Perhaps you noticed that Chinese President Hu Jintao visited Washington this week. If not Jay Leno did and theorized his initial meeting with President Obama's kids went like this: "So what factories do you work at?"
I laughed out loud when I read that joke. After spending the early part of this week reading about all of the special precautions that the White House was taking to ensure that the Chinese president and his entourage were welcomed in a way worthy of a world dignitary, I think an unscheduled celebrity roast should have occurred with President Hu as the special guest:
- "I hear President Hu is quite the ballroom dancer. Having tap danced around that whole currency manipulation charge for the last five years, he's got to be pretty good by now."
- "China is really starting to improve its human rights record. Dissidents are allowed two showers a month now in jail and are not subject to reruns of 'According to Jim.'"
- "Everyone is noticing the quality improvement in Chinese-made goods. President Obama commented on how much he liked President Hu's Rolodex watch during their initial meeting."
The entire hullabaloo about the relationship between the world's largest economic super powers is wasted breath. In fact, Secretary of State Hillary Clinton summed it up best in this quote made public because of the WikiLeaks scandal: "How do you deal toughly with your banker?"
The U.S. has no leverage to pressure China to do anything. Sitting on top of billions of U.S. dollars in its reserves, the Chinese government has financed the federal government's voluminous debt. It influences U.S. policy and public statements just as corporations, political action committees, and unions influence U.S. politicians. It may stink like a pig farm on a 90-degree day, but that's reality.
Ironically, after years of pestering China to end its efforts to stop the natural appreciation of its currency against the U.S. dollar, the country may be taking steps to do just that. However, the motivation is not linked to U.S. pleas, but rather the fact that China's cheap currency policy is feeding inflation. To fend off unrest among the population, the Chinese government might have to allow its currency to appreciate some.
Truthfully, I don't begrudge China for its actions. It needs to satisfy the needs of 1 billion people. I'm actually more frustrated by U.S. politicians who see no problem continuing their spending ways and those who talk about smaller government without offering substantial plans for cuts or simply ignoring the need to alter Social Security benefits or slash the $700 billion Department of Defense budget. My problem is more with the junkie than the dealer.
That doesn't mean, however, that I view China as the shining city on the hill. The country is still a ruthless competitor and a continuous threat to U.S. manufacturing. Just ask the Brannock Device Co. Inc. in Liverpool, N.Y., who struggles to put the best foot forward in light of overseas competition.
So let China compete, and let's get our own financial mess in shape. That way we don't have to kowtow to the Chinese delegation next time they visit.