President Barack Obama meets with Prime Minister Manmohan Singh during their bilateral meeting in the Oval Office, Nov. 24, 2009

President Barack Obama meets with Prime Minister Manmohan Singh during their bilateral meeting in the Oval Office, Nov. 24, 2009

The economy was the big issue on the minds of many voters in the midterm elections two days ago. The economy will be a front-burner issue as well on President Obama’s visit to Asia’s major democracies–his longest foreign trip since taking office. On stops in India, Indonesia, South Korea and Japan, the president is expected to press for better access to markets for U.S. exports. He’ll also be working to build stronger alliances in Asia, particularly in the face of China’s growing influence in the region. We’ll look at what the administration hopes to accomplish in Asia and what’s at stake for the U.S.


  • Robert Kaplan National correspondent, "The Atlantic"; senior fellow, Center for a New American Security; author, "Monsoon: The Indian Ocean and the Future of American Power."
  • Amb. Wendy Sherman Vice chair of the Albright Stonebridge Group. She is former special adviser to President Clinton and Secretary of State Albright, and was counselor for the State Department and North Korea policy coordinator in the Clinton administration.
  • Victor Cha The Korea Chair at the Center for Strategic and International Studies; professor of government at Georgetown University School of Foreign Service; former director of Asian Affairs at the White House National Security Council during the Bush administration.


  • 10:06:55

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. President Obama is embarking on a four-country trip to Asia in visits to India, Indonesia, South Korea and Japan. The president will be looking for economic opportunities for Americans, and he'll address concerns about Chinese power and influence as he works to strengthen relationships with the region's key democracies. Joining me here in the studio to talk about U.S. foreign policy goals in Asia, Robert Kaplan of the Center for a New American Security, he is author of the new book titled "Monsoon: The Indian Ocean and the Future of American Power."

  • 10:07:53

    MS. DIANE REHMAmbassador Wendy Sherman of the Albright Stonebridge Group, she is former special advisor to President Clinton and Secretary of State Albright. And Victor Cha of the Center for Strategic and International Studies, he is former director of Asian affairs at the White House National Security Council during the Bush administration. Please join us, 800-433-8850. Send us your e-mail to Feel free to join us on Facebook and Twitter. Good morning to each of you.

  • 10:08:44

    MR. ROBERT KAPLANGood morning.

  • 10:08:44

    MR. VICTOR CHAGood morning.

  • 10:08:44

    AMB. WENDY SHERMANGood morning.

  • 10:08:45

    REHMGood to see you. Wendy Sherman, there's been so much attention paid to the Far East, generally China in particular. Tell me what the concerns are.

  • 10:09:03

    SHERMANWell, the concerns are enormous. I think we all believe that the 21st century is really the Asian century, that the greatest growth in the world's economy is going to happen in Asia. And President Obama, when he spoke yesterday after our midterm election, said it's not just about creating jobs here in the United States but being able to be competitive with the world. And the greatest source of competition comes from Asia.

  • 10:09:30

    SHERMANI think everyone is concerned that the rise of China be a peaceful rise of China, and so we saw more campaign ads in this midterm election about China than any other country. And that's very typical for American election cycle, but we have to get to the reality that the Pacific region is really made up of many countries. We have to develop trading relations with all of them. We have to build our economy. And we have to make sure that we have security in that region as well 'cause we've got nuclear weapons there to boot.

  • 10:09:59

    REHMVictor Cha, what are the primary concerns regarding China?

  • 10:10:06

    CHAWell, one of the major concerns in the run up to the G20 Summit are questions about China and currency, the extent to which they are undervaluing their currency artificially, which leads to this, you know, hundreds of billions of dollars of trade deficit with the United States.

  • 10:10:22

    CHAI think more broadly on the strategic perspective, there are concerns in the past few months about more assertive behavior by China in the region. It is, as Wendy said, clearly growing onto the global stage as a major power. And I think countries in the region, including Korea, countries in Southeast Asia, are concerned about recent actions the Chinese have taken in the South China Sea on -- in the Senkaku Islands and other places where people feel like China is kind of asserting itself in a way it hasn't in the past. And that's made countries concerned.

