Currency deal could be near between China and United States

Word comes from New York that negotiators for China and the United States are closing in on an agreement to raise the value of China's currency, a point of contention between the two world economic giants. China's president, Hu Jintao, is scheduled to visit Washington this week, days after a surprise visit to China by U.S. Treasury Secretary Timothy Geithner, according to the Cable News Network (CNN). The United States has been pressing China to allow its currency to float against other world currencies, at least temporarily, to help rebalance the value of trade between the two countries. Analysts say an increase in the value of China's currency, the yuan, will help cut a huge surplus in its balance of trade. "It basically seems like it's a done deal," Ashraf Laidi, chief market strategist for CMC Markets, told CNN. In addition to diplomatic friction, the undervalued yuan is hampering economic recovery in the United States, said Peter Morici, a professor at the University of Maryland. "Unemployment would be falling rapidly and the U.S. economy recovering more rapidly but for the trade deficit with China and Beijing's currency policies." China has been keeping its currency undervalued by buying billions of dollars in U.S. currency and notes, CNN said. Most economists now think the yuan is undervalued by up to 40 percent, but raising its value precipitously could cause more problems than it would solve by overheating China's economy. In that scenario, a gradual increase would be more desirable, CNN said. "The movement from managed currency to freely floating currency is not easy to pull off," Mark Vitner, a senior economy with Wells Fargo Securities, told CNN. "If we have a boom and then a bust in China, that could lead to another global recession." In the short run, raising the value of China's currency will raise the price of Chinese goods sold in the United States while cutting the price of China's imports of natural resources like oil. Hu is expected in Washington next week for U.S. President Barack Obama's worldwide nuclear security summit.

Progressive nuclear policies sound good but mean nothing

While it'll been fun hearing right-wing blowhards blow a little harder this week, the most important thing about the new nuclear weapons policy unveiled Tuesday by U.S. President Barack Obama is that it doesn't mean anything. Rhetoric about when and where a country will or will not use nuclear arms is meaningless because neither situations nor temptations can be accurately predicted in advance. So, the Obama administration's Nuclear Posture Review, a document required from all U.S. governments by the Congress, can be full of lofty anti-nuclear sentiment yet not reflect what the country will actually do in the event of nuclear conflict. If another country launches a nuclear attack on the United States, sentiment loses all value. Critics of the administration must realize this, even as they launch what are sure to be bombastic attacks on the new policy. The Obama policy, which replaces the Bush administration's threat of nuclear retaliation in the event of chemical or biological attack, commits the United States to refrain from the use of nuclear weapons against non-nuclear countries that comply with the Nuclear Non-Proliferation Treaty of 1970, according to the Reuters international news service. The new policy also declares that the United States will not develop any new nuclear weapons. "We are taking specific and concrete steps to reduce the role of nuclear weapons while preserving our military superiority, deterring aggression and safeguarding the security of the American people," Obama said in a statement released by the White House, Reuters said. The policy was released in time for Thursday's scheduled signing of a new arms reduction treaty with Russia and appears designed to enhance next week's 47-nation nuclear summit in Washington. Iran and North Korea, emerging nuclear powers that have not signed the treaty, were deliberately left out of the non-use guarantee, U.S. Defense Secretary Robert Gates said. "If there is a message for Iran and North Korea here, it is ... if you're not going to play by the rules, if you're going to be a proliferator, then all options are on the table in terms of how we deal with you," Gates told reporters, Reuters said. The document also expressed concern about China, which has a nuclear arsenal and has signed the treaty, but has not been forthcoming about its program. "China's nuclear arsenal remains much smaller than the arsenals of Russia and the United States," the document said. "But the lack of transparency surrounding its nuclear programs -- their pace and scope, as well as the strategy and doctrine that guides them -- raises questions about China's future strategic intentions." Obama is expected to hold talks with Chinese leader Hu Jintao on the sidelines of next week's summit that will possibly include China's nuclear program as well as the value of its currency, Reuters said.

Human Rights Watch report raises troubling questions about China

If it is indeed true that China's government is permitting local authorities to operate secret jails in Beijing where citizens are mistreated, it's time for the United States to re-evaluate trade relations with the world's most populous nation. Of course, we're not talking about returning to the days of complete non-engagement -- the U.S. and China are far too interdependent economically for that. Rather, it is because we are so tied together economically that China would be likely to respect and comply with reasonable demands to restrain its totalitarian tendencies. Beijing certainly understood that its decision to become part of the world economy meant unprecedented scrutiny of its internal affairs and, as a result, an obligation to conduct itself in a more transparent and civilized manner. That's why Thursday's report from the nonprofit group Human Rights Watch is so troubling. The report alleges that the government in Beijing permits local governments to operate a system of secret prisons in which prisoners are routinely mistreated, according to the New York Times. Abuse is routine even in detention centers run by the national government but is even worse in the unofficial jails, the report said. "We're talking about a country with torture in formal detention centers, and the black jails are 10 floors down" in terms of treatment of detainees, said Sophie Richardson, the group's advocacy director for Asia. Richardson said abuses that were widespread in China’s official prison system, which has some judicial supervision, were even worse in unofficial jails, which have no oversight. But China denies that the unofficial detention system exists. “There are no black jails in China,” Qin Gang, a Foreign Ministry spokesman, said in Beijing on Thursday, the Times said. “If citizens have complaints and suggestions about government work, they can convey them to the relevant authorities through legitimate and normal channels.” But Human Rights Watch said China's system for protecting detainees was being subverted by local officials, who had an incentive to block such complaints from reaching national officials. The issue is considered serious enough by the U.S. government for President Barack Obama to raise when he meets next week in Beijing with Chinese President Hu Jintao, according to National Security Council official Jeffrey Bader, the Times said.