Climate Change Conference

Our climate change conference pointed to several issues that arise during large negotiations that are almost impossible to get around. First of all, each country has a different perspective on each climate issue, and some are unable to contribute anything due to instability or lack of funding. Another issue is that when you seek total agreement, each country wants to come out even or at an advantage which is impossible due to the issues complexity. The proposal for 3/4ths of developed and developing countries is better, but it still allows for a few major countries to vote no and walk out. A comprehensive global climate change agreement means very little if huge CO2 producers like the US or China fail to agree to any terms and walk out. If votes were scaled based on current or future carbon emissions with larger polluters getting more of a vote than a majority without unanimity could work. This however would not address the concerns of poorer countries who would feel the damages of climate change sooner and on a greater scale than rich countries. The world must come to some agreement on cutting carbon emissions to combat global warming, and the longer we wait the more difficult it will be to cut back in time. A global cap and trade system would seem to work, as long as there were severe damages to any country that did not join on or decided to leave. If a country did not want to be part of this system, it would have to have a global tariff on the goods it sold or all other countries would have unfair competition that might make them consider leaving. Also, in order to cut CO2 emissions enough to avoid levels where our climate would become unpredictable, developed countries must be nearly carbon free by around 2050. This necessitates huge advances in the technology and deployment of carbon free energy sources that can run 24/7. Some money from the cap and trade system, possibly an overall global tax on the standard allotted CO2 levels for developed countries, should be used for investment and research into green, carbon free energy in developed countries so they are at an economic advantage to switch to clean energy. Making clean energy cheaper and CO2 emissions more expensive is the best way to combat this issue, as it is difficult to monitor emissions and each country has to originally agree and continue to be a part of any agreement if it is going to be successful.

Currency in China vs Debt to China

The US debt owed to China is more important than the $900 billion in US currency China controls. China relies on the US as an importer of the materials it makes and does not want to see the US economy damaged. The foreign currency is unlikely to change US policy towards China, so it is not as important as the US debt. The US needs to pay back 1.1 trillion dollars to China between 2018 and 2038, which means the US will need to balance its budget and reduce spending dramatically. If the US is not able to do that, it will have to borrow money to pay back it's debt, which will leave the US in even worse shape. At some point we will need to sacrifice something to deal with the debt, while the foreign US currency in China will likely never be an actual threat to the US.

US Debt

The United States is in a very difficult position when it comes to balancing the national budget and reducing the national debt. The government has already promised people so much in social security, Medicare, and medicaid that it will have a difficult time paying for much else. This requires a more modest expenditure on social programs and a cutting back on all other spending. But this could also lead to problems if taxes are increased or government spending that stimulates business is cut too much, which could lead to a slowdown in the economy. This could have the effect of lowering all government income as less taxes would be payed. So the US government has to find a way to cut the deficit without hurting our economy or losing the support of voters who rely on nonessential programs to our economy or national security. To add on to this challenge, Congress has to agree on all these changes while each person is appealing to their unique political districts and trying not to loose their campaign funding from lobbyists.

Contagion

It is strange how when even one currency in a very small country is threatened, the entire global economy may become threatened. It is also surprising how we still rely on making last minute loans to a country in distress as the only way to prevent this from occurring. Globalization led to so many new markets that are being invested in that everything is tied together, which can result in Contagion. Because of the focus on perceived risk and value instead of actual value, countries and markets are subject to large stampedes of investors in and out of currencies and markets. Nothing has been done to shift these markets back towards their real value instead of the perceived market shifts except for loaning a country money until the crisis is over. Most major economic crises are the result of over speculation, yet the current global economic model is based on speculating on very high risk developing economies that investment companies in rich countries focus heavily on. It seems like we should try to eliminate some of the purely speculative parts of the global market instead of loaning large amounts of money until each crisis hopefully passes.

Glogster

http://www.glogster.com/danmcd/us-china/g-6lmivfkb33bpql0mhibcda0?s=nameglog

The Letter of the Two Sorrys

The US was correct in its decision to be regretful, but not apologize for the US spy plane incident over China. The Chinese pilot had put himself in danger by trying the maneuver he tried, which was not the fault of the US. The US was spying on China, which is the reason the Chinese planes were flying close to the US plane, but when the plane crashed the Chinese stripped it of all it's components and technology that was not destroyed. This should have been the payback from the Chinese for the US spying on them, not an apology taking responsibility for the outcome of the incident.

Class Definitions

Terms

GDP- gross domestic production. Amount of profit made by products being exported. 14.59 is US and 5.93 China, in trillions.