  • 10:10:54

    REHMRobert Kaplan, you write in your new book "Monsoon" that the map of Asia is reemerging as a single, organic unit. What do you mean by that?

  • 10:11:09

    KAPLANWhat I mean is that for decades we've been prisoners of Cold War area studies, where the United States, at the end of World War II, had to divide up the world to produce experts. So we had the Middle East, Central Asia, South Asia, Southeast Asia, East Asia, universities, think-tanks, government departments did all this. But, in fact, now we live in a world where China in East Asia wants to buy more and more hydrocarbons from Iran in the Middle East, where India in South Asia is increasingly in a rivalry with China in East Asia.

  • 10:11:45

    KAPLANIn other words, every place affects every other place. And President Obama's visit is really something absolutely necessary that he has to do in order to face this new strategic climate in a post-Iraq, post-Afghanistan world, where all these countries that he's visiting -- Indonesia, India, South Korea and Japan -- you know, have to face up to the rising challenge of China, not just as an economic force but as a military and particularly naval force around the whole Southern Eurasian rim land, from the horn of Africa to the sea of Japan.

  • 10:12:23

    REHMConsidering the fact that this is the longest foreign trip that the president has made thus far, realistically, what can he hope to accomplish?

  • 10:12:38

    KAPLANI think simply by being there, going to India for a relatively long trip there, a few days -- he's visiting several cities -- finally getting to Indonesia after postponing the trip twice. It's, you know, showing -- you know, much of life is just showing up. And, you know, one of the good things of this administration that has not been heralded enough is Secretary of State Clinton's repeated trips to Asia. It's almost as if by appointing special envoys to Israel, Palestine, Afghanistan, Pakistan, that has logistically freed her up to concentrate on Asia. And, of course, she would never say this, but to compete with the Chinese for influence.

  • 10:13:23

    REHMBut now with his trip to India, how does that affect our relationship with Pakistan, Wendy Sherman?

  • 10:13:34

    SHERMANWell, it's very interesting that you mention that, Diane, because he's not going to Pakistan on this trip. That was a very conscious decision. He's starting the trip in India to say that this is the world's largest democracy, that it is an important partner for the United States. It's also a message to China. In fact, the president is visiting four democracies. Where Pakistan is concerned, he's going to visit there, he says, in 2011. And Pakistan's leadership will be coming to the United States. But this is very clearly a deliberate decision to de-hyphenate the India-Pakistan relationship, that we have a relationship with India that stands on its own.

  • 10:14:14

    SHERMANAs Robert mentioned, he's going to be in India for three days. He's going to go to both Mumbai and New Delhi. He's going to look at trade and investment. He's going to stay at the Taj Mahal Hotel, which was the sight of the terrorist attack, to really say that it is safe to come back to India. But because tourism is quite crucial to India's economy -- but also highlight that terrorism remains an issue that we all have to be focused on. He's going to talk to a joint session of Parliament -- which is quite unusual -- probably talk about American industries' desire to get in on the U.S.-India civil nuclear agreement, which has had some problems, but could open up huge areas of economic investment for American companies.

  • 10:14:57

    SHERMANThere'll be a separate business delegation that will be there at the same time. He'll speak to them. So there's a lot going on in this trip. But even with all of this, we still probably don't quite yet have the right strategic positioning with India nor the really big idea that cements our relationship in, as was said earlier, a post-Cold War era.

  • 10:15:19

    REHMVictor Cha, I want to go back to China for a moment because a recent Russian publication ran a story with the headline, the U.S. is building an anti-China coalition. What do you make of that?

  • 10:15:40

    CHAWell, I mean, it wouldn't surprise me that that would come out of a Russian paper these days. I don't think that that is what the Obama administration is trying to do with this trip. I agree, absolutely, that these are the four major democracies of Asia, India, Indonesia, South Korea and Japan. And part of the purpose of the trip is to consolidate the relations with those countries. But the other piece of this, on the economic and financial side, are aimed -- I mean, they're lessons aimed at China, but they're not a strategy to try to contain China.

