Jan 24, 2011
When China's President Hu Jintao came for his state visit last week,
the White House press corps completely ignored almost all the
substantive issues raised by Hu's visit. The domestic policy issues
raised by this trip were altogether invisible in the reporting in major
news outlets.
The news accounts were filled with the long list of
items that President Obama was likely to raise with President Hu. There
are issues about China
respecting the patents and copyrights of US firms. The US has concerns
about market access in China for our retailers, our financial firms and
some of our manufactured products.
And then there are issues
about the relative value of the dollar and yuan. Yep, the White House
press corps got together the whole list, presented it to the public, and
then went home and had a drink.
If these reporters actually had
to cover the news to get a paycheck, then this checklist of concerns
would have been just the beginning of their job. It's great for the Obama administration to come up with a wishlist that it would like from China's leadership. But this is not Disney World. China doesn't hand the United States everything on its wishlist.
China
is a superpower that doesn't have to do whatever the United States
wants. It makes concessions to the United States in exchange for items
on its own wishlist.
This means that the United States is not
going to get everything on its list. In fact, President Obama must
decide which items he will prioritise with China and put these items
first, as opposed to other items which he will tell Hu are of less
consequence. The real job of reporting in Washington last week should
have been trying to find out the actual priority that President Obama
was assigning to the various items on his list.
This is what the
public needs to know: different items will obviously matter more to some
people than others. Most people in the United States probably don't
give a damn if the Chinese pay Bill Gates for making copies of MS
Windows. The public may even applaud if Chinese companies make
unauthorised copies of Pfizer's
drugs, so that more people in China can afford the medicine they need
to save their life. They probably also don't care much if China's
bureaucracy makes it difficult for Wal-Mart to expand or for Goldman Sachs to be a big player in China's financial markets.
But
most of the public really does have a very big interest in the value of
the yuan against the dollar. If the dollar is overvalued against the
yuan by 30%, then this has the same effect as the United States imposing
a tariff of 30% on the items that we may try to export to China. It is
pretty hard to export goods if you impose a 30% tax on them.
On
the other side, a currency that is overvalued by 30% is equivalent to
providing a subsidy to China's manufacturers of 30% for the goods that
the United States imports from China. A 30% subsidy for imports gives
them a very large advantage competing with US-made goods.
Not
surprisingly, this overvaluation is making it very difficult for US
manufacturers to compete with China. The overvaluation of the dollar
against the Chinese yuan (and other currencies)
is the main reason for the huge US trade deficit. It is also one of the
main reasons that the country has lost 6 million manufacturing jobs in
the last dozen years.
The loss of relatively well-paying
manufacturing jobs has put downward pressure on the wages of large
segments of the US workforce. It is one of the main factors behind the
growth of inequality in the United States in the last three decades.
So, we know that the value of the yuan was one of the items on President Obama's wishlist, but we do not know how high up it was on the list. Did President Obama tell President Hu that he doesn't care about Microsoft and Pfizer and Wal-Mart and Goldman; he just wants to see the dollar fall against the yuan?
Or
did Obama tell Hu that he would like to see the yuan rise against the
dollar, but he understands the problems that this would create in China.
Instead, Obama may have suggested that Hu do more to protect Pfizer's
patents and swing a few more deals to Goldman.
The fact is that
the public has no clue as to what the Obama administration's priorities
were in negotiating with China - because the media made no effort to
find out. It somehow escaped the White House press corps, but the deals
with China are, first and foremost, about battles over domestic policy.
President Obama either pushed for Goldman Sachs or he pushed for the
nation's workers, but it doesn't make sense that he pushed for both.
The
media, apparently, are not going to tell the American people which side
the President chose. Fortunately, the currency markets will.
