China's Frustrations with America

Geithner (right) is trying to reassure the Chinese their U.S. investments will be safe Andy Wong-Pool/Getty Images

Beijing - As a journalist in China for nearly 15 years, I've had to play a second role as something of a guide to American culture. In the small talk that inevitably follows interviews with government or industry bigwigs, I'm sometimes asked: "How is this done in the States?" That's because China has often sought to emulate the American economic system. A planned stock exchange was pitched as a "Chinese Nasdaq." A central bank reform was modeled on the U.S. Federal Reserve system. And officials and executives alike boast that their staffers have spent time in the U.S., a badge of honor in China.

As Treasury Secretary Timothy Geithner motorcaded his way through Beijing this week, though, it became clear that mainlanders have far less respect for the American Way these days. While there's scant evidence that Chinese youth are avoiding McDonald's (MCD), KFC (YUM), or the myriad other beacons of U.S. culture that dot the landscape, American management has fallen out of favor. "I used to think the U.S. was a very good country," says Li Mo, a 26-year-old wearing a red LeBron James T-shirt and sipping an iced mocha in a Beijing Starbucks (SBUX). "But after the financial crisis, I began to think China is the best place in the world."

That's not to say people here are happy about Beijing's management of the economy. In fact, plenty of Chinese feel their country has too closely followed the lead of Washington—or Wall Street. China's sovereign wealth fund, the China Investment Corp., has been roundly criticized for losses (on paper, at least) of $4 billion on investments in New York financial houses Blackstone Group (BX) and Morgan Stanley (MS). And many fear Beijing may ultimately take a far bigger bath on the $1.4 trillion-plus in U.S. securities it holds.

Much of the discontent is showing up on China's freewheeling Internet forums. On these Web sites, countless postings attack U.S. banks and politicians for reckless behavior. The U.S. economy "is like a dump truck just starting to tip," reads one comment on the Web site of broadcaster CCTV. On a hyper-patriotic online forum called Revival, another post declares that "anyone who sends money to the U.S. is betraying the Chinese people!"


Wang Xiaodong may be one of the most vociferous proponents of this view. I first met him more than a decade ago, when he was running Strategy & Management, a Chinese journal that advocated a turn away from Western values. He recently co-authored China Is Not Happy, a book that has sold more than half a million legal copies, with an untold number of pirated versions in circulation. In it, Wang criticizes the U.S., saying it has damaged itself by focusing too much on its financial sector while sending manufacturing offshore. China, he says, needs to adopt a more assertive economic, diplomatic, and military stance. "China's policies are always based on trying to please the West. We don't think this is necessary," Wang tells me as he sips a Coke, a beverage he allows is "pretty good."

The anger has found its way into official rhetoric. Premier Wen Jiabao on Mar. 13 urged Washington to "maintain its good credit, to honor its promises, and to guarantee the safety of China's assets." During his visit to Beijing, Geithner heard plenty of concern about such matters, with students at Peking University questioning him on the financial crisis and how Washington might put things right. And those worries about China's U.S. investment holdings? They're "very safe," he told the students. "We have the deepest, most liquid financial markets in the world." Good luck convincing the Chinese of that.

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