  • 10:16:12

    CHAFor example, on the currency issue, you know, Geithner has put forward this proposal to try to get an arrangement between surplus and deficit countries about how they deal with their currency and how they do formal and financial restructuring. At the same time, there's talk in the G20 about development assistance -- responsible development assistance, which is, you know, tacitly aimed at a country like China, which does very irresponsible assistance to places like Africa. So, I think, while the agenda is not a anti-China containment agenda, many of the issues are trying to push China in the direction of being a more responsible stakeholder in the international system.

  • 10:16:51

    REHMBut, Robert, how does that effort -- how does that come about when what you're trying to do is to mitigate China's influence in the region without seeming to be somehow ganging up on China?

  • 10:17:13

    KAPLANWell, you never want to use the word containment. The way you want to describe it is managing China's rise. And at the same time, we reach out to these new and more important allies -- like, we could even add Vietnam to the list and the Philippines and other places in Asia that are increasingly nervous about China's growth -- that the same time we do this, we reach out to China. Like, Secretary of Defense Robert Gates is very intent on reestablishing on a firm footing on military to military bilateral ties with China.

  • 10:17:51

    KAPLANSo we make it clear to all the Asian allies -- most of which are democracies around the rim land -- that we're here. We're not distracted anymore by Iraq and Afghanistan. But at the same time, we reach out to China and say that our bilateral relationship with Beijing is going to be the most important bilateral relationship between any two countries in the 21st century.

  • 10:18:16


  • 10:18:17

    CHAAs -- I mean, I think that Bob's point about being present is really important. But a big part of the U.S. being present in Asia is going to be on the issue of trade and free trade, where President Obama said at the G20 Summit in Toronto, he wanted to see the U.S.-Korea Free Trade Agreement in a place to move forward. And we are down to our last few days, in terms of this very difficult agreement, which will be a big indicator of U.S. presence in Asia.

  • 10:18:43

    REHMVictor Cha of the Center for Strategic and International Studies.

  • 10:20:03

    REHMAnd welcome back here in the studio as we talk about the president's upcoming trip to Asia. Robert Kaplan, national correspondent for The Atlantic, he is the author of a new book titled "Monsoon: The Indian Ocean and the Future of American Power." Former Amb. Wendy Sherman, vice chair of the Albright Stonebridge Group, she was former special advisor to President Clinton and Secretary of State Albright. Victor Cha served as former director of Asian Affairs at the White House National Security Council during the Bush administration. And we are going to open the phone shortly. Join us on 800-433-8850. Apparently, several messages like this one from Kurt on Facebook, who says, "I'd like to know if the trip is really going to cost $100 million per day and if the president is bringing as many people as right wing commentators are saying." Wendy Sherman.

  • 10:21:26

    SHERMANWell, it was very interesting. There was a whole flurry of activity on the cable networks and the blogs last night exactly to that. It really comes off of a story in a small Indian paper that put this number out. It is, in fact, not true. The White House doesn't give out the exact numbers for security reasons because they don't want people to know what they're investing in getting this done, not American taxpayers but terrorists.

  • 10:21:53

    SHERMANSo I think the best comparison is when President Clinton made a similar trip of this length, it cost for the entire trip approximately $50 million -- the whole trip, not a day but the entire trip. I think the important point here -- I understand why American taxpayers are concerned about the cost. It is expensive to travel abroad. But there is nothing like understanding another country's culture, meeting people face-to-face to understand where our interests are and how to protect those interests. And if our going abroad and creating those relationships -- particularly for American business -- means that there might be billions of dollars in contracts with another country, we will get a return on that investment many times over.

  • 10:22:37

    REHMVictor Cha.

