Obama in China: Why not more US export jobs?

With 10.2 percent US unemployment, Obama in China should have pushed harder at trade barriers.

Creating jobs for Americans is President Obama's top priority. Yet he left China on Tuesday with little to show in further opening the world's fastest-growing economy to greater imports of US goods and services.

Perhaps Mr. Obama's three-day visit at least created enough goodwill with Beijing's tight-lipped leaders to later achieve his goal of reducing China's blatant discrimination against foreign firms.

The president promised last September that the United States "cannot go back to an era where the Chinese ... just are selling everything to us." After all, more than three-quarters of the $400 billion in trade between the countries is one-way – from China to the US.

In a token gesture just before Obama's arrival, China did promise to let American firms take part in the country's growing wind-turbine industry and to restart imports of American pork (after bogusly claiming that the pork carried the H1N1 flu virus).

But as old China hands like to say, "You don't change China, China changes you." And Obama seems to have fallen for many of the Communist Party's old excuses for selective protectionism, such as its desire to create jobs for hundreds of millions of poor and increasingly restless peasants.

Well, a deep and long recession has now left the US with its own growing population of poor and restless. And many of them could be employed in the US export sector soon if only Obama had forcefully demanded reciprocity in an unbalanced trade relationship with China.

Even boosting US exports by 1 percent to a country with 1.3 billion people would create close to 200,000 American jobs. Such a possibility is one reason why Obama says he considers Sino-US ties to be the "most important bilateral relations in the world." (After Canada and Mexico, China is the third largest trading partner for the US, but even then only 14 percent of US exports go there.)

While trade with China has increased since it joined the World Trade Organization in 2001, American companies operating there have an increasingly long list of complaints about Beijing not honoring WTO commitments.

The stealing of patents and copyrights tops the list. Just two months ago, for example, China set up rules for online music sales that treat foreign and domestic firms differently.

Beijing also limits US agricultural imports with rules on foreign firms in the selling of grain, cotton, and other such products in stores. China uses a monopoly to block expansion of US credit cards. Foreign insurance companies are tightly restricted to only certain geographic areas. World-class companies in express delivery and airline services face overt discrimination.

Many US companies, such as General Motors and Proctor & Gamble, have done well in China. Last spring, for example, Mattel opened in Shanghai its first dedicated store in the world for selling its Barbie dolls. But the market share for foreign firms remains low compared with their potential in such a huge country.

While the US has its own protectionist measures, China still has far to go in treating foreign companies fairly – from more transparency in its bureaucracy to stronger enforcement of intellectual-property rights. In a World Bank comparison of countries in terms of their "ease of doing business," China ranks 89th out of 183 countries – just above Zambia and close behind Serbia and Pakistan.

The days are gone when US warships could just show up on the shores of an Asian nation and demand that it open its borders to trade – as Cdre. Matthew Perry did with Japan in 1853 with his "Black Ships." But a modern US president has many levers to use with Beijing, and they go beyond simply using the WTO to resolve disputes, which can take years.

China, for instance, wants the US to recognize it as a "market economy" well before a 2016 deadline required under a WTO agreement. Such a designation would allow China to import certain technologies that have either civilian or military uses. The US can also do more in currency markets to force China to stop manipulating its currency, the yuan, a practice that clearly favors exports over imports.

While China is the largest foreign holder of US Treasuries, it needs the US economy to do well in order to keep the value of those holdings. Obama could have persuaded his hosts in Beijing to boost the US economy by welcoming more American imports.

On Dec. 3, Obama plans to hold a "jobs summit" at the White House in hopes of finding new ways to bring down a 10.2 percent unemployment rate. With exports being the only bright spot in US manufacturing right now, he needs to use the summit to come up with stronger ways to further open China's trade doors.

It looks as if a visit to Beijing isn't enough.

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