Import- Products bought from outside of the country and taken in. US 227 billion, 122.7 billion

Export- Products shipped out of a country to buyers. US 178 billion, 149.9 billion

Tariff- a tax placed on a good being traded so the economy of the importing country remains the same.

Trade Surplus- extra good left over after a country has exported goods.

Trade Deficit- when a country does not meet the demand of another country who would like to import their products.

Treasury Bond- marketable fixed interest US govt. debt security with a maturity of more than 10 years.

Foreign Direct Investment (FDI)- investment made in a company in a foreign country. CHINA 143 billion.

Budget Deficit- spending more money than you have. US 15.5 trillion, 1.9 trillion

Foreign Currency Reserve- deposits and bonds held by central banks and monetary authorities. US 148.5 billion, China 3181 billion

Currency Exchange- exchange rate of different currency from one system to another. Money can lose value or gain value based on country you are in so money is exchanged to make it easier.

Subsidy (subsidies)- government buys a product so it can be selled at a constant price.

Reaction to Tiananmen Square

I think President Bush's reaction to the Tiananmen Square incident was reasonable because he did not want to lose China as an ally against the Soviets or as a trade partner. He also had to appease public calls for action against the Chinese because of the public attention at the time. The incident did not affect his run for reelection, so his actions served that purpose as well. Turning against the Chinese or imposing harsh sanctions would not have been effective because of their governments focus on control. The US would only be further isolating citizens in China if they tried to punish the government, which would not have appeased the call for democracy. The US could not have influenced the Chinese to be kinder to their citizens because that may undermine their power, which they would not willingly do.

Clinton Answers

1. Clinton had little background on China and had lobbied in Taiwan before becoming president.
2. She said it could cause US companies to lose out to foreign competition in the toy, shoe, and other industries because of increased duties.
3. Clinton offered a backing off of Taiwan deals for an improvement in human rights.
4. Congress wanted human rights, arms proliferation, and trade conditions on MFN status renewal, but dropped it when Clinton said he would take care of it with an executive order. This consisted of just better human rights conditions for renewal of MFN status. China wanted more from the MFN, but did not speak up about that.
5. US companies entered China very quickly and invested 6700 new contracts in China of the 83,437 total signed. Japan had beaten the US to China and US companies were then trying to catch up.
6. Military sanctions are imposed when M11 missile sales to Pakistan were confirmed, which was opposed by some higher technology companies.
7. North Korea was withdrawing from the Nuclear Nonproliferation Treaty, so Clinton is less confrontational with China.
8. The Clinton administration remained neutral, but gave the IOC information on human rights violations in China.
9. The new policy is opening up talks on many topics and talk about other topics they had not discussed before like the military.
10. This would make the US weaker because they are weaken their stances in China.

New Market in China

President Carter opening up trade with China and giving them Most Favored Nation status was good for both the US and China. Trading with the US allowed new technology to flow into China that China wouldn't have been able to develop on their own. It also allowed China to eventually compete for business in US markets when their technology and industry picked up. The United States opened up a market of over a billion people that it could trade with. This also helped them fight communism by improving capitalism worldwide with increased trade and more markets to buy and sell to.

US China Negotiations

The US was in a difficult position negotiating with China because of the bigger stakes of their negotiating. China had not been open to the west and Mao was close to death, so they were able to be bold in negotiations, while the US feared an unpopular settlement or backlash from a failed negotiation. This helped China in the beginning to seemingly gain Taiwan, but the US overall won the negotiations by being vague enough to successfully open relations without fully conceding anything meaningful. The obscure wording used helped the US push off any problems they ran into in negotiations to the future after relations had improved.

Problems In China

The problems facing China in the future are concerning for them because they are difficult to solve and are not going away. One major problem is the lack of fresh water in China, which has 22% of the worlds people and 8% of the worlds water. Water is needed for agriculture and industry to feed the populace and provide improved job opportunities. China's population will not decline very quickly and there are already tens of thousands of protests each year. It will be difficult for China to provide water for farming while continuing to supply water to growing cities and industrial regions. China needs to manage the water in their country or they could face more discontent if water supplies start to run out.

US Relationship With China

In the future  it would be best for the United States to develop a working relationship with China that benefits both countries economically. The US relies on goods produced in China and creating a strong partnership is the best policy for the US going forward. It is better for the US to work constructively with China than to challenge them on many issues we disagree on. As China's economy improves the global economy will also grow, which benefits the US and should drive our policy there. The problems we have with China's actions and the problems they have with us do not outway the positives of open trade and growth in both economies in the future.