US and China both need a time out on international trade
The APEC conference in Honolulu should give those few remaining optimists pause for thought. Neither the US nor China is serious about fixing a broken global trade system. They lack the mandate from back home, the political will, and quite frankly – the diplomatic chops – to stave off a disastrous global meltdown. Interesting times.
Washington continues to be stymied by the concept of “exit strategy”. While most Westerners engaged in China business are heartened to find that someone is willing to openly discuss trade restrictions and unfair regulations creating an unequal playing field in the PRC, the Obama administration manages to appear simultaneously cowardly and bullying on trade. How is Beijing supposed to react to being called “childish” under the glare of the APEC spotlight? The President and his administration tend to wait for just the wrong moment to launch dramatic blow-ups that have no chance of leading to substantive discussion, let alone a credible solution. Geithner has spent his tenure as Sec of Treasury kowtowing to Beijing as though it were his full time job, occasionally whispering about unfair currency manipulation when the coast is clear. Sec of State Hillary Clinton is the only member of the team who understands how to apply pressure consistently and credibly – but she is largely absent from the stage.
China is not winning any prizes either. The ordinarily staid & steady PRC has been displaying a chilling tendency towards hysterics at international sit-downs. After the theatrics at 2009’s Copenhagen climate summit, the APEC “we only play by the rules we negotiate” histrionics demonstrate that China is its own worst enemy when it comes to getting the international recognition it says it deserves. It is well known that the PRC doesn’t care for public multilateral forums, preferring to settle matters one-on-one behind closed doors, but that doesn’t justify turning each uncomfortable meeting into a meaningless farce. Just as it did in Copenhagen, Beijing set up a low ranking official to undermine a potentially serious conference with outrageous, irrational behavior. China has to decide whether it wants to lead global institutions or neuter them.
International managers who have been trying to gauge the economic climate for 2012 and beyond had best break out the foul weather gear, because it looks like a storm is coming.
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