bush outmaneuvered on renminbi revaluation

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    Southeast Asia

    China's October revelation
    By Marwaan Macan-Markar

    BANGKOK - It was meant to be US President George W Bush's big moment in Asia,
    but by the time he finished his six-country tour last week, there were
    unmistakable signs that the world's most powerful man had been undone by
    regional heavyweight China.

    Two events captured this best: one in Australia and the other in Thailand. In
    Australia, Bush was given a reminder about an emerging pattern in the region -
    that countries will shower Chinese President Hu Jintao with the same respect as
    they would the leader of the United States.

    On Friday, Hu became the first head of an Asian country to address the
    Australian parliament. The confidence with which Beijing currently views itself
    was reflected in the comment by Hu that Australia had a role as a regional

    "We are ready to be your long-term and stable cooperation partner, dedicated to
    closer cooperation based on equality and mutual benefit," Hu said in his
    address to the federal legislature on the second day of his four-day tour of

    That came a day after Bush had addressed the same body to thank Canberra for
    backing the US in its invasion of Iraq and its "war against terrorism".

    However, what occurred in Thailand shortly before Hu's Australia visit was even
    more revealing of China's sense of place in Asia, and the determined wall of
    confidence it is building to stay its ground.

    Bush, who joined Hu and leaders from 19 other Pacific Rim economies for a
    meeting on trade in the region, failed to make the expected headway on China's
    policy of pegging the yuan to the US dollar.

    This failure was all the more acute given the rhetoric flowing from Washington
    as Bush rode into town. Media reports gave the impression that the US president
    would use his meeting with Hu to apply pressure for change.

    The US has been calling on China to free its currency, which has been locked at
    8.28 yuan to the dollar since 1994. By doing so, US critics say, China has
    enjoyed an unfair edge in the global economy, including taking away
    manufacturing jobs from the US.

    But Hu, in an artful display of diplomacy, struck before his encounter with
    Bush. During an address to business leaders in Bangkok for the Asia-Pacific
    Economic Cooperation (APEC) forum, which ran from October 14-21, he said that
    China was not contemplating any change in the country's currency-rate system.

    There was little the US president could do after that, since Hu had drawn a
    line in the sand. "Bush was outmaneuvered," wrote William Pesek Jr in a
    commentary for Bloomberg News. "The battle [between Bush and Hu] was lost
    before it even began."

    Such moments add to what has clearly become China's October revelation - a
    tapestry of achievements throughout the month that has helped add new standing
    to Beijing.

    Already, China's moves are sending ripples through the region. "There is a new
    respect for China emerging throughout Asia," said Panitan Wattanayagorn, an
    international relations specialist at Bangkok's Chulalongkorn University. "The
    recent events, including China's performance at APEC, have clearly contributed
    to this regional shift."

    By not yielding to the US agenda on the yuan, Beijing has shown the region
    that "it is confident and comfortable in handing international pressure", he
    said. "This new sophistication in China's foreign policy was also evident in
    the press conference Hu had with the international media at the end of APEC."

    The significant highs Beijing chalked up before APEC was China's first space
    mission on October 15. That made China only the third country in the world to
    have sent a manned rocket into outer space, marking its entry into an exclusive
    club that previously included only the US and Russia.

    "It left other countries like Japan, South Korea and India, which are keen to
    compete in space technology, with something serious to ponder," the Bangkok
    Post newspaper commented in an editorial soon after. "This is especially the
    case as China managed this achievement alone, using rockets and the spacecraft
    of its own manufacture."

    As noteworthy were Beijing's achievements at the 10-member Association of
    Southeast Asian Nations (ASEAN) meeting early this month. During that summit in
    the Indonesian tourist resort of Bali, Chinese Prime Minister Wen Jiabao signed
    a variety of agreements with ASEAN.

    They included a treaty of solidarity that committed Beijing to look at the
    ASEAN grouping as a friend instead of foe, since the ASEAN Treaty of Amity of
    Cooperation rules out the use of force to settle disputes. This turn prompted
    some analysts to declare it was a deepening of the strategic alliance China was
    building with its southern neighbors.

    ASEAN countries are already gearing up for the new economic reality in the
    region: a free-trade area that will unite China and ASEAN's members - Brunei,
    Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,
    Thailand and Vietnam - to become the world's largest economic entity of its

    The importance of such economic bonds has not been lost on China, which is
    currently enjoying a phenomenal spell of economic growth - 8.2 percent in the
    first half of this year, as against 7.2 percent in 2002. Premier Wen challenged
    ASEAN leaders at the Bali summit to achieve US$100 billion worth of trade with
    China by 2005.

    That would almost place it on par with the US in terms of economic relevance in
    Southeast Asia. In 2001, the volume of US trade with ASEAN amounted to $120

    "China is trying to be the center of economic power in Asia, and it has
    demonstrated to the US that it has its own agenda," said Panitan, the academic.

    Such an agenda is far from cosmetic, as showcased at the beginning of this
    month when Beijing celebrated the 54th anniversary of communist rule. The tone
    was set by Hu, 60, who became the Communist Party's general secretary last
    November and then the country's president this March. At an address to mark the
    occasion, he called for a more open political culture and one that was
    accountable to the people.

    Set against these combined messages flowing out of China were the three issues -
    Iraq, Islam and terrorism - that were on Bush's mind as he traveled through
    six Asian countries in as many days.

    On Iraq, it appears that his Asian shopping spree for money and bodies to
    support the US conquest of Iraq paid off, with Japan, South Korea and Singapore
    assuring material support in addition to three others who already have sent
    troops, Australia, Thailand and the Philippines.

    On Islam - which Bush touched on during his three-hour stop in Indonesia - the
    US president was not convincing enough, a fact that may not be lost on the
    region's estimated 190 million Muslims.

    The headline chosen by the Jakarta Post editorial after Bush's message to
    Indonesian Muslims - that Washington is after terrorists and not the followers
    of Islam - aptly conveyed how US commitment is viewed. "Action, not flattery
    needed," it said.

    It is a comment that reflected how much more the Bush administration will have
    to do in the region if it is to be seen as being seriously engaged.

    If this month is any indicator, Washington's agenda in the region may be
    increasingly compared with what regional heavyweight China has in mind - and
    Southeast Asian leaders such as Malaysian Prime Minister Mahathir Mohamad are
    eagerly welcoming the fallout.

    "The United States is trying to make a comeback to interact with Southeast
    Asia," Mahathir told a press conference at the end of APEC. "We will benefit
    from this China-US competition."

    (Inter Press Service)

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