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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

27 March 2006

Senator Schumer in China

In April 2005, Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC) proposed legislation to impose a 27.5% tariff on all Chinese goods if, within two years, China had not taken immediate and concrete steps to let its currency float. They withdrew it under pressure from the administration but promised to bring it to the floor some time in the future.

Given that this legislation has been brewing for some time now, it is encouraging to see Senators Schumer and Lindsey finally make it to China (first trip for either). Mr. Schumer said: “I was very frank with the vice premier. I said when I came here I thought the Chinese policy was sort of mercantilist, aimed at accumulating wealth. And now I see that there is an added dimension.” Mr. Graham: “The challenges this country faces are greater than I realized.”

For one, it is good that a “fact-finding” trip takes place a few years after both have been demonizing China for its mercantilism. The New York Times writes, “Maybe the chance to talk face-to-face with Chinese on their home turf is what it took to make Mr. Graham and Mr. Schumer realize that just as trade is a two-way street, so too are sanctions.”

Maybe. But what is more likely is that the two Senators appreciated the complexity of the issue at hand. Americans may focus inadvertently on a rising China, but the Chinese see a massive challenge ahead: how to bring prosperity to the poor hinterland; how to preserve the stability of the communist party and the legitimacy of rule; and how to build institutions that can cope with the explosive growth that China has experienced.

For Senators wanting to make foreign policy, it should not take them a trip to China to realize this elementary fact. But if that’s what it takes, too bad they didn’t go earlier.

References:
Jason Dean, “A Senate Test of Protectionism,” Wall Street Journal, 25 Mar 06; “Mr. Schumer Goes to China,” New York Times, 27 Mar 06

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