Obama's Chinese honeymoon

The new administration's relations with Beijing have been better than feared. But the first cracks are emerging
Shi Yinhong
guardian.co.uk, Monday 5 October 2009 10.00 BST

China's relations with President Obama's administration have been, until very recently, excellent. Beijing had worried during Obama's presidential campaign that a Democratic win might signal a protectionist stance towards China and overconcern with perceived human rights issues, but these fears had not proven grounded.
Yes, there were tensions, most prominently about the US naval surveillance activity within China's special economic zone in the South China Sea. Yes, there were also a few ongoing major disagreements that Beijing and Washington still urgently needed to thrash out, on matters such as climate change.
But what had been impressive, even extraordinary, was that the handful of public frictions never reached crisis point, and were all dealt with within a climate of rather friendly negotiation. Bilateral relations had been in a generally good state during President Bush's last years in office, but during the first months of a new administration in Washington there has almost always been a downturn in the attitude toward China, so the cordial start was unexpected and highly welcome.
It is this happy context that makes the US president's decision on 11 September to slap high tariffs on cheap imported Chinese tyres so surprising and enraging to Beijing. Many Chinese see it as humiliating that Obama took this drastic action immediately after Wu Banguo, head of China's National Congress, had declared his visit to Washington to be a great success – especially given that the president himself had not raised the prospect of Sino-US trade disputes since taking office.
Beijing's anger was expressed instantly and in the strongest terms by the ministry of commerce, the main national government agency dealing with foreign trade. It condemned the tyre tariff decision as a "grave protectionist action" and an "extremely bad precedent", warned that "abusing trade relief measures will damage China-US trade relations" and made a clear threat of trade retaliation. This kind of language is rarely used by Beijing so it carries real force.
However, at the same time, the ministry's reaction shows a sophisticated streak of restraint. In its statement the ministry mentions that the US government was "forced by domestic political pressure" to raise its "unreasonable demands", a phrase that partially exonerates the US policymakers. The threatened retaliation involving American chicken parts and motor parts, in the words of the Christian Science Monitor, "seems designed to minimise the impact of any retaliatory measures it might take", because chicken parts accounted for a little over 1% of overall US poultry exports to China last year and in the first half of 2009 fell sixfold from even this insignificant level, while China reduced import tariffs on auto parts a little over two weeks ago, which, as the Christian Science Monitor says, "would appear to limit its ability to impose serious new sanctions on such goods".
The honeymoon may be ending, but the Chinese government still puts a high value on relations with the United States and President Obama. The relationship can weather this storm. President Obama visits Beijing in November and both parties will try to prevent this dispute spilling over into something much more serious. The Chinese government's strong reaction (limited thus far mainly to harsh words) to Obama's tyre tariff decision seems fuelled by its sensitivity to business and public opinion. The former fears US protectionist measures, while the latter (at least a large part of it) has long been much more critical toward the US in its relations with China than the Chinese government. "We must take a forceful posture in dealing with the US, even withdrawing from the WTO," one Chinese internet user wrote on a bulletin board on 16 September about the tyre tariff affair, using much more moderate language than many others. "Totally boycott US goods! Sell all US treasury bonds!" another wrote on the same day.
We should not take the Chinese government's attitude toward the United States and the Obama administration for granted. It has not forgotten what most commentators in east Asia said during the presidential campaign about Obama and the Democratic party's protectionist inclinations. It knows that as the US emerges from financial crisis and reduces its financial dependence upon China, substantial trade disputes might raise their head again. The probability of Obama meeting with the Dalai Lama sooner or later, the possible new programme of arms sales to Taiwan, and the marginalisation of China in the North Korea problem all have the potential to make things worse. Normal relations between Beijing and Washington could soon be resumed, the honeymoon well and truly over.