Stir Fried China

President Barack Obama will make his first trip to China as president on November 16-18, first in Shanghai and then in Beijing. He is the first president to make the trip in his first year in office, and follows on the heels of earlier meetings this year with Hu Jintao in Italy and at the United Nations. Beyond the standard US-China relations issues – human rights, Tibet, Taiwan, currency valuation (which is becoming more internationalized, see below) – Obama will also need to discuss a number of worldwide issues with his Chinese counterpart, and probably to an extent that no other US President has before. Beyond that – and although the Chinese press is trying to downplay it – the reaction that Obama will receive in China is going to be very interesting. Part 1 here will focus on the issues and in Part 2 I’ll talk about how I think Obama will be received in China and how he’ll approach Chinese domestic affairs.

US Economy

image from Reuters

The US economy may technically be out of recession, but with a 10% unemployment number hovering around him (with one economist today saying it will reach 13%), Obama is going to have a hard time convincing China that we’re on the mend and that their enormous investment in our future (bonds) is on good ground. On the flip side, I think that the Obama administration needs to push China to understand that China’s “we’ll just sell everything to America and everything will be fine” strategy may be a thing of the past (at least in the short term) and that they need to continue to stimulate China’s domestic economy (which is a win for both sides).

North Korea

Obama is going to have to set a tone while in China that he trusts that China will continue to spearhead a solution to the craziness going on across the river from Jinan. Supporting the six party talks was probably the only thing that Bush Jr. did passably well in foreign relations, and Obama needs to continue to allow China and the other Asia states to influence North Korea into some kind of progress. It’s really the only way it’s ever going to work.

Tariffs

The continuing tariff spats on industries such as steel pipes and the auto industry, really annoys the business communities on each side of the Pacific. I doubt that this trip will help to ease any existing tariffs or significantly stem the tide of more to come, but hey, you never know, Obama is a charmer.

Currency

The Wall Street Journal has confirmed that Obama will bring up the RMB (or I should say, try to get it down) while in China, which isn’t really surprising. However, both the EU and Japan are also calling for China to reassess their currency, especially if the global crisis lengthens a bit into next year, so China’s brass may be forced to give some time to the issue if it falls out of a primarily US led demand.

Climate change

With a cloud of grey death hanging over much of northern China this week, I think that it’s fair to say that climate change and the environment will be a discussion point during the trip. However, as key as China is to keeping the world green (or the other way around depending on your point of view), with climate talks already scheduled for later on in the year, the Chinese leadership will most likely defer to those talks and – baring perhaps some green purchasing agreements, i.e. wind turbines or the such – I wouldn’t expect much to happen on this front during Obama’s three days there, though I do expect that he’ll put it prominently in his speeches.

Beyond these issues, the “war on terror”, China’s expanding role/investment in Africa (China really wants us to just butt out of that, so I doubt it will go far) and tainted food products will also be discussed, but actually I think I’ll save that last one for Part 2, as that is an issue that really affects Mainland China even more than the world at large. Looking forward to your comments and most likely I will expand on this post over the next week.