  • 10:22:39

    CHAWell, whatever the number is -- $100 million a day or $50 million for the whole trip -- I mean, it's the same whether it's a Democratic or Republican president that's traveling abroad. I mean, this is the price that you pay when your head of state goes abroad, and it's a part of what the United States does around the world. I mean, I would agree with Wendy that, you know, a big focus of this trip is the economic focus. And it is about trying to create more markets for U.S. businesses and create more jobs at home. So, you know, I think that that's -- I mean, that's not really a good indicator of the importance of the trip.

  • 10:23:10

    REHMAnd here is a question from James. "Is President Obama briefed from representatives of U.S. corporations doing business in the Asia Pacific region prior to going there? If yes, how does he use this information in his discussion with the Asia Pacific region to help create jobs in the United States?" Robert Kaplan.

  • 10:23:43

    KAPLANWell, I'm sure either he's been briefed, or his staff has been briefed. After all, the Asia Pacific region is the center of world trade and commerce, where American companies are strikingly active and need to be active to create jobs at home. And so it would make sense for him to be briefed by them, or his staff to be briefed, and to coordinate his visit with the visit of, you know, leading American business people in the area.

  • 10:24:15

    KAPLANAll countries do this. When Prince Charles travels abroad or Queen Elizabeth travels abroad, a slew of British businessmen go with them. These royal trips are seen as a way, as a vehicle, to increase British investment and create British jobs at home. The American president, like -- is a ceremonial post as well as a political position. So the American president, in a way, you know, takes the role of a British royalty in this. And all countries do this.

  • 10:24:50


  • 10:24:50

    SHERMANWell, indeed, President Hu Jintao is coming to France now. And that is one royal state visit because French President Sarkozy, worried about a shaky relationship with China, is really turning out the glitz for Hu Jintao. And billions and billions of dollars of investment and deals between China and France are going to be announced. So this is really the way of the world. And let's remember that President Obama is traveling with -- headed towards the G20 meeting in Seoul and APEC in Yokohama, Japan.

  • 10:25:29

    SHERMANAnd the point of both of these meetings is really the global imbalances that Victor referred to, making sure that development moves forward in a pro-growth manner, that it's about aid, of course, but it is about more than aid. It is about growth and real economic development that's sustainable over time so that countries can grow a middle class. It is about ensuring that the recovery continues for the United States and for the world. And it's about modernizing and reforming the international financial institutions so that we don't find ourselves back in the same place again. We are in a different world. We are in a G20 world. It's not just about the developed countries anymore. It's about the huge markets, which are the developing countries.

  • 10:26:14

    CHAJust on -- specifically to the last question, I would say -- I mean, the way a president will get briefed is in advance of the trip. The American Chamber of Commerce would usually come to Washington with companies, and they do what's called a door knock, usually with NSC. And so the staff would be well briefed on what business needs are. The ambassadors -- our ambassadors in these countries will also be well briefed and will brief the president. And then also with APEC -- the meeting in Yokohama that Wendy referred to -- there's something called ABAC, which is the business council part of the APEC meetings. And the president in the past usually attends those meetings as well. So there's plenty of opportunities for President Obama to understand what's the -- on the ground truth for American businesses.

  • 10:26:56

    REHMRobert Kaplan, what are the key issues that President Obama will deal with in Indonesia?

  • 10:27:06

    KAPLANIndonesia is the largest Muslim society in the world -- 200 million of its 240 million people are Muslims. In addition, Indonesia's biggest trading partner is China, and China is increasingly encroaching on Indonesian waters. Whereas China has many dozens of submarines, Indonesia has two that do not work. So the Indonesian navy cannot really protect its far-flung archipelago. What Indonesia will probably talk about behind closed doors with President Obama is that we require, into the future, a continued U.S. naval presence in this region, but we can't say this publicly for fear of alienating other Muslim countries around the world.

  • 10:27:53

    KAPLANBut keep in mind that what makes globalization work -- or one thing that makes globalization work is the U.S. Navy 'cause it protects the sea lines of communication in an age when 90 percent of all commerce goes by sea. And not only Indonesia but India, other countries in the region, are -- you know, don't want to see -- you know, they realize that America's unipolar moment is ending, and we're entering a more multipolar world. But in a military sense, they want that to happen slowly.

