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June 09, 2005

The Bush Economic Policy Clown Show: The China Ring

David Wessel scratches his head as he contemplates U.S. economic policy toward China:

WSJ.com - Capital: How's China to Make Sense of U.S. Signals?: Imagine what it must be like to be a Chinese leader listening to the U.S. government. The Treasury plays the good cop, relying not on threats but reasoned economic argument: Let your currency rise, it tells the Chinese, not for our sake but for yours. Flexibility is your friend, the market your ally. Act like the economic superpower you have become.

The Commerce Department plays the pragmatist: Free trade is a nice slogan, but you Chinese know that slogans aren't policies. What matters is jobs. Either find a way to restrain your exports of clothing and textiles to us, or we will find a way to block them. If you don't like it, sue us in world-trade court. The U.S. trade representative prefers the high ground: Steal our factory jobs if you must, but stop stealing our ideas, the intellectual property that is our best hope of prospering in the global economy.

The Congress, keenly aware of Americans' anxiety about losing jobs, plays the heavy: You Chinese are "cheating," some, though not all, members of Congress shout. If the Bush administration doesn't do something about it soon, we will. How do you say "tariff" in Chinese? Actually, how do you say "cacophony" in Chinese?

Newspaper columnists sometimes take contradictory and uncoordinated government policies, discern the glimmer of a coherent framework and then describe that trenchantly.... I would gladly perform this public service -- if I could. Since I can't, I asked... economic-policy wonks....

Nicholas Lardy.... "The Chinese are probably baffled," he says. "There's no coherent strategy. Every executive-branch agency plus Congress has their own policy," he says. "The Chinese will pick and choose or ignore everything."... Kenneth Rogoff... "The message is very strong. As China grows into a superpower, the U.S. is expecting more from it." But he, too, is puzzled: The U.S. tells China to act like a superpower, and then treats it as a pipsqueak.... Mr. Rogoff agrees... [that the] yuan [should] rise to help bring the Chinese and global economies into better balance. But... the administration isn't offering to do its part... aggressive deficit reduction....

Daniel Tarullo... speculates that Chinese leaders draw one of two conclusions... U.S. policy... marks a shift to... containing China... [or] the Chinese... see all this as pandering to American public opinion....

Chinese leaders and the U.S. public deserve more than divergent talking points from cabinet secretaries...

Well, yes, the U.S. public (and Chinese leaders) deserve more than the Bush Administration Economic Policy Clown Show. But how to get it for them?

Posted by DeLong at June 9, 2005 10:05 PM