sell arms to Taiwan and Obama planning to meet with the Dalai Lama, analysts said the possibility of a speedy yuan appreciation is slim.

"Even if the yuan's value rises, it is China's own business," said Li Jian, economist with the research institute under the Ministry of Commerce. "China will not (appreciate the rate) in accordance with the US' demand."

The currency issue will become a dramatic one if China still continues its purchases of US Debt. It becomes even more of an issue if it does not and the FED just prints money at a reckless rate to fill the gap in the exploding Budget. This will be a sensitive issue to follow as the Budget fiasco expands.