  • 10:28:29


  • 10:28:31

    CHAWell, of course, this is the trip that has been cancelled a couple of times. And this is the American president that actually grew up in Indonesia, so the optic will be incredible. I mean, the visuals of him arriving there, giving a speech, speaking in the native language -- you know, this will be just an incredible scene.

  • 10:28:48

    REHMHow many years did he spend in Indonesia?

  • 10:28:52

    CHAIt was only a few years of his childhood, about five.

  • 10:28:54


  • 10:28:55

    CHABut still this is, as the administration says, the first American president from the Asia Pacific. And I think all the things that Bob mentioned are important, but the visual is also important. Another big area for this administration has been Burma. It's the one area you could argue where their Asian policy has really changed quite a bit from past U.S. policy. And Indonesia is a very important player in how to deal with Burma. The administration also says we're back in Asia, that they're big -- in a big way back and present in many of the regional architectures that Asia is building. And Indonesia is a very important part of this new East Asia summit.

  • 10:29:32

    REHMNow, the president is not specifically going to China. But he will meet...

  • 10:29:40


  • 10:29:40

    REHM...China's President Hu Jintao in South Korea. Is that correct, Wendy?

  • 10:29:45

    SHERMANYes. He will meet President Hu Jintao in South Korea. And, in fact, President Hu Jintao is coming to Washington in January. And this has been very carefully orchestrated so that, in fact, China does not feel dissed because there is no visit. And between Secretary of State Clinton's current trip to Asia and the president's trip to Asia, they are really touching, not only our five major allies in the region but many other countries as well. Because the message here is that we care about all of Asia. We all understand the rise of China. But there are many other markets here. There are many other relationships that we need to pursue.

  • 10:30:25

    SHERMANAnd as Bob has pointed out, and as we've seen -- as Victor mentioned, this Senkaku Island incident where a Japanese ship was jammed by a Chinese ship, potentially with great problems, with Secretary of State Clinton in Vietnam, talking about how important it is to protect the South China Sea open to shipping lanes. We're going to see a lot of discussion about keeping the seas open for everyone.

  • 10:30:59

    REHMBut I also wonder about human rights discussions with President Hu Jintao, Robert Kaplan.

  • 10:31:08

    KAPLANYes. Clearly, if the United States did not bring up human rights in private discussions with the Chinese leadership, we would not be who we are. Also, the Chinese would perceive weakness on our part. If we had a totally -- you know, realism is in vogue now after the George W. Bush era. But if we had a totally realistic foreign policy that was devoid of any realism -- devoid of any idealism -- excuse me -- what would separate our foreign policy from that of China's itself? So, yes, this issue will come up.

  • 10:31:46

    KAPLANIt came up in discussions, I believe, Secretary of State Clinton had in Vietnam where they were persecuting bloggers. You know, this is something we're attentive to. But what's really interesting on this is -- back to Indonesia for a moment -- Indonesia has had a successful moderating Muslim democracy for 12 years now, very unheralded, the largest Muslim society in the world. The idea that Muslim countries cannot evolve into, you know, into a democratic order is just wrong.

  • 10:32:21

    SHERMANI think there's one important addition to that. The president is going to speak at a mosque while he's in Indonesia in Jakarta and an open air forum as well. But the message here is not just about Islam, which is crucial, but it's about Indonesia being a multicultural, tolerant society that represent -- has many religions present in a majority Muslim country. And everyone is working together towards common goals.

  • 10:32:46

    REHMAmb. Wendy Sherman, vice chair of the Albright Stonebridge Group. You're listening to "The Diane Rehm Show." And we'll open the phones now, 800-433-8850. We'll go first to Watertown, N.Y. Good morning, Victor. You're on the air.

  • 10:33:10

    VICTORGood morning, Diane. Thanks for taking my call.

