The English version of the Asahi Shimbun article about the U.S. action against China in the WTO over intellectual property has a pretty obvious headline: “WTO complaints against China put Japan in a bind.” It addresses the fact that the U.S. government asked Japan to join the action (and they haven’t decided yet as far as I’ve seen), and how that’s kind of awkward when Chinese Premier Wen Jiabao is in Tokyo for a “thawing” visit.

But the final two paragraphs seem to make a point of sticking it to China more than the United States:

Honda Motor Co., for example, has won a suit against a Chinese company that made “Hongda” motorcycles. In the 10 years ending in January, Chinese authorities acted on about 2,000 cases of intellectual property rights violations involving Honda products and technology.

Meanwhile, Chinese vendors sell batteries labeled “Sqny” (not Sony Corp.) and pirated versions of Japanese anime DVDs.

In a rare U.S. newspaper article that reveals the complexity of global entanglements over something so simple as food, The New York Times notes Brazil’s status as the largest soybean exporter in the world and looks at China’s involvement. Some history:

Once, the biggest bilateral food trade flowed between the United States, the world’s largest food exporter, and Japan. But countries with vast arable land available for expansion, particularly Brazil, are now racing to meet demand in China, whose population of 1.3 billion is 10 times that of Japan’s.

Farmers in the United States have started planting far more corn for ethanol at the expense of other crops, including soybeans. But after the United States grain embargo by President Richard M. Nixon in the early 1970s helped spawn Brazil’s soybean industry, American farmers are not giving up their leading role in the grain trade easily.

They’re not giving up, but even the United States isn’t big enough to feed China. Perhaps the most interesting angle of China’s involvements in countries whose exports fuel China’s population is the incentive for Chinese business and government to improve infrastructure in supplier economies.

The Chinese want to connect directly with Brazilian farmers, bypassing the multinational grain merchants. While they have yet to make a major purchase of cropland in Brazil, they are looking to invest in improved facilities and upgrade the antiquated rail system.

This presents a huge opportunity to Brazil, but it might not help as much as it could if not managed correctly. Developing a rail system for more efficient soy exports might not build the kind of rail network Brazil would want for general development. The challenge for Brazilian authorities is to make sure what Chinese groups build helps Brazil.

UPDATE: How could I miss the companion article about the infrastructure! (Although I feel like I’ve read something almost identical in the last year.) The short of it is that most of these soybeans are moved by truck on the Brazilian end—not exactly a model of efficiency. And China’s involvement has remained nominal and ambiguous:

“A lot was said a few years ago about big partnerships between C.V.R.D. and China to boost the country’s railroad infrastructure,” a company spokesman, Fernando Thompson, said. “None of those plans have gone forward, and we have no current discussions under way with Chinese companies” on expansion.

C.V.R.D. may help build a new north-south railway link, Mr. Bartolomeu said — but only if it “makes economic sense.” For now, amid sharp competition for space on cargo trains, the company has reduced the soybean products it shipped by rail last year by 11 percent, to 5.8 million tons. The level was still more than double the soy that the company shipped in 2001.

I still think it would be wise for the Brazilian government to try to use this opportunity and make it “make economic sense” for them to get better infrastructure.

How issues involving China will play in the 2008 U.S. presidential election is yet mostly uncharted territory, but Senator Hillary Clinton revealed revealed some China talking points this week after the Shanghai market’s burp heard round the world.

Sounding bells of economic populism, Clinton told CNBC the United States faces a “slow erosion of our economic sovereignty.” She sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, saying the stock market turbulence “underscores the exposure of our economy to economic developments in countries like China. As we have been running trade and budget deficits, they have been buying our debt and in essence becoming our banker.” Her letter went on to warn the government’s economic czars that “if China or Japan made a decision to decrease their massive holdings of U.S. dollars, there could be a currency crisis and the U.S. would have to raise interest rates and invite conditions for a recession.” (A nice sound bite from the letter: “The writing may not be on the wall, but yesterday, the writing was on the Big Board.”)

An unnamed “Democratic strategist not currently working for any of the presidential contenders” (well, not that he admits) told MSNBC that China may be a liability for Clinton:

“Arguably, no candidate may be more vulnerable on China, and Wal-Mart than Senator Clinton,” he said. Why? Because she once served as a member of Wal-Mart’s board of directors and because, as president, her husband persuaded Congress in 2000 to award China with permanent normal trade relations status and smooth the accession of China to the World Trade Organization.

