U.S., China Stage an Economic Balancing Act
Former Treasury Secretary Lawrence Summers calls the evolving U.S.-China relationship "a balance of financial terror," an unsettling concept for a new era.
The outgoing Harvard president's phrase echoes the U.S.-Soviet "balance of nuclear terror" that defined the Cold War. The mass of atomic weapons on each side prevented either protagonist from declaring war on the other due to what become known as MAD, or "mutually assured destruction."
As senior Washington and Beijing officials prepare for Chinese President Hu Jintao's summit with President Bush at the White House on April 20, a more unstable logic is being tested that has come to define the emerging superpower relationship that will define the first half of the 21st century.
THINKING GLOBAL
How dangerous is the U.S.-Chinese "balance of financial terror"?
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Thinkingglobal@wsj.com with your thoughts.
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Sign up to receive alerts when new installments of Thinking Global are published. Frederick Kempe also writes a daily analysis of the biggest news of the day. You may sign up to receive Mr. Kempe's full daily commentary by email, along with links to all of the stories and features that are mentioned in each day's Asian or European edition of the print Journal.The argument holds that both countries would be so economically devastated by a trade or financial war -- "mutually assured economic destruction" -- that neither would trigger one despite growing trade tensions.
By that logic, China won't stop buying billions of U.S. dollars each month because to do so could prompt a dollar collapse that would undermine the American consumer and the global stability upon which China's economic miracle rests. It follows that the U.S. would not implement tough sanctions to punish China's undervalued currency because such action could trigger inflation, higher interest rates and recession.
Don't bet on this logic holding.
Miscalculation is the mother of all unintended conflicts. Nuclear holocaust was more likely in the Cold War's early years, before the U.S. and Soviets had fully defined their relationship through a series of summits and near-crises. The same is true -- though the possible consequences less fatal -- at the beginning of this new superpower summitry.
"The direction that China and U.S.-China relations take will define the strategic future of the world for years to come," says economist Fred Bergsten, co-author of "China: The Balance Sheet," a book to be released this week that offers a comprehensive and penetrating analysis of the relationship. It's a three-part policy prescription: get China to play more by international rules (in letting its currency rise to market rates, protecting intellectual property, etc.); make China a key player in international organizations that protect those rules (instead of following its new course of establishing its own, Chinese-dominated organizations); and, perhaps most importantly, fix America's own high-debt, low-savings problem that over time will erode Washington's leverage with Beijing.
What worries Mr. Bergsten is that, in the meantime, "the world trade system could be blown apart if this financial imbalance is not addressed quickly and substantially."
The Bush administration's leverage with Beijing can only shrink over time. A weakened President Bush is losing control of China policy to a Congress in which Republican leaders are increasingly turning against him on a number of issues. Longer term, China's leverage will increase as it reduces its dependence on the U.S. market and gains political, economic and military power.
"Over a period of time, they will need us less," says Robert Hormats, vice chairman of Goldman Sachs, International.
For now, however, Mr. Bergsten says the Chinese reluctance to revalue a currency that Mr. Bergsten says is 20% to 40% below market rates miscalculates the seriousness of rising American protectionism.
The latest evidence of that seriousness is a new bill that the top Republican and Democrat on the powerful Senate Finance Committee will unveil at hearings this week. Committee Chairman Charles Grassley (R., Iowa), and Sen. Max Baucus (D., Mont.) have drawn up what could be a more effective and comprehensive attack on China than legislation on the table that threatens Beijing with across-the-board 27.5% tariffs.
The two senators are known for their free-trade credentials, underlining growing impatience with China. Their legislation is less blunt but more far-reaching than the tariff bill of Sens. Charles Schumer (D., N.Y.) and Lindsey Graham (R., S.C.).
A person familiar with the Grassley-Baucus bill, whose details haven't yet been publicly disclosed, says it would "significantly amend" current U.S. law in ways that would force the Treasury's hand on the exchange rate "in a directive manner." The bill would make China liable to countervailing duties as punishment not just for currency manipulation but also for a host of other state supports, the person says.
Yet for all the focus on trade tensions now, over time the U.S.-Chinese rivalry might be played out on the periphery, just as was the case between the U.S. and the Soviets during the Cold War. Taiwan will be high on the Bush-Hu summit agenda. Yet China, with its focus on domestic development, has avoided a crisis over Taiwan and instead wants to block independence rather than rush unification.
More unsettling are potential conflicts over energy. China's growing thirst for oil has prompted a buying spree of global energy assets and long-term contracts with countries that are among America's leading global problems: Iran, Sudan and Venezuela.
"One swing factor that will determine whether we have a cooperative or a confrontational relationship is how we address the issue of energy," says Mr. Hormats of Goldman Sachs. He has suggested to U.S. officials that Mr. Hu and Mr. Bush at the summit make a "U.S.-China Energy Partnership" a centerpiece, including development of clean coal, alternative energy sources and common efforts to keep open critical sea lanes. "This should be a centerpiece of Hu-Bush conversations."