  • 10:33:14


  • 10:33:16

    VICTORMy question is, day before yesterday, President Obama rejected the request from Indian side to consider for the UN Security Council membership for India. So my question is, India being the largest democracy in the world, fourth largest economy, third largest military power, and why -- is there any standard for getting into the UN Security Council?

  • 10:33:44

    REHMVictor Cha.

  • 10:33:46

    CHAWell, you know, this is part of the general global agenda of trying to reform these international institutions to reflect the world that we have today and not the world after World War II. And countries like India and Japan have sought seats on the UN Security Council. I mean, I think the problem is not any personal distaste on the part of President Obama. The formulas for trying to reform the UN Security Council are terribly complex, and they require meeting a number of different demands among countries in Africa and other places that are underrepresented on the council. So the problem is that you can never really find a formula that works that doesn't expand the council to, like, 50 members. And I think this is the basic problem, so it's not something specific to this administration. It's a generic problem with regards to the UN Security Council reform.

  • 10:34:34

    KAPLANThe UN Security Council reflects the balance of power at the end of World War II, where you have countries like France and Britain on the council, even though their militaries are being reduced by so much that they are going to be sharing aircraft carriers. Meanwhile, you have not just India but the rise of Indonesia, of South Africa, of other countries, yet a whole middle tier of countries that are -- middle-high tier of countries that are coming up. And then there are other problems with China, which is a permanent member of the Security Council, countenance India being a member of the Security Council. That -- you know, that's unclear at this moment. So, as Victor said, it's a very -- you know, it's a very complex process.

  • 10:35:23

    REHMAll right. To Manchester, N.H. Good morning, Daniel.

  • 10:35:29

    DANIELGood morning, Diane. Thanks for taking my call.

  • 10:35:31


  • 10:35:32

    DANIELI'm in my 70s. I'm a private businessman. The U.S. government, through free trade, gave away over 10 million excellent manufacturing jobs in this country from the 1960s to today. Never mind China. Never mind the Far East or the Near East. Never mind any countries except our own. Immediately enact at least a 20 percent import tariff on everything coming into this country, plus an economic equalization tariff that would create a level playing field. In other words, if Taiwan is 10 percent less -- 90 percent less for their labor than us, then we need a 90 percent import tax, economic equalization tax on everything coming in from Taiwan.

  • 10:36:20

    DANIELAnd use these billions of dollars for our so-called stimulus money to rebuild our own steel mills, our own leather and shoe factories, our own clothing mills, our knitting mills, our electronics business and everything that you people in government gave away. And isn't it ironic that 10 million people lost their manufacturing jobs in this country in my lifetime, and that's exactly the number of people unemployed right now?

  • 10:36:47

    REHMDaniel, thanks for your call. Victor Cha.

  • 10:36:51

    CHAWell, I can certainly empathize with the listener about the loss of American jobs and the high rate of unemployment in the United States today. The only issue with the solution that he proposes is, even if the United States were to do that, the rest of the world is moving in a different direction, which is they're reducing trade barriers, not raising them. If we take again, for example, the U.S.-Korea Free Trade Agreement, one of the big issues it's stuck on is autos -- the ability not to export more U.S. autos to Korea. If we don't have the agreement, European cars, which are now in Korea, are going to be much cheaper. And that already hurts us in terms of competition.

  • 10:37:27

    REHMVictor Cha, Amb. Wendy Sherman, Robert Kaplan, they're here in the studio. We'll take more of your calls, comments when we return.

  • 10:40:03

    REHMOur last caller raised the issue of trade with other countries and that his proposal was we impose a 20 percent tariff on goods coming into this country. Here's an e-mail from Larry in Farmington Hills, Mich. who says, "The U.S.-Korea Free Trade Agreement, in its current form, is a farce and would still allow South Korea to shut out most auto imports. Ford just ran a full-page ad today that states that for every 52 cars Korea ships here, the U.S. can only export one there -- more U.S. exports means reducing our unemployment rate. Will President Obama be firm and get South Korea to open its automotive market?" Wendy Sherman.

