The Dalai Llama's visit to the White House last month was the culmination of a testing few months for Sino-US relations: one that promised rapprochement, but yielded little.
Much has changed since this time last year. Hot off the campaign trail where he had promised 'fresh thinking' to work through their differences, Obama seemed to extend his hand to Chinese premier Wen Jiabao. Commentators wrote of a 'G-2 approach' that could 'steer global governance' and 'solve the world's ills'. In September, the president declined to visit the Dalai Llama, for fear of offending Beijing.
Then Jiabao refused to endorse sanctions proposed by Obama to stymie Iran's nuclear programme; trade between the two is booming. In Copenhagen, despite Obama's footwork in the foregoing weeks, the final deal was 'gutted' by a Chinese delegation asserting its right to fuel-heavy growth. The US took most of the flak. This, teamed with the Google-China debacle, secretary of state Hillary Clinton's speech on internet freedom, the announcement of arms sales to Taiwan, and the unveiling of the Quadrennial Defense Report, which specifically highlights the need to defend against China, seems to show a new hardening of the US's views on China.
But Obama's real issues are closer to home. The majority of China's $2bn foreign currency reserves are held in US dollars, and it holds the most part of the US's $12.4 trillion debt. Beijing stands accused of protectionism and of undervaluing the yuan, giving its imports unfair advantage in a struggling domestic market. The trade deficit grows; China won't budge, and denies that it is undervaluing its currency. Meanwhile, the increasing number of jobless Americans puts more and more pressure on the president to act.
Beijing's sale of some $34bn US bonds, announced this week, could be interpreted two ways: as vengeance for recent months' irritation, or an attempt to reduce the risk on its reserves. The latter, perhaps, is more worrying for Obama. 'After all,' writes one commentator, 'if the world's richest investor suddenly turns bearish on you, this could be a sign that you are in trouble.'
Yet China must sell as the US must borrow; no market but America is of requisite scale. The yuan is pegged to the dollar, and any large sell-off would kick off steep decline. If predictions of market meltdown play out, Beijing will be on the back foot.
Broken marriage analogies come thick and fast, but the love's never been there to lose. The two are instead mutual hostages, and neither knows how to get out.
Much has changed since this time last year. Hot off the campaign trail where he had promised 'fresh thinking' to work through their differences, Obama seemed to extend his hand to Chinese premier Wen Jiabao. Commentators wrote of a 'G-2 approach' that could 'steer global governance' and 'solve the world's ills'. In September, the president declined to visit the Dalai Llama, for fear of offending Beijing.
Then Jiabao refused to endorse sanctions proposed by Obama to stymie Iran's nuclear programme; trade between the two is booming. In Copenhagen, despite Obama's footwork in the foregoing weeks, the final deal was 'gutted' by a Chinese delegation asserting its right to fuel-heavy growth. The US took most of the flak. This, teamed with the Google-China debacle, secretary of state Hillary Clinton's speech on internet freedom, the announcement of arms sales to Taiwan, and the unveiling of the Quadrennial Defense Report, which specifically highlights the need to defend against China, seems to show a new hardening of the US's views on China.
But Obama's real issues are closer to home. The majority of China's $2bn foreign currency reserves are held in US dollars, and it holds the most part of the US's $12.4 trillion debt. Beijing stands accused of protectionism and of undervaluing the yuan, giving its imports unfair advantage in a struggling domestic market. The trade deficit grows; China won't budge, and denies that it is undervaluing its currency. Meanwhile, the increasing number of jobless Americans puts more and more pressure on the president to act.
Beijing's sale of some $34bn US bonds, announced this week, could be interpreted two ways: as vengeance for recent months' irritation, or an attempt to reduce the risk on its reserves. The latter, perhaps, is more worrying for Obama. 'After all,' writes one commentator, 'if the world's richest investor suddenly turns bearish on you, this could be a sign that you are in trouble.'
Yet China must sell as the US must borrow; no market but America is of requisite scale. The yuan is pegged to the dollar, and any large sell-off would kick off steep decline. If predictions of market meltdown play out, Beijing will be on the back foot.
Broken marriage analogies come thick and fast, but the love's never been there to lose. The two are instead mutual hostages, and neither knows how to get out.
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