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Not so gentle on his mind

by Kevin Rafferty

HONG KONG — Democracy in America — what a fine show it is, great television, wonderful speeches, some weird and wacky candidates, an opportunity for The People to make their views count.

But as the leaders in Beijing watched the results of last week’s midterm polls in the United States, they must have been muttering their thanks to Mao Zedong or whatever gods they believe in that they don’t have such a messy and unpredictable system.

Two years after President Barack Obama and his Democrats swept to power in the White House and Congress on a popular wave of “Yes, we can” — the belief that they were going to transform the U.S. — the U.S. economy is groaning under massive deficits and high unemployment. Obama’s majority has been smashed, his capacity to govern gravely weakened, and he has to cut deals with his opponents to govern — a choice of abandoning his principles or risking gridlock.

He also knows that many of the people just voted in are thinking principally of how they can plot his removal from the White House in the 2012 election. Obama might reflect on whether Winston Churchill was really right in believing that democracy was the worst system of government in the world apart from all the rest as he starts his long-delayed Asia visit, which will see him skirting China, but surely thinking about China.

China must be the dragon on Obama’s mind. This is not least because four of his 10 days away will be in close proximity to Chinese leaders — at the Group of 20 summit in Seoul and then at the Asia-Pacific Economic Cooperation forum in Yokohama.

More important, the leading economic and foreign policy issue for America has to be its financial and economic weakness in the face of China’s roaring challenge. A G-2 Sino-U.S. partnership never got off the ground, and Beijing is demanding that the G20, International Monetary Fund, World Bank and other international bodies yield more power to China to do things its own successful way.

One of the most memorable advertisements of the midterm elections was shot in Putonghua with English subtitles and purported to show a Chinese professor in 2030 teaching “Why do great nations fail” — from ancient Greece to the mighty U.S. His lesson was that they failed because of reckless spending and large deficits. In the case of the U.S., the professor concludes triumphantly, “We owned most of their debt and now they work for us.”

The video has scored almost a million hits since it was first shown on the Chinese Tudou website Oct. 22. About half of the Chinese who viewed it think it accurately represents the future.

(Jimmy Lai’s Next Media Animation’s spoof of the video showing a talking panda explaining the real reasons for China’s success — selling cheap crap produced by slave labor, with a little toxin thrown in, and using stolen technology — has not been shown on Tudou.)

Before the elections, Beijing was sufficiently worried about China-bashing for the People’s Daily to complain that, “Politicians in the United States have intensified their campaign making China a scapegoat in a manner some find deplorable.” Now the results are in and China seems more relaxed, with its media suggesting that the Republicans now dominating the House of Representatives and with enough Senate seats to deny Obama freedom to pass legislation will be preoccupied with domestic matters and will be less protectionist or inclined to punish Beijing over the yuan.

In his postmortem press conference, Obama was in a chastened mood after his election “shellacking,” but strangely bloodless, cerebral and lacking passion. He complained that “being in the bubble” of the White House prevented people from understanding that he was still the same guy whom they had warmed to on the 2008 campaign trail when “I think that they understood that my story was theirs. I might have a funny name, but the values of hard work and honesty and responsibility and looking out for one another that had been instilled in them by their parents — those are the same values that I took from my mom and my grandparents.”

The president promised to reach out and seek common solutions with the Republican leaders. But reasonable nice guy Obama, who said his heart is broken by letters of economic hardship and inspired by stories of people helped by his health care scheme, may find that the hard-nosed tea party victors are not so easily moved, not least because they have a self-righteous belief that the American people have spoken through them.

Already, Spencer Bachus, the likely new chairman of the House Finance Committee, has said he will do everything in his power to gut the Dodd-Frank financial reform bill. According to the Financial Times, he “expressed concern that shareholders of Goldman Sachs and J.P. Morgan Chase will be hurt because the banks will be less profitable.” The Obama health care proposals are also on top of the Tea Party agenda for scrapping. All of this leads to the prospect that so much time will be spent on recriminations and rolling back Obama’s reforms that there will be little time or energy or space for constructive discussions let alone agreement on how to get America through its crisis.

China is not standing still, but is busy growing, reshaping itself and the world, doing everything it can to promote its own standards as the international norm and its disregard for international standards of transparency and good governance in trade and aid.

Jeremie Waterman, senior director of the U.S. Chamber of Commerce, complained to the U.S. International Trade Commission in June about Beijing’s “medium and long-term indigenous innovation plan via a growing web of discriminatory industrial policies, including in the areas of government procurement, information security, standards setting, tax, antitrust, intellectual property protection and enforcement and industrial espionage.”

Gridlock and deadlock between the U.S. president and Congress are not likely to make the American deficits go away or lessen the challenge from China, so a delayed crunch may hit harder. The best hope is that Obama stops brooding in his White House bubble and reading his fan mail and realizes that leadership takes blood and guts and passion as well as intellectual superiority.

Kevin Rafferty, formerly in charge of the Financial Times’ coverage of Asia, is editor in chief of PlainWords Media.