  • 10:41:07

    SHERMANWell, I am a very big supporter of us coming to closure on a U.S.-Korea Free Trade Agreement that is fair trade between our two countries. There are two issues, beef and autos. Beef is being worked through. There are teams on both sides working through autos. The president's asked for the proposals by the time he meets President Imam back in Seoul for the G20. I think what will happen is there will have been progress made to, in fact, create a fairer playing field. And then the presidents will have to decide whether it's good enough to get through the U.S. Congress and get the U.S.-Korea Free Trade Agreement passed. What Victor pointed out is quite crucial, which is the European Union now has achieved a free trade agreement with Korea. So we have a very tough choice.

  • 10:42:04


  • 10:42:04

    SHERMANAre we going to cede the playing field to someone else? Are we going to play? I completely understand both that e-mail and the last caller. I think there is a lot of rethinking about manufacturing jobs in the United States.

  • 10:42:18


  • 10:42:20

    SHERMANAnd NAFTA. That, indeed, did we do everything the right way? Did we put all of the protections, not in the protectionist sense of closing our markets, but making sure that we held on to American jobs? Are we, most importantly, building the high value jobs of the future? America is a very innovative entrepreneurial society. It is one of our greatest strengths. And we all understand that the future is green technology. It's high tech. It's nanotech. And are we creating all those high value jobs here for our kids and our grandkids? 'Cause it's not going to be just about the service industries -- it's not even going to be about traditional manufacturing. It's going to be about the new manufacturing, and that's what we have to be focused on.

  • 10:43:06

    CHAYeah, I think if we look at any one sector in terms of this free trade agreement, I mean, you can find problems. Autos is clearly one of them. Part of the problem is structural. I mean, the Korean market for autos, any autos, are only 40 million people, you know, versus the United States at 237 million people. So naturally they're going to buy fewer automobiles. But in the broader scheme of things, you know, these free trade agreements open up and create new jobs in the United States, not necessarily in manufacturing in some of these areas but in areas like service sectors, and as Wendy talked about, in future technologies. This is where the future is in terms of the economy.

  • 10:43:44

    CHAJust to give one very specific example of a dynamic that Wendy raised -- you know, are you going to play or are you just going to sit on the sidelines? This EU-Korea Free Trade Agreement is basically going to reduce the price of a BMW in South Korea by $17,000 and a Mercedes-Benz by $7,000. So if American autos want to be competitive in Korea, we're not going to be competitive by not playing...

  • 10:44:07


  • 10:44:08 the free trade field.

  • 10:44:09

    REHMI want to go back for a moment to China. Robert Kaplan, what can the president of the United States do to encourage China to be more of a consumptive player as opposed to completely an export player?

  • 10:44:33

    KAPLANWell, you know, it's in the mix of general Chinese-American relations, you know, in terms of how he handles this. In terms of -- you know, what he can do is...

  • 10:44:50

    REHMWhat can he do? What tools does he have?

  • 10:44:54

    SHERMANHe -- part of what Secretary Geithner attempted to do with the recent meeting is to try to take the focus just off the currency valuation, which was becoming a very neuralgic issue...

  • 10:45:07

    REHMRight, right.

  • 10:45:07

    SHERMAN...and a very political issue, and broaden it out to talk about every country has to look at how they deal with their trade imbalances. And we have to have a global system so that you're dealing with both the surplus side and the deficit side. They are an array of tools. Currency valuation is a crucial tool, and we will keep pressing China to do that. We also have talked to them about consumption -- export versus imports. We have imbalances in our own country. We have to be greater savers, less consumers, make sure we have import-export balance right in our own country. So he tried to broaden out the discussion, take out the neuralgia, and, in fact, it is in the Chinese leadership's interest to create a different kind of society. Or they will not be able to manage their enormous population and their growing middle class.

  • 10:45:57

    KAPLANYeah, also we've had -- we've seen the start, the nascent start of a labor movement in China. Through all these strikes, China is -- China has a large number of strikes that go unreported throughout the country. And this start of a nascent labor movement can lead, ultimately, to rising prices of goods. You know, cheap Chinese goods in America may not be so cheap in America and around the world so much as China's society as a whole reforms in this. You know, China incorporated, so to speak, has been built to a certain degree on cheap labor, but that's not going to last forever.

