China is about to change U.S. politics

One of President Obama’s biggest foreign policy challenges this year will be working to contain growing pressure in Washington for a much more confrontational approach toward China — on trade, currency policy, investment, and cyber-security issues. At best, he’ll have limited success.

We’ve seen this game before. As a presidential candidate, Bill Clinton once referred to the Chinese leadership as the "butchers of Beijing." As president, he took a more circumspect approach, leaning on Congress to moderate its protectionist impulses toward China and signing Permanent Normal Trade Relations for China into law during his final days in office. George W. Bush supported moderate legislative pressure on China to divert bipartisan congressional support from onerous tariffs on Chinese products. Now it’s Obama’s turn to tug at the reins as the horse prepares to bolt. He’s liable to have limited success, because the relationship has changed.

China has rebounded strongly from the global slowdown. Washington is much slower to regain its footing. China is again headed for strong growth this year, America’s unemployment rate is still at 9.7 percent, and it’s an election year. This is a recipe for more trouble in a relationship already suffering from a growing list of well-publicized problems.

In the near-term, the news will look deceptively positive. On April 15, the U.S. Treasury Department will probably announce that it will again resist pressure to formally brand China a currency "manipulator," a finding that China manages the value of its currency to secure an unfair trade advantage. There’s unprecedented momentum behind a get tough approach, but Chinese President Hu Jintao is expected to visit Washington on April 12. That’s a clear signal that the White House and Beijing have an understanding that this is not the year. Obama is hardly likely to allow for such a public humiliation of China’s leader. (Obama’s no Netanyahu.)

Beijing will allow the value of the yuan to rise modestly … for its own reasons. The Obama team will talk tough, but mainly to dissuade Congress from a more aggressive approach in hopes of keeping the world’s most important bilateral relationship moving in a more or less constructive direction.

But things have changed in recent years. Gone are the days when tough talk from the White House and a conciliatory gesture from Beijing can persuade the China hawks on Capitol Hill to take their eye off the ball. Given the growing fear across the country that the balance of power in the relationship has shifted toward Beijing, China is fast becoming the issue for American labor, for the American media, and most critically, for America’s private sector (as made abundantly clear by a survey of U.S. executives released last week by the American Chamber of Commerce in China which found that the number of member companies who felt "unwelcome" in the country jumped from 26 percent to 38 percent since December 2009.

In 2008, we saw the last U.S. presidential election in which most voters neither knew nor cared where the candidates stood on China. As November’s mid-term elections loom, we’ll get our first look at one of the biggest emerging wedge issues in American politics.

Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations? (Portfolio, May 2010)