看美国和中国如何过招
美国前任财政部长劳伦斯?萨默斯(Lawrence Summers)将充满变数的美中关系称为新时代的“金融恐怖平衡”，不过这种观念并不令人信服。
哈佛大学校长萨默斯的这番言论和阐述美苏冷战的“核恐怖平衡”概念异曲同工。当时双方都拥有大量核武器，因此为避免“同归于尽”(mutually assured destruction)，谁也不敢首先发动战争。
在华盛顿和北京方面的高级官员为中国主席胡锦涛和美国总统布什4月20日在白宫会晤作准备之时，一种阐述美中关系的、有些经不起推敲的理论浮出水面。美中关系无疑将对21世纪前50年的世界发展产生重大影响。
这个理论认为，由于贸易战或金融战将对两国的经济将带来毁灭性打击──“经济上的同归于尽”──因此尽管贸易局势日趋紧张，但谁也不会首先挑起事端。按照这个理论，中国不会停止每月在外汇市场购买数十亿美元的做法。因为中国停止购入美元将导致美元崩盘，而这又将影响中国经济奇迹赖以存在的根基──美国消费者的购买力和全球经济的稳定。同理，美国也不会因人民币估值过低而实施严厉制裁，因为这会导致通货膨胀、利率上扬和经济衰退。
但不要对这种理论深信不疑。
对对方的错误判断通常是很多无意冲突的根源。在冷战前期，发生核战争的可能性更大，因为当时美苏尚未通过一系列峰会甚至唇枪舌剑来明确双方的关系。在美中峰会即将召开之际，这个道理也同样适用──虽然由此引发的后果并不会如此严重。
“China: The Balance Sheet”的合著者、经济学家佛瑞德?伯格斯滕(Fred Bergsten)表示，“中国乃至中美关系的走向将决定这个世界未来几年的战略格局。”这本书定于本周发表，书中对中美关系进行了全面而透彻的分析。本书对美国对华政策开出了一剂药方，具体包括三方面：用国际准则要求中国承担更多责任（允许人民币升值，保护知识产权等等）；让中国成为确保这些准则实施的国际组织的重要成员（中国不能按照新的方法建立中国居主导地位的国际组织）；另外，也许最重要的一点是，解决美国自身高负债、低储蓄的问题，因为这从长期看将减弱美国对中国的影响力。
同时令伯格斯滕担心的是，“如果金融不平衡的情况没有得到快速而切实的解决，那么全球贸易体系可能崩溃。”
随著时间的推移，布什政府对北京方面的影响力将逐渐减弱。美国国会从优柔寡断的布什总统手中获得了中国政策的控制权，在国会上，共和党领导人在许多问题上开始和布什唱反调。从长期来看，随著对美国市场的依赖程度减小，以及政治、经济和军事力量的增强，中国的影响力将逐步提高。
高盛国际(Goldman Sachs International)副董事长罗伯特?赫麦茨(Robert Hormats)说，“一段时期以后，中国对我们就会不那么依赖了。”
不过伯格斯滕表示，中国政府低估了美国贸易保护主义势力对于重估人民币问题的重视程度──伯格斯滕认为人民币汇率低于市场水平20%至40%。
对于最近一项新法案的讨论正是这种重视态度的例证，参议院财政委员会(Senate Finance Committee)中最高层的共和党和民主党委员将在本周的听证会上揭开新法案的面纱。与威胁对所有中国进口商品征收27.5%的关税法案相比，委员会主席查尔斯?格拉斯利(Charles Grassley)和议员马克斯?鲍科斯(Max Baucus)起草的针对中国的法案可能效果更好、内容也更全面。
这两名议员都因提倡自由贸易而闻名，这也就更加说明美国对中国已逐渐失去耐心。与查尔斯?舒默(Charles Schumer)和琳赛?格雷厄姆(Lindsey Graham)的关税提案相比，他们的法案并不是那么尖锐，但影响更加深远。
格拉斯利-鲍科斯法案的详细内容尚未公开，不过知情者称，它将对美国现行法律作出“重大修订”，以“一种指示性的方式”加强财政部对汇率问题的控制。如果出现汇率操纵以及国家补贴等问题，中国将遭受补偿关税的惩罚。
虽然如今所有人的目光都集中在贸易争端上，但随著时间的推移，美国和中国的竞争可能会被搁置一旁，正如美国和苏联在冷战时期的情况一样。台湾问题是此次胡锦涛访美的重要内容。不过著重发展国内经济的中国不愿和台湾发生冲突，中国希望阻止台湾独立，但不愿仓促实现统一。
相比之下，能源冲突更加令人不安。在如饥似渴的能源需求推动下，中国正在全球范围内四处寻找能源资产，并和伊朗、苏丹和委内瑞拉等美国的头号对手们签订了长期合作协议。
高盛公司的赫麦茨说，“决定美中关系是合作还是敌对的一个不确定因素是我们如何对待能源问题。”他建议美国官员在胡锦涛和布什的会晤中将“美中能源合作”列为中心议题，包括开发洁净煤、可替代能源和开放重要的航道，“这应成为会谈的中心问题。”