Join Us: News for people demanding a better world
Common Dreams is powered by optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place. We're hundreds of thousands strong, but every single supporter makes the difference. Your contribution supports this bold media model—free, independent, and dedicated to reporting the facts every day. Stand with us in the fight for economic equality, social justice, human rights, and a more sustainable future. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. |
© 2023 The Guardian
Dean Baker
Dean Baker is the co-founder and the senior economist of the Center for Economic and Policy Research (CEPR). He is the author of several books, including "Getting Back to Full Employment: A Better bargain for Working People," "The End of Loser Liberalism: Making Markets Progressive," "The United States Since 1980," "Social Security: The Phony Crisis" (with Mark Weisbrot), and "The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer." He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.
When China's President Hu Jintao came for his state visit last week,
the White House press corps completely ignored almost all the
substantive issues raised by Hu's visit. The domestic policy issues
raised by this trip were altogether invisible in the reporting in major
news outlets.
The news accounts were filled with the long list of
items that President Obama was likely to raise with President Hu. There
are issues about China
respecting the patents and copyrights of US firms. The US has concerns
about market access in China for our retailers, our financial firms and
some of our manufactured products.
And then there are issues
about the relative value of the dollar and yuan. Yep, the White House
press corps got together the whole list, presented it to the public, and
then went home and had a drink.
If these reporters actually had
to cover the news to get a paycheck, then this checklist of concerns
would have been just the beginning of their job. It's great for the Obama administration to come up with a wishlist that it would like from China's leadership. But this is not Disney World. China doesn't hand the United States everything on its wishlist.
China
is a superpower that doesn't have to do whatever the United States
wants. It makes concessions to the United States in exchange for items
on its own wishlist.
This means that the United States is not
going to get everything on its list. In fact, President Obama must
decide which items he will prioritise with China and put these items
first, as opposed to other items which he will tell Hu are of less
consequence. The real job of reporting in Washington last week should
have been trying to find out the actual priority that President Obama
was assigning to the various items on his list.
This is what the
public needs to know: different items will obviously matter more to some
people than others. Most people in the United States probably don't
give a damn if the Chinese pay Bill Gates for making copies of MS
Windows. The public may even applaud if Chinese companies make
unauthorised copies of Pfizer's
drugs, so that more people in China can afford the medicine they need
to save their life. They probably also don't care much if China's
bureaucracy makes it difficult for Wal-Mart to expand or for Goldman Sachs to be a big player in China's financial markets.
But
most of the public really does have a very big interest in the value of
the yuan against the dollar. If the dollar is overvalued against the
yuan by 30%, then this has the same effect as the United States imposing
a tariff of 30% on the items that we may try to export to China. It is
pretty hard to export goods if you impose a 30% tax on them.
On
the other side, a currency that is overvalued by 30% is equivalent to
providing a subsidy to China's manufacturers of 30% for the goods that
the United States imports from China. A 30% subsidy for imports gives
them a very large advantage competing with US-made goods.
Not
surprisingly, this overvaluation is making it very difficult for US
manufacturers to compete with China. The overvaluation of the dollar
against the Chinese yuan (and other currencies)
is the main reason for the huge US trade deficit. It is also one of the
main reasons that the country has lost 6 million manufacturing jobs in
the last dozen years.
The loss of relatively well-paying
manufacturing jobs has put downward pressure on the wages of large
segments of the US workforce. It is one of the main factors behind the
growth of inequality in the United States in the last three decades.
So, we know that the value of the yuan was one of the items on President Obama's wishlist, but we do not know how high up it was on the list. Did President Obama tell President Hu that he doesn't care about Microsoft and Pfizer and Wal-Mart and Goldman; he just wants to see the dollar fall against the yuan?
Or
did Obama tell Hu that he would like to see the yuan rise against the
dollar, but he understands the problems that this would create in China.
Instead, Obama may have suggested that Hu do more to protect Pfizer's
patents and swing a few more deals to Goldman.
The fact is that
the public has no clue as to what the Obama administration's priorities
were in negotiating with China - because the media made no effort to
find out. It somehow escaped the White House press corps, but the deals
with China are, first and foremost, about battles over domestic policy.
President Obama either pushed for Goldman Sachs or he pushed for the
nation's workers, but it doesn't make sense that he pushed for both.
The
media, apparently, are not going to tell the American people which side
the President chose. Fortunately, the currency markets will.
