As Treasury Secretary Timothy Geithner heads to China, critics who hoped the Obama administration would bring change to U.S. policy toward that country are voicing disappointment.
So far, the new administration’s economic policies on China do not differ from the Bush administration’s, according to domestic manufacturing groups and their supporters in Congress.
While some note the new administration has been office a short time and remain hopeful change will come, others see trade irritants are being pushed to the side by an administration worried about other priorities.
This week’s missile test by North Korea could make it even more difficult to get the administration to take a firm stand on China by making Obama wary of doing anything that might make it more difficult to get China to use its leverage on the North Koreans.
“The first three months of the Obama administration has indicated that trade issues are going to be utterly subordinated to other [strategies] in terms of the relationship with China,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
“You add to that the growing problem with North Korea, and it doesn’t paint a pretty picture for U.S. manufacturers who are desperate for a change in the trade relationship with China,” he said.
Alan Tonelson, a research fellow at the U.S. Business and Industrial Council, describes the Obama administration as a rerun of the Bush administration on China. “It seems pretty clear that, we’re seeing much of the same thing,” he said.
Tantillo and others list several examples of how the new administration has downplayed U.S.-China trade irritants.
Secretary of State Hillary Rodham Clinton pushed trade to the side during discussions with Chinese leaders earlier this year, though she did urge the Chinese to keep buying U.S. bonds for the sake of both countries’ economies.
In May, Obama named a pro-trade Republican, Utah Gov. Jon Huntsman, as his ambassador to China. Confirmation hearings for Huntsman are expected next week.
The Treasury Department also decided to not name China as a currency manipulator earlier this year, something that Rep. Mike Michaud (D-Maine) said was a disappointment.
Those wanting tougher U.S. actions had reasons for optimism when Obama was elected.
Obama signed on as a co-sponsor to 2007 legislation calling for tariffs to be imposed on products from China or any other country that manipulates its currency. He also sent a letter to the National Council of Textile Organizations in October 2008 that said he would step up the fight against unfair trade practices.
Senior Treasury officials briefing the media Thursday on Geithner’s trip said currency would be raised, but the issue was not part of the highlighted agenda. Geithner will arrive in China on Sunday, and is scheduled to speak at Peking University on Monday.
Michaud and 54 other House Democrats in a Feb. 26 letter to Obama pleaded with him to work with Congress to reform trade policies, including with China. Michaud said the group still has not received a response.
“It’s a new administration, they’ve got a lot on their plate,” he said. “But we have to
juggle more than one ball and these are important issues.”
Charles Freeman, a former trade official in the Bush administration, said the North Korean missile tests doesn’t make it more likely Obama will shy away from tackling China on trade. He said it’s more likely that the president is comfortable with existing policy. He noted that Obama’s economic team largely consists of people who believe in the status quo economic relationship with China. They include economic advisor Larry Summers and Geithner.
Through the first few months of the administration, those officials have been consumed with a global economic crisis. Policy toward China has been geared toward convincing that country to work with the U.S. to help lead the world out of recession, partly by stimulating its consumers to spend.
U.S. policy makers have also worked to press Chinese officials to continue their policy of buying U.S. bonds. Those purchases keep the value of the U.S. dollar high, hurting U.S. exporters and lowering the cost of Chinese imports. It also keeps U.S. interest rates low.
Some think its still too early to make any judgments on Obama’s China policy.
“In my impression, these are unsettled issues,” said former trade official Charlie Blum. “They haven’t really thought it through.
Blum, who supports legislation that would impose tariffs in Chinese goods if China is found to manipulate its currency to secure a trade advantage, said it’s understandable that the administration has been slow to come up with answers on the China questions given the extraordinary circumstances in the world economy.
Still, he criticized the administration for not getting more advice from groups critical of current policy.
Freeman expected Obama by now to have offered a political pay-for to trade critics in organized labor. He also noted the administration has revved back efforts to move several trade agreements through Congress, which suggests they’re wary of irritating Democrats opposed to more free trade.
Another supporter of a tough line on China said groups will give the administration more time to demonstrate its policies will differ from its predecessor.
“Domestic manufacturers are expecting this Congress and this administration to be more aggressive on China trade policies than the last one, and we’re waiting and watching for that to unfold,” said Cass Johnson of the National Council of Textile Organizations.
