With Obama meeting other East Asian countries in Hawaii these few days, the “American re-engagement with Asia” story is all of a sudden in vogue again. This new way of thinking actually started with President Obama’s promise couple of years ago to double America’s exports in the not too distant future. The goal itself is worthy and is an excellent way to channel America’s energy. Unfortunately, the simple gist of that U.S. ‘re-engagement’ has instead been couched by the U.S. media into some sort of militaristic furtherance, with a suspicious eye casted at China. Such ploy is to dramatize and sell ads (and, sure, by politicians to garner votes). I am happy that the Obama administration still publicly reaffirms the idea that a richer China bodes well for American exporters, because that is the simple truth. Ask Intel, Apple, GM, and Caterpillar.
If we look at the trade volume within Asia, it is clear U.S.’s proportion has been falling. China is already Japan’s largest trade partner for some time now. During the 1997 Asian Financial Crisis, it was China who acted responsibly to keep the RMB value steady which helped stemmed further deterioration of other Asian country’s currencies. It was precisely massive capital flight (an act of irresponsibility by the developed countries) that exacerbated the problem. The Asians have not forgotten that.
If China is only interested in keeping all benefits to herself, she wouldn’t pass along sizable growth to her neighbors by maintaining a trade deficit with them. To show commitment to the FTA, China in fact lowered tariffs ahead of agreed schedule.
As I predicted in this August 2010 post, ASEAN + China trade would exceed $250 billion. In 2010, it reached $292.78 billion. This number is significant, because that is precisely the trade volume between China and U.S. for 2009. With the FTA in place since 2010, I expect this growth to continue to roar; and undoubtedly push the volume higher than America’s. More details from the recent 8th ASEAN+China Expo here:
The trade volume between China and ASEAN has increased substantially in the past twenty years. According to the statistics from China Customs, the trade between the two sides in reached US$292.78 billion 2010, up from US$7.96 billion in 1991, with an average annual growth rate of more than 20 percent.
Another example of China’s constructive engagement is in her assistance to ASEAN in projects like the high speed rail linking Kunming all the way south to Singapore. (Click here to see a rough sketch and of the scale of this project.)
Recently, America signed a FTA with South Korea. I absolutely applaud that.
You see, China has been much better at this game than America as of late. America has lost her sight of it, because the wars in Iraq, Afghanistan, and now Libya have totally distracted her.
The real re-engagement is in fact about trade expansion. To lower trade barriers. To find more avenues for American products. Does doubling the 50,000 troops in Japan to 100,000 sell more iPhones? Does placing 50,000 troops on Philippines deter any pirates? With all of America’s might, she couldn’t muster enough resolve to decisively deal with the Somalian pirates! There is really not much of a pirate problem in South East Asia anyways.
The U.S. media might make Americans feel ‘good’ about America’s might. But, that is wrong-headed. Americans need to focus on what their president tells them – to double America’s exports to help with the unemployment crisis.