The world looks to Obama - Part II

Many Chinese cheered along with the rest of the world when Barack Obama became the first African-American to be elected president.

“This really makes history,” said Li Bo, a software consultant, at a jubilant American Chamber of Commerce election party in a Beijing hotel. “I’m proud for America. I’m proud for the American people’s choice.”

And that’s despite the fact that Li was wearing a McCain sticker and voted for John McCain in the mock election at this party, which Obama won handily. Li said his preference for McCain was because Obama had been making protectionist noises in the final weeks of the campaign.

Obama did say in a letter to the National Council of Textile Organizations that he will “use all diplomatic means at my disposal” to get China to stop artificially keeping its currency cheap and relying so heavily on exports to feed its economic growth.

Chinese Foreign Ministry spokesperson Jiang Yu said in response, “The renminbi exchange rate is not the fundamental cause of the deficit in China-US trade. We’re willing to appropriately handle problems in China-US trade on a basis of equal, friendly consultation.”

This is a polite but firm message that China will not tolerate being bullied, especially not in the middle of a global economic downturn where China’s still robust growth may prove indispensible in helping other major economies out of a recessionary rut. Previous US presidents learned the hard way that going head to head with China before first building a constructive, multifaceted relationship, is a recipe for frustration.

President Bill Clinton started his presidency promising to get tough with China on human rights. After that it led to Secretary of State Warren Christopher getting a humiliating cold shoulder during a visit to Beijing; the Clinton administration delinked trade and human rights, and learned to manage the relationship on multiple levels.

President George W. Bush started out calling China a “strategic competitor” and viewing it as a threat. But after the 9-11 attacks, China suddenly became a US ally in the “war on terror” and helped bring North Korea to the negotiating table about its nuclear program.

Former Hong Kong governor Chris Patten had his own rough patches, learning how to work constructively with China’s leaders. On a recent book tour to Beijing, he offered this advice to the next US president:

“I think the most important message for a new US president to give to his opposite numbers is that he’s going to place the relationship with China at the heart of US foreign policy, and he’s going to resist pressures to become protectionist. It will get him off on the right footing, and it will also be the right thing to do.”

Slapping steep tariffs on Chinese exports certainly won’t win the Obama administration friends in southern China’s factory belt, where laid-off factory workers already blame recession-hit American consumers for no longer keeping up their end of the unspoken deal - buying lots of cheap Chinese-manufactured goods so China’s factories can run and pay their workers.

Eddie Leung, president of the Association of Foreign Invested Enterprises in Dongguan, has said 20 per cent of the 45,000 factories in Guangzhou, Dongguan and Shenzhen could close within the next couple of months, taking some 2.7 million jobs with them.

Here’s where Obama may have been on to something in saying China needs to rely less on exports, says Shanghai-based veteran economist Andy Xie.

“China has been an export-led economy, and the export success is related to the US credit bubble that has fueled the consumption boom for the past 10 years or longer,” Xie said. “This is the end of an era. The US economy will be in recovery mode for many years, and even after the balance sheet has recovered, there won’t be consumption growth like before. So I think China does need to reconsider its growth model, to be less dependent on exports and to diversify the export markets it does have. This is the biggest challenge for China in a long, long time.”

As Chinese struggle to face that challenge, many hope Obama’s protectionist rhetoric turns out to have been just a campaign strategy, discarded in favour of long-term interests. They say it’s time for the United States to forge a stronger, more-multifaceted relationship with China that recognises China’s rising global stature and clout. Toward that end, President Hu Jintao was one of the first world leaders to congratulate Obama on his victory.

“China and the United States share broad common interests and important responsibilities on a wide range of major issues concerning the well-being of humanity,” Hu wrote. “To grow long-term health and stable China-US relations serves the fundamental interests of our countries and peoples and is of great significance to the maintenance and promotion of peace, stability and development in the world.”

The idea that China is now the global champion of peace, stability and prosperity is one China has been promoting at the expense of the US, while the Bush Administration has kept its tunnel vision focus on the war on terror. Some Chinese analysts privately admit that the global enthusiasm for Obama might make that a more competitive effort - especially in Africa, where China has been expanding its economic presence.

Of course, that expansion hasn’t come without friction. Some Africans resent their markets being flooded with cheap Chinese goods, undercutting African products, while Chinese companies hire only Chinese for the best jobs. And some Chinese have a hard time getting past their own latent racism.

It was two beers into a dinner in a poor Chinese province when one local official leaned over to me and confided in a low voice, “I don’t like black people”.

The conversation was a few weeks before the US election. The official explained that he liked Hillary Clinton, and wished she’d knocked Obama out of the running. The official said he’d spent too much time in Africa, feeling frustrated and alienated, to think Barack Obama would be any different.

But this was a man of a certain generation, and many younger Chinese think differently. They welcome the elevation of a black man to arguably the most powerful position on earth, and hope the fact that he’s non-white, like them, will help bring the United States and China closer.

“What I care about is how can we improve the relationship,” said 24-year-old Jing Sheng, a former Beijing Olympics worker. “We are the greatest nations on earth - we both are - and I hope we can be good friends forever.”

That might be unrealistic, as China continues its annual double-digit increase in military spending and increasingly competes with the US for soft power and influence around the world. But for now, the two nations’ economies remain interdependent, and their relationship remains one of the most important in the world.

And for now, there’s enthusiasm here about an Obama presidency, even in some unexpected quarters. A Public Security Bureau official watching results at the US embassy election party said he likes Obama “because he’s young, he’s black and he’s got charisma.” He shrugged when asked what an Obama presidency means for relations with China. “I don’t know,” he said. “But I like him. Let’s see what happens.”