President Barack Obama’s First Visit to China

Obama Looses “Rock Star” Status on First Visit to China

About: (Barack Obama, Chinese President Hu Jintao, U.S.-China Trade Relations)

This week Barack Obama heads to Asia minus the ace-in-the-hole that has accompanied him on other tours. President Obama is not definitely regarded as a rock star president by any leader in Asia. Anything but.

The centerpiece of the Asian trip will be Obama’s potentially tense meeting with Chinese President Hu Jintao in Beijing. As always, the camera will record pomp and circumstance. The official statements will be couched in positive language. But what’s really going on?

Beijing enjoyed remarkably good relations with the Bush administration which generally maintained a hands-off policy towards China and much of Asia. But the Obama administration is involved in a number trade disputes, new tariffs and investigations with China involving cheap tires, steel pipe used in the oil industry, and glossy paper products. China has responded by issuing angry statements and launching investigations into allegedly unfair trade practices by U.S. industries, raising fears of a trade war.

In an interview with Reuters before departing, Obama warned of “enormous strains” between China and the U.S. if key issues aren’t addressed.

“On critical issues, whether climate change, economic recovery, nuclear nonproliferation, it is very hard to see how we succeed or China succeeds in our respective goals, without working together.”  President Obama told Reuters that the economic relationship between the two countries had become “deeply imbalanced” in recent decades, with a huge trade imbalance in China’s favor and huge Chinese holdings of U.S. government debt.

Especially sensitive is the issue of the value of the Chinese yuan. Many western nations believe that it is unfairly undervalued. Chinese leaders are indignant at outside pressure to increase the value of the yuan, feeling it is necessary to protect their shrinking but vital export industries.

Before departing, Obama said, “As we emerge from a crisis situation, I believe China will be increasingly interested in finding a model that is sustainable over the long term. But if we don’t solve some of these problems, then both economically and politically it will put enormous strains on the relationship.”

No American leader has ever warned of such a bleak outlook for Sino-U.S. relations since the Nixon-era thaw in the Cold War between China and the United States.

Throughout his Asian tour, Obama will find America’s unquestioned supremacy in the region has waned. China is seen as the economic engine of the region and will surpass Japan in GDP in the next twelve months. (Japan is also feeling more militant towards America and may ask the US to move or remove its Okinawa bases.)

The president will also be on the sidelines of a ten-nation meeting of Asian leaders. Obama comes to Asia “bringing absolutely nothing to the table,” Michael Green, a White House Asia adviser during the Bush administration and now an analyst at the Washington-based Center for Strategic and International Studies told the Associated Press. Without American leadership on trade, the fear is that the U.S. will be left behind while other nations roar ahead with their own agreements, Green said.

As a massive debtor nation and an economy seen to be lagging behind the Chinese juggernaut, President Obama will face an unprecedented challenge in his main mission: to convince Asian nations to consume more US exports.

China holds the aces in this economic showdown.