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China's G-Finance & G-Economy Key to US$ 40 Trillion Market (3)

12:49, September 03, 2010

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Other U.S. trading partners, worried about US anti-protectionist language and new protectionist policies and, are expressing tough talk against U.S. tariff plans. Paul Krugman, an American Nobel Prize winning economist and New York Times columnist commented, “The point of the tax is to hopefully steer consumers to domestically produced products which are produced under government approved conditions rather than those from countries like China…which aren't playing the game the US wants them to play. This is, frankly, an invitation to a trade war.”

An American Business Day article on July 7, 2009 exemplifies the current US approach, which while perhaps making sense to an American mindset, is unacceptable to the Chinese. In discussing a US tariff on Chinese goods it stated: “WORDS matter. Describing the trade provisions of the American Clean Energy and Security Act (HR 2454), approved by the US House of Representatives last month, as a “carbon tariff”, is convenient shorthand for a complex proposal, but lazy and wrong. Tariff is an emotive word (redolent of Smoot-Hawley and the Great Depression). It is being used by officials in China, India and other developing countries to mobilize opposition. China has already denounced the proposals as likely to “seriously hurt the interests of developing countries” and “disrupt the order of international trade”. But the measures in HR 2454 are not tariffs. They have been carefully structured as import permits specifically to ensure they are consistent with World Trade Organization rules.” China Daily commented that, “Targets such as those proposed by the U.S. would cripple the nation's growth as an industrializing nation.” Li Gao, a senior Chinese negotiator from the National Development and Reform Commission, said that “a carbon tariff would be a "disaster," would prompt a trade war and wouldn't be legal under World Trade Organization agreements. It does not abide by the rule of WTO and, secondly, it's not fair.”

The Wall Street Journal commented, “However, the overall tone of Locke’s remarks was to underscore the potential of Chinese/American partnerships that can make environmental and economic goals work together. Mr. Chu and Mr. Locke, both of Chinese heritage, called for the United States and China to work together to develop new technologies to generate clean energy and to improve energy efficiency. They announced that each country would put up $15 million for a joint research center on clean energy, with headquarters in each country at locations not yet decided.” That size of the commitment given the complexity and urgency of the problem and resulting opportunities are not adequate.

If the economic and pollution remediation and energy efficiency business and economic relationships between the US and China continue to be approached by US policymakers within and outside the Obama administration as a zero-sum game in which the US must win and therefore China must lose, America’s businesses and economic growth will be the losers not the winners. Todd Stern recognizes that, “The US must recognize China’s efforts. China is emerging as the unquestioned global leader in clean-energy production, significantly increasing its chances to wean its energy appetite off coal, and at the same time ushering in an era of sustainable economic growth by exporting these clean-energy technologies to the world. China is not there yet, but it is beginning to transition to a clean-energy economy through a wide range of actions.”

Climate change and therefore global G-Finance of the G-Economy are not zero-sum games. The rapidly manifesting climate change related weather changes globally are the harbingers of the effects of relatively small changes in the earth’s environment that can make human life impossible. Climate change remediation is not a zero-sum game that any nation can win if others lose. But only Barack Obama can play the required US presidential leadership role in making reciprocal economic globalization the new core of the US’s 21st century policies towards China. It is essential in climate change negotiations between the US and China. No one else has the ability today to change the direction of US policy in the 21st century. It is vital that Chinese policymakers and policies require President Obama and US policymakers to do so.

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The articles in this column represent the author's views only. They do not represent opinions of People's Daily or People's Daily Online.

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John Milligan-Whyte and Dai Min are the executive producers and co-hosts of the Collaboration of Civilizations television series adapted by the eight books they wrote in the America-China Partnership Book Series published in English and Mandarin in 2009-2010. They founded the America-China Partnership Foundation and Forum in 2008 and the Center for America-China Partnership in 2005. E-mail: [email protected]