Playing ‘chicken,’ or, hope floats

Despite a rough few days for U.S.-China relations, options remain.

To ChinaâÄôs chagrin, the United States announced the sale of a $6.4 billion weapons package to Taiwan one week ago. According to BBC News, China, which lays political claim to Taiwan, accused the U.S. of “arrogance” over the deal. Then, President Barack Obama adamantly expressed his intent to meet with the Dalai Lama of Tibet. Again, the tiger was displeased. Next, on Feb. 4, The Washington Post reported, âÄúU.S. officials hopeful China will make concessions on currencyâÄù after Treasury Secretary Timothy Geithner predicted that it is âÄúactually quite likely China will moveâÄù on its fixed renminbi. Neither China nor its renminbi budged. Finally, yesterday, a TIME Magazine headline declared, âÄúChicken feet: A symbol of U.S.-China Tension.âÄù China, claiming cheap U.S. imports have wrought âÄúsubstantial damageâÄù upon its domestic chicken business, plans to put tariffs of up to 105.4 percent on U.S. poultry products. According to Vice Minister Zhong Shan, trade frictions with the U.S. are âÄúescalating,âÄù but we shouldnâÄôt âÄúexpect a trade war between China and the U.S. simply because of those trade frictions.âÄù Terry Roe, professor of applied economics at the University of Minnesota, said, âÄúThe most important thing right now is the undervaluation of the renminbi âĦ which sets up global imbalances.âÄù China has become the mediaâÄôs favorite economic spectacle, but letâÄôs not get tunnel vision: there are more than two countries on the planet. Professor Roe continued, âÄúMy guess is that both the U.S. and Europe will put more pressure on China to float her currency. It will be good for many countries that compete with China on exports.âÄù