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Saturday, November 22, 2008

Economy, not rights, rules the new China-US world

BEIJING (AP) — As a dangerous confrontation flared between China and Taiwan in 1996, Bill Clinton deployed the Seventh Fleet to deter the two rivals from going to war. Five years later, when a U.S. spy plane collided with a Chinese fighter, George W. Bush faced a prolonged international crisis. Meanwhile, human rights and democracy in China were a perennial hot-button issue.

Now it's Barack Obama's turn to deal with the China challenge, and this time, it's all about the money. As the global financial system teeters, China, with its $1.9 trillion in foreign reserves and slowing but still strong economy, offers a potential lifeline.

The crisis that Obama is inheriting has pushed aside the old points of contention and underscored how profoundly the power equation between Washington and Beijing has changed.

China now owns over half-a-trillion dollars in U.S. government bonds, more than any other country, and Washington needs Beijing to continue buying them to help finance the national debt and the $700 billion financial industry bailout.

And while China's economy is heavily dependent on exports to the U.S., it is also a growing market for U.S. products, making trade retaliation — long a threat wielded solely by Washington — more of a two-way street.

"The power shift in China-U.S. relations is making them more interdependent," said Cheng Xiaohe, an international relations scholar at Beijing's Renmin University. "This next president will need to exercise greater caution."

When Clinton first ran for the White House, he made human rights an issue, accusing then President George Bush of "coddling" the communist dictatorship. But during his presidency, the administration moved to uncouple human rights from trade privileges — a milestone in normalizing ties between the two powers.

During Bush's presidency, as Chinese exports boomed, China's currency regime and trade surplus hit $163.3 billion in 2007, becoming an increasingly fractious political issues, even as the question of human rights was moving to the fringes of the public agenda.

In the Barack Obama-John McCain race, human rights figured early when Tibetan unrest flared and Obama called on Bush to boycott the Beijing Olympics. But the issue soon faded from his talking points, and when relations with China briefly resurfaced, the context was purely economic.

During the campaign, Obama described China as "neither our enemy nor our friend; they're competitors." He called for broad cooperation with Beijing while repeating the accusation that the trade surplus was stoked by a Chinese currency kept artificially cheap.

The currency has been an especially hot topic in Congress and could arise again as an irritant in relations. On Thursday, a congressional advisory panel recommended Congress enact legislation to pressure Beijing into forcing up the value of the yuan, thereby making Chinese imports more expensive.

China is a veto-holding permanent member of the U.N. Security Council and there are many other reasons why Washington needs Beijing's help — to maintain detente in the Taiwan Strait, strip North Korea of its nukes, and pressure Iran into cooperating with nuclear inspections.

Throw in the economy, and many expect Obama to take a mild approach toward Beijing on issues of human rights, freedom of speech and Tibet.

That would be a mistake, argues Wei Jingsheng, the internationally renowned pro-democracy dissident whose imprisonment and exile came to define the difficulties of the U.S.-China relationship in the 1980s and 1990s.

Wei, who now lives in Washington, D.C., maintains that the root of the economic crisis lies in the trade imbalance with China, and that China's industrial might is built on underpaid, badly treated workers. China gets away with it because Western business doesn't want human rights getting in the way of profits, he says.

In an interview with The Associated Press, Wei rejected the idea of China as the West's economic lifeline, saying China would have a hard time saving its own economy and anyway wouldn't mind seeing the West failing.

"This expectation of China to save the West is only a dream," he said. "But why is this dream fanned up so much? Because the big businesses in the West are pumping up this idea; they do not want to see Western governments take severe measures against the Chinese government."

He recalled the days when Western governments and media were focused on Chinese human rights abuses — "It is really because of their effort that people like me survived" — and urged Obama to renew the pressure by establishing a link between trade privileges and workers' rights.

"It would be like killing two birds with one stone — reducing the trade deficit while boosting rights for Chinese workers," he said.

But Chinese scholars at government-backed research bodies sound confident that no radical changes in the relationship will happen under Obama.

"Although we'll see some disputes around issues like trade, human rights and climate change, the general framework will be stable," said Jin Canrong, an expert on the U.S. at Renmin University. "This is mature bilateral relations between two big powers."

Associated Press writer Carley Petesch in New York contributed to this report.

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