Chen Weihua

Victorious Obama must rethink the yuan

By Chen Weihua (China Daily)
Updated: 2010-03-23 07:14
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United States President Barack Obama made history Sunday night when the House of Representatives passed a landmark healthcare bill that widely expanded medical care to Americans.

Passage of the bill would make health insurance available to 32 million Americans currently uninsured. The overhaul would also cover pre-existing conditions.

The historic legislation would make the US look like a developed country and less like a developing one in this regard.

The healthcare bill has already been hailed as a legislative victory as significant as the enactment of social security in 1935 under President Franklin D. Roosevelt and Medicare in 1965 under President Lyndon Johnson.

It is indeed a great victory for Obama, who took office just 14 months ago. It is also likely to be the largest achievement during his presidency.

But the success is unlikely to halt his declining approval rate among the American public.

The Sunday passage in the House has made the US more divided as a nation, especially among members of the two parties in Congress. It means that Obama will face stronger resistance from the Republicans in any endeavor during the rest of his term.

In fact, the Democrats could lose their slim majority in the Congress during the upcoming mid-term elections in November due to public frustration at the Obama administration for the wars in Iraq and Afghanistan as well as the unemployment rate and the state of the economy.

I applaud Obama for making the right move in reforming the healthcare system. It is a right and historic move toward social justice.

But I am worried that he will grow cocky enough by the triumph to forcefully push for the revaluation of the Chinese currency in a way that looks totally foreign to Chinese.

Obama needs to appear as a tough guy on China in order to salvage his dismal approval ratings and help his fellow Democrats in mid-term elections. For decades, China-bashing has been a popular game played by American politicians to get votes.

Obama knows that politics well. But he also understands that an appreciation of the Chinese currency will not solve the US' economic woes.

If Obama continues to push for a drastic yuan revaluation - or if the US Treasury Department announces China as a currency manipulator in its April 15 report - it will divide China and the US as far apart as the current gap between the two US political parties. Any cooperation in other areas might be hindered at least for awhile.

If that becomes the mood between the two largest economies and the two most powerful countries in the world, it won't look good for China or the US or any other nation.

Confrontation is always a lose-lose game. Although one side might lose more than the other, this game should not be pursued for the purpose of votes, congressional seats or any other domestic politics.

While I congratulate Obama on the healthcare reform, my advice to the jubilant US president is this: Don't try to look tough just for the sake of votes or ratings. The cost of a disruptive bilateral tie between China and the US is way too high.

If Obama can't accomplish anything further due to resistance from Republicans in the Congress and if Obama can't get anything done due to resistance from China on international issues, the rest of his presidency will become much more difficult than the difficulties he inherited when he became president.

Obama needs a better and less confrontational strategy to deal with the Chinese currency.