Dean Baker
Dean Baker is the co-founder and the senior economist of the Center for Economic and Policy Research (CEPR). He is the author of several books, including "Getting Back to Full Employment: A Better bargain for Working People," "The End of Loser Liberalism: Making Markets Progressive," "The United States Since 1980," "Social Security: The Phony Crisis" (with Mark Weisbrot), and "The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer." He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.
When China's President Hu Jintao came for his state visit last week,
the White House press corps completely ignored almost all the
substantive issues raised by Hu's visit. The domestic policy issues
raised by this trip were altogether invisible in the reporting in major
news outlets.
The news accounts were filled with the long list of
items that President Obama was likely to raise with President Hu. There
are issues about China
respecting the patents and copyrights of US firms. The US has concerns
about market access in China for our retailers, our financial firms and
some of our manufactured products.
And then there are issues
about the relative value of the dollar and yuan. Yep, the White House
press corps got together the whole list, presented it to the public, and
then went home and had a drink.
If these reporters actually had
to cover the news to get a paycheck, then this checklist of concerns
would have been just the beginning of their job. It's great for the Obama administration to come up with a wishlist that it would like from China's leadership. But this is not Disney World. China doesn't hand the United States everything on its wishlist.
China
is a superpower that doesn't have to do whatever the United States
wants. It makes concessions to the United States in exchange for items
on its own wishlist.
This means that the United States is not
going to get everything on its list. In fact, President Obama must
decide which items he will prioritise with China and put these items
first, as opposed to other items which he will tell Hu are of less
consequence. The real job of reporting in Washington last week should
have been trying to find out the actual priority that President Obama
was assigning to the various items on his list.
This is what the
public needs to know: different items will obviously matter more to some
people than others. Most people in the United States probably don't
give a damn if the Chinese pay Bill Gates for making copies of MS
Windows. The public may even applaud if Chinese companies make
unauthorised copies of Pfizer's
drugs, so that more people in China can afford the medicine they need
to save their life. They probably also don't care much if China's
bureaucracy makes it difficult for Wal-Mart to expand or for Goldman Sachs to be a big player in China's financial markets.
But
most of the public really does have a very big interest in the value of
the yuan against the dollar. If the dollar is overvalued against the
yuan by 30%, then this has the same effect as the United States imposing
a tariff of 30% on the items that we may try to export to China. It is
pretty hard to export goods if you impose a 30% tax on them.
On
the other side, a currency that is overvalued by 30% is equivalent to
providing a subsidy to China's manufacturers of 30% for the goods that
the United States imports from China. A 30% subsidy for imports gives
them a very large advantage competing with US-made goods.
Not
surprisingly, this overvaluation is making it very difficult for US
manufacturers to compete with China. The overvaluation of the dollar
against the Chinese yuan (and other currencies)
is the main reason for the huge US trade deficit. It is also one of the
main reasons that the country has lost 6 million manufacturing jobs in
the last dozen years.
The loss of relatively well-paying
manufacturing jobs has put downward pressure on the wages of large
segments of the US workforce. It is one of the main factors behind the
growth of inequality in the United States in the last three decades.
So, we know that the value of the yuan was one of the items on President Obama's wishlist, but we do not know how high up it was on the list. Did President Obama tell President Hu that he doesn't care about Microsoft and Pfizer and Wal-Mart and Goldman; he just wants to see the dollar fall against the yuan?
Or
did Obama tell Hu that he would like to see the yuan rise against the
dollar, but he understands the problems that this would create in China.
Instead, Obama may have suggested that Hu do more to protect Pfizer's
patents and swing a few more deals to Goldman.
The fact is that
the public has no clue as to what the Obama administration's priorities
were in negotiating with China - because the media made no effort to
find out. It somehow escaped the White House press corps, but the deals
with China are, first and foremost, about battles over domestic policy.
President Obama either pushed for Goldman Sachs or he pushed for the
nation's workers, but it doesn't make sense that he pushed for both.
The
media, apparently, are not going to tell the American people which side
the President chose. Fortunately, the currency markets will.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.