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Friday, Nov. 14, 2008

Hu touches base with Obama on economy


BEVERLY HILLS, Calif. — Guess who telephoned Barack Obama for one of the first, if not the first, substance-packed reachout to the next U.S. head of state. It was Chinese President Hu Jintao. The conversation focused on the global economic freeze, but Hu knew how to warm up the president-elect as well as, we fervently hope, the cooling Chinese economy.

China, the buzz from Beijing suggests, needs no persuading about the seriousness of the worldwide slide, its harmful effect on China (the worldwide export king), or on China's rising role in the grand global scheme of things.

Accordingly, China's Cabinet (or State Council) is launching a two-year social-services and infrastructure spending spree to pump some life into its economy — to create jobs, stimulate demand and assuage social unrest. About which, three points must be made:

• China's leaders are anything but brain-dead Marxist doctrinaires. In some respects they are more Keynesian copycats than we Americans: They are well aware that their government and others now have to move smartly and quickly to push back hard on the encroaching darkness. A hands-off attitude will only lead to further slowdowns. For months various subcommittees of the State Council have been charged with coming up with a new master plan to avoid an economic landslide down the mountain so arduously climbed since the reforms of 1979.

"They are so focused on what is going on," reports globe-trotting economist Ken Courtis, a well-known economic Asia expert based in Tokyo. "They are probably the one government in the world that's so responsive and realistic in this regard." We might add that with 1.3 billon mouths to feed (22 percent of the globe's populace), Beijing had better be.

• At the same time, many Chinese leaders believe Washington has been awfully slow to react and hope that Hu's reachout effort will help Obama wake up America. (By and large the Japanese share their Asian neighbor's alarmed view.) What America has put forth so far seems too little as well as too late.

Obama's recent call for a Japan-style injection for a titanic infrastructure buildup cheers Asia. It's the first sign that America might move toward an overall strategic approach instead of reacting to each symptom of trouble.

• The final point is that the arrival of a new administration in Washington paves the way for a complete review of what has been done and what must be done next. The incoming Obama crowd will keep what they like from the Bush crowd but throw out what they don't. In the end, it is they who'll reap the global standing ovation if the country pulls out of it, or take heat if the economy totally tanks. There's no sense beating around the Bush.

Just as what China does — or does not do — hurts or helps the rest of the world, so too with the United States. A little more than a decade ago, Asia was hit with an almost regionally devastating financial crisis, and the Clinton administration was painfully slow to react and help out. Now the shoe is on the other foot, but Asian treasuries can't do much more than they already have unless we do more to work our own way out of the hole.

Conspiracy theorists relax: China as well as Japan have so much of their savings invested in U.S dollars that they have no interest at all in seeing us fall on our face. On the contrary, Asia and America in effect have a joint account, and both deposits and withdrawals need to be better coordinated now that there's less money around with which to play.

To this end, it might be a good idea to organize a quickly arranged meeting of the Pacific Rim "Big Three" — Obama, Hu and new Japanese Prime Minister Taro Aso. Perhaps it could be held at some halfway point such as Honolulu, where Obama grew up.

You can't bank on the meeting being miraculously productive, but the very fact of its taking place would yield stabilizing economic dividends as well as a positive diplomatic bonus.

Syndicated columnist and author Tom Plate is a member of the Pacific Council on International Policy. © 2008 Pacific Perspectives Media Center


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