President Barack Obama addressed China’s role in the global economy during the Asia-Pacific Economic Cooperation summit in Hawaii. The president urged Chinese policymakers to allow the country’s currency to appreciate at a faster pace so as to rebalance mutual benefits in trade and industrial contracting between China and other countries. Chinese president Hu Jintao argued, however, that China had no significant part in crafting global economic policy and felt little need to abide by its rules, and intimated he hoped his country would have a larger role in shaping policy moving forward. For more on this continue reading the following article from Tim Iacono.
You’d think that there’s at least a little bit of a “Good Cop, Bad Cop” dynamic going on right now when President Obama talks to the Chinese about letting their currency strengthen at a faster pace. Of course, Obama is the good cop here with just about every GOP presidential hopeful playing the alternate role and one can easily imagine Chinese President Hu Jintao being told over the weekend, “Hey, I’m about the best friend you’re ever going to have in Washington. How about a little appreciation, currency-wise?”
As Hu made clear yesterday, from the perspective of the Chinese, they had no part in making any of the rules in the current global monetary system and feel little compulsion to play by them. Mindful of the Japan experience in the late-1980s when strong currency appreciation led to massive asset bubbles and two lost decades, they’re not likely to simply comply with the wishes of the West when it comes to their currency.
This blog post was republished with permission from Tim Iacono.