This trip will likely be most remembered because Obama bowed down to the Japanese emperor, contrary to standard protocol.
He did the same thing to the Saudi king. The President of the United States is both the head of government and the head of state. Therefore, he is not acting in a subordinate role for the country. The Japanese emperor is a head of state just like Obama, so the President doesn't need to bow to him, or anyone for that matter!! I'm surprised that no one on his staff has pointed this out to him.
But the symbolic stuff is just a small aspect of this trip. I get the feeling that the President is starting to experience a sharp learning curve, especially when it comes to foreign affairs. Given the results of this trip, it is obvious that the Chinese feel that they are in the drivers seat when it comes to Sino-American relations. This is something that I feel will come back to haunt the US and the Obama Administration down the road.
But this was probably the most significant trip that any President has made to Asia in maybe 25 years. Our relationship with China in particular is at a cross roads. Obama tried to reach common ground on a variety of issues with China, including environmental policy, nuclear proliferation, and especially China's currency.
Lots of people in Europe and the United States are complaining that China is suppressing the value of the Yuan (their currency). That in turn is giving China an artificial advantage in global trade by making their exports more competitive vis-a-vis those of other nations.
Obama came home with not much of anything accomplished. He reached an agreement with the Chinese which would allow their banks to purchase US banks and financial institutions, many of whom are desperate for capital. The Chinese will likely use this as an opportunity to buy up more US assets at firesale rates. As if there aren't enough countries taking advantage of the weak dollar and depressed prices to do that!
What's so disturbing about this is that it appears as if the balance of power between the US and China is rapidly shifting in their direction because of our overreliance on China to fund our high deficit spending. This loss of power is one of the hidden costs of high debt spending. Yes, the US and China have a mutually dependent relationship, but they have the power here. They are the 800 pound gorilla in our debt markets. They own about $2 trillion in US Treasury bonds and securities, all used to finance our high spending. The Chinese don't even have to dump their US bonds to send prices plunging and interest rates surging. All what they have to do is buy less at auction. China knows this, hence why they're acting so confident with us. They can do this without impacting their domestic markets much in the long term--they can just switch to alternate markets while the US recovers from the impacts.
It's becoming obvious that China is much more willing to say "no" to the United States than they have been in recent years. The situation with the Yuan illustrates this. The Chinese want to keep their currency weak so they can sell their finished goods in the market at more competitive rates. It's a backhanded form of protectionism, but they feel like they need this advantage to build up their domestic markets. Furthermore, they're also becoming very aggressive in the international sphere. They're buying oil and natural gas from Iran (one reason why they'll never agree to sanctions--they're one of China's biggest client states), they're becoming major players in Africa's natural resources market, and they're flooding the international market with inexpensive goods that are produced with very cheap labor. This isn't making the rest of the world happy, who have to compete with this dynamic.
They're using the same globalized markets that allowed America to become a dominant world power to their advantage now. They operate with a different modus operandi than we do. Rather than take over an entire country to establish military supremacy over a certain geographical area, they simply go into a country and gain the corner in its resource markets by buying up raw materials to take back to their home country. For them, military control of territory isn't a important prerequisite to power. The fact that many of their industries remain state-owned give them an added advantage, as it facilitates coordinated action.
In short, they were able to make the transition from traditional communism as represented through Maoism to today. Perestroika didn't work in the USSR but it did in China. They're definitely communist, but with a commercial overtone.
I don't feel as if China will ever become a dominant military power, at least not in the intermediate future. Historically they prefer commercial control rather than direct use of military power. One thing we are doing with China is transferring a lot of our ICBM weapons technology to them. I feel like that is being done effectively as a bribe to ensure that China doesn't pull the rug from under us in the bond markets.
Obama didn't make much progress in getting the Chinese to agree to any type of climate change accord. They're rapidly industrializing and any type of emissions control regime will likely slow down their rate of growth. Considering that they're one of the worst offenders when it comes to release of CO2 emissions, it is unlikely that any type of climate change deal will be effective without Chinese cooperation.
I'm very concerned for the country. No nation should ever hold its destiny in the hands of foreign creditors. Our debt spending is too high, our industry has been decimated by years of outsourcing, and our currency continues to be debased by the carry forward trade. This trip revealed several faultlines that will likely become a major theme going forward through the next few years.
America isn't finished, nor is it the end of the world, but its obvious that our country is no longer the world's only superpower.
