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The President on U.S.-China Relations

July 27th, 2009 . by economistmom

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The President delivered these remarks today, at the Strategic and Economic Dialogue between the United States and China (here in DC).  I found his remarks to be remarkable, because Americans have been very wary of China’s economic rising as threatening our own nation’s economic strength and security–especially lately when we have become so dependent on China to lend us the money to deficit finance our economic recovery.  There’s no denying that dependence:  China now holds (as of end of May) more than $800 billion in U.S. Treasury securities–nearly one-fourth of the $3.3 trillion in total foreign holdings.  (Total foreign holdings currently represent about 47 percent of the total outstanding Treasury debt held by the public.)  At the beginning of the Bush Administration in January 2001, China held only $61.5 billion (just 6.1 percent) of the $1.0 trillion in total foreign holdings–and total foreign holdings were under 30 percent of total outstanding debt.  But the President understands that the “dependence” is mutual, and in his opening speech to begin the dialogue did a beautiful job of setting a cooperative tone:

My confidence is rooted in the fact that the United States and China share mutual interests.  If we advance those interests through cooperation, our people will benefit and the world will be better off — because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges.

Let me name some of those challenges.  First, we can cooperate to advance our mutual interests in a lasting economic recovery…

[A]s Americans save more and Chinese are able to spend more, we can put growth on a more sustainable foundation — because just as China has benefited from substantial investment and profitable exports, China can also be an enormous market for American goods.

Second, we can cooperate to advance our mutual interest in a clean, secure, and prosperous energy future.  The United States and China are the two largest consumers of energy in the world.   We are also the two largest emitters of greenhouse gases in the world.  Let’s be frank:  Neither of us profits from a growing dependence on foreign oil, nor can we spare our people from the ravages of climate change unless we cooperate.  Common sense calls upon us to act in concert…

I believe in a future where China is a strong, prosperous and successful member of the community of nations; a future when our nations are partners out of necessity, but also out of opportunity…

And quoting a Chinese philosopher (awesome! :) ), the President concluded:

Thousands of years ago, the great philosopher Mencius said: “A trail through the mountains, if used, becomes a path in a short time, but, if unused, becomes blocked by grass in an equally short time.”  Our task is to forge a path to the future that we seek for our children — to prevent mistrust or the inevitable differences of the moment from allowing that trail to be blocked by grass; to always be mindful of the journey that we are undertaking together…

Together, I’m confident that we can move steadily in the direction of progress, and meet our responsibility to our people and to the future that we will all share.

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