The one-year review: When it comes to China and climate change the stakes are high
By Phil Levy Surprises? I have been most surprised by President Obama’s policy toward China. Trade with China was a major concern of labor groups in the election and then-Senator Obama signed pledges about the aggressive approach he would take. This included a commitment to find that China was a currency manipulator — a stance ...
By Phil Levy
I have been most surprised by President Obama’s policy toward China. Trade with China was a major concern of labor groups in the election and then-Senator Obama signed pledges about the aggressive approach he would take. This included a commitment to find that China was a currency manipulator — a stance reiterated by Treasury Secretary Geithner in his confirmation testimony. If anything, the facts shifted in favor of a currency finding against China: the exchange rate has not moved in over a year and the United States is borrowing less from abroad (suggesting less dependence).
However, in April and October, the Obama Treasury repeated the finding of the Bush Treasury, that there were no currency manipulators worth mentioning. If you combine this with the docile stance on human rights that my Shadow Government colleagues have already mentioned, it might be explained as a surprising but consistent attempt to engage China as an important economic player. Yet the administration also chose to confront the Chinese with a weak decision on low-cost tires.
For constructive criticism, I would turn to the administration’s broader trade policy. President Obama has attempted to warm international relations while chilling commercial relations. In China, Colombia, S. Korea, Brazil, India, and the European Union, there is growing aggravation at the administration’s lack of a trade policy. It is high time that the president deliver his long-promised speech and resolve the conflicts within his party on trade. That could clear the way for reengagement with the rest of the world.
Finally, as a prediction for one year hence, I forecast serious international rancor over the environment. President Obama is in a bind. If there is no U.S. action on climate change, there will be sharp condemnation and disillusionment from abroad. If there is action, it seems likely to entail border measures (tariffs) that could threaten the global trading system. It is hard to see how this ends well.
PHILIPPE WOJAZER/AFP/Getty Images
Phil Levy is the chief economist at Flexport and a former senior economist for trade on the Council of Economic Advisers in the George W. Bush administration. Twitter: @philipilevy
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