…

But if the mood of the electorate in 2008 is anti-China, other Democratic presidential contenders would have their own China history to contend with: as senators, John Edwards, Chris Dodd, and Joe Biden all voted for the Clinton administration’s China trade deal.

So what’s the policy message? How is the U.S. to get out of this bind? Clinton’s letter to Bernanke and Paulson and her public statements (as far as MSNBC and I have found) have been short on details, but she did endorse a plan by “Senator Dorgan and then Congressman Cardin that sounds an alarm bell when US foreign owned debt reaches 25 percent of GDP or the trade deficit reaches 5% of GDP. It would require the administration to develop a plan of action to address these conditions, and report their findings to Congress.”

OK great. The solution is to require someone else to come up with the solution. Sloughing off responsibility from Congress onto the executive branch may look good when you’re running for reelection as a senator from the great state of New York, but people concerned with her China background are going to need more from Clinton if she wants to run the executive. Not that anyone else is giving us much to go on so far. Not to worry! We’ve got 10 more months of this clown show before the primaries.

It’s actually been two months since the last time I posted an obvious headline, but this one warrants reviving the tradition. From the ever-insightful Agence France Presse:

China, India, Japan to power Asian economy in 2007

Sure, I mean, there may be something to the story that Asian economies and not the United States are projected to fuel Asia’s largest economies. But is anyone really surprised that two countries with 1 billion-plus populations and one with the second largest economy in the world will power a continent?

Plans for a high-level economic delegation from the United States to China next month have been gradually emerging over the last week. This team will be pretty hard-hitting. Treasury Secretary Henry Paulson, who first visited China in September, and Federal Reserve Chairman Ben Bernanke will lead the delegation to the semiannual U.S.-China Strategic Economic Dialogue, created in September.

The talks are expected to address the $200 billion U.S.–Chinese trade imbalance and the Bush administration’s hope that China will adjust its undervalued currency.

China Law Blog tells the story of a worried client deciding whether to do business in China, revealing the decisions set before a small or medium-sized companies in the United States or Europe when faced with competitors who manufacture in China.

I talked a lot with my small company client today about the risks of China and what his company can do to minimize those risks, all the while emphasizing there is no way to wholly eliminate them. Towards the end of our conversation, he said, “it sounds like you are telling me I should not go into China.” I then told him I was actually telling him the opposite, but as his lawyer I felt it my job to highlight the risks and focus on minimizing them. I then went on to say that based on what he had told me, the biggest risk of all would be to not go into China even though it had become pretty clear that failing to do so would likely eventually mean the end of his business.

Is China growing at the United States’ expense? That is one of the most vexing questions about China for U.S. politicians, and that’s the question Stephen Roach of Morgan Stanley and Desmond Lachman of the American Enterprise Institute are at work debating on cfr.org.

Short answer? Well, they’re not giving a short answer. In Roach’s opening argument, “Don’t Scapegoat China,” he argues that the United States needs to get its house in order before it can blame China. He says the culprit, by in large, is “a dearth of domestic saving” in the United States. “Lacking in domestic saving, the United States must import surplus saving from abroad in order to grow—and run massive current-account and foreign trade deficits to attract the capital,” Roach writes.

Lachman comes back with an indictment of China’s undervalued currency. The United States should save more, he agrees, but “it will also need a much cheaper dollar to promote its exports and to discourage its imports.” And China will have to let its currency reflect market value for that to happen. So in addition to better U.S. policy, Lachman says China will have to undergo currency reform for the good of everyone.

Roach counters that Lachman’s opinion reflects the Washington Consensus (which is more or less the idea of neoliberal reform), which he summarizes thus: “Sure, we in America need to fix our deficits—and maybe some day we will—but China needs to get its act together now.”

A small wrench landed in their civil debate today. Without specific reference to the currency issue, the Chinese Commerce Ministry has said it will attempt to eliminate China’s trade surplus in the next four years.

Until 2010, the world’s fourth-largest economy will target 10 percent annual growth in foreign trade, down from 24 percent growth in the first half of the decade, the commerce ministry said in a statement on its website Wednesday.

In the next four years, China will target a new foreign trade strategy where exporters abandon the blind pursuit of growth for growth’s own sake in favor of “quality growth,” the ministry said.

My question for those with a better understanding of economics is: How will this policy, if executed as advertised, affect the feasibility of revaluing the currency?