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China needs the US as much as the US needs China

Posted: August 23, 2011 - 8:37pm

The following editorial first appeared in the St. Louis Post-Dispatch on Thursday:

Vice President Joe Biden is in the People’s Republic of China this week to meet with China’s vice president, Xi JinPung. Among the expected topics of discussion: a U.S. plan to sell Taiwan upgraded components for some of its aging F-16 fighter jets, an idea the People’s Republic doesn’t like much, and North Korea’s nuclear machinations, which nobody likes much.

Judging from recent reports in the state-controlled Chinese press, Biden also may get an earful from Xi about the lagging U.S. economy, the recent rating downgrade of long-term Treasury bonds by Standard & Poor’s and the size of America’s national debt.

Diplomacy necessarily involves delicacy, and the mutually crucial relationship between China and the United States is particularly sensitive to subtle interpretations of language. But when it comes to finance, trade and economic investments, Biden ought to give Xi an earful right back — at least in private.

The authoritarian Chinese government has controlled its country’s institutions — civil, military, political, economic, commercial and social — since 1949. A partial shift to market-driven economics, gradually introduced starting in the late 1970s, has fueled a phenomenal increase in manufacturing and an expanding economy.

China has invested $1.2 trillion of its wealth in U.S. Treasury bonds, more than any other overseas investor. That pales next to the $4.6 trillion held by various trust funds of the U.S. government itself and the $3.6 trillion owned by individual American investors, American companies in all sectors of the economy and state and local governments in all 50 states.

Nevertheless, China chose to lecture the United States on financial policy shortly after the S&P downgrade announcement on Aug. 5. In an unsigned commentary, China’s official Xinhua news agency told the United States to “cure its addiction to debts,” learn to “live within its means” and make deep cuts to “bloated social welfare” efforts and “gigantic military expenditure.”

If Xi takes a similar tack in his discussions with Biden, the U.S. vice president should remind his Chinese host — in language of the utmost delicacy, of course — that China did not invest in Treasury notes out of the goodness of its heart; it bought them because they were and are the safest, most secure investment in the world, S&P or no S&P.

Biden also might remind Xi that American companies and consumers constitute the most important market for China’s exported goods. As such, they are China’s largest source of funds to help pay for the vast infrastructure projects that eventually may provide 1.3 billion Chinese people with the higher standard of living they have begun to demand with increasing impatience.

And Biden gently might remind his counterpart that China needs to pursue even more vigorously its belated efforts to ensure the safety and efficacy of the products it exports to the rest of the world.

No developer or housing contractor, after all, wants to install defective Chinese drywall that emits hydrogen sulfide gas fumes at levels high enough to corrode metal and induce breathing problems, skin and eye irritation and headaches.

Parents prefer that their children play with Chinese-made Barbie accessories, Batman figures, Thomas & Friends wooden trains and Fisher-Price Elmo and Dora the Explorer toys that are free from lead paint.

Americans are not eager to stake their lives on a ride on defective radial tires. They have no desire to use malfunctioning and/or counterfeit made-in-China electrical goods like coffee makers, paint sprayers, cell phone batteries, circuit breakers and toaster ovens. They aren’t interested in contaminated blood-thinning medication, contaminated baby formula, contaminated pet food that kills pets, toothpaste with poisonous antifreeze in it or fish products containing dangerous levels of anti-fungal agents and unapproved antibiotics.

All of these have been problems, Biden might say. Gently, of course.

The potential benefits of expanding relations between China and America are broad and deep. That is readily apparent in the efforts to create a cargo hub at Lambert-St. Louis International Airport to receive and trans-ship Chinese goods arriving in the United States, ship American goods back to China and create good American jobs in the process.

The leaders pursuing these and other opportunities should remember that the benefits flow both ways. And that respect is a two-way street.

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