  • 10:46:41

    REHMAll right. To Charlottesville, Va. Good morning, John.

  • 10:46:47

    JOHNGood morning, Diane. Thanks for taking my call.

  • 10:46:49


  • 10:46:50

    JOHNMy question is for Robert Kaplan. I'm a big fan. I would heartily recommend his books and articles to your listeners. I -- my question is kind of a little bit esoteric. But I wanted ask Mr. Kaplan, to what extent Samuel Huntington's ideas underpins his own and also, to what extent he thinks Huntington has it in his ideas? He's a political science professor at Harvard, recently passed away. Are his ideas still influencing the state department and high political levels in the U.S.?

  • 10:47:26

    KAPLANI would just say, if you re-read Professor Huntington's book of 1996, "The Clash of Civilization and the Remaking of World Order" and his article of the same name in 1993, it's very -- it's impressively prescient, because he talks about -- and this was before the U.S.-China relationship was such an obsession with Americans, with American policy elites. He talks about that relationship in those -- in that article, in that book as a coming relationship, as the great rise of China. The real lesson of that -- of his theory "The Clash of Civilizations" was the gradual decline of the West and the rise of Asia. You know, that's where his theory ends up. It's not where it starts, but it's where it ends. And so it's still very worthwhile to read.

  • 10:48:21

    REHMAnd taking it from there, how do you, having just written this new book titled "Monsoon: The Indian Ocean and the Future of American Power," how do you see the rise there and its effects on American power?

  • 10:48:44

    KAPLANThe Chinese are at pains to have their rise seen as benevolent, non-hegemonic. It's why they're building ports throughout the Indian Ocean but don't want to make them naval bases 'cause that would be too provocative to India. So China is basically building. If you look at their port projects, not just in the Indian Ocean but in Europe, in Africa, elsewhere, they're building the 21st century equivalent of a 19th century British trading empire.

  • 10:49:17


  • 10:49:18

    KAPLANAnd we see -- and what -- this presents the United States, actually, with an opportunity because all these nations, from Japan to India to South Korea to Vietnam, will require us as an indispensable -- in former Secretary of State Albright's word -- an indispensable balancing power to help manage the rise of China.

  • 10:49:43

    REHMNow, consider the political ads we've seen the last few weeks, people speaking in Chinese in a Chinese conference subtitled, and in the end sort of, we're going to own the United States. Talk about provocative, Victor Cha.

  • 10:50:10

    CHAYeah, well, I mean, this -- I actually saw that for the first time the other night. It surprised me. And this, I think, speaks to what Wendy was mentioning earlier about how China has become a much bigger issue in this last election than we've seen in quite some time. You -- Diane, you were talking earlier about the levers that we have on China. The popular perception is that China has levers on us because they own so much of our debt, but that really isn't a lever in many ways. Because if China ever threatened or actually tried to dump U.S. treasuries, it would have as devastating an impact on their economy as it would on ours. So rather than China owning us, it's really much more of a mutual hostage situation.

  • 10:50:47

    CHAThe other thing is that while China certainly owns a lot of our debt -- and that's what's in the newspapers -- the European Union also owns more of our debt than China does, as well as countries like Japan and others. So it's -- there is a perception issue here, but the main point is that this is really not a lever for China as much as the media likes to make it out to be.

  • 10:51:06

    REHMI still want to go back to that question of how the president encourages China to be more of a consuming nation than an exporting nation. Wendy.

  • 10:51:20

    SHERMANI think some of this is going to happen because in the growth and development of a country, one has to find that imbalance or you face one and/or the other -- hyperinflation or hyper-deflation. And China is really quite focused on the succession that's coming in 2012 when they get to their new five-year plan and their new Chinese leadership. Over the next two years, their first, second, third, fourth, fifth, sixth, seventh, eighth, ninth priority is internal stability.

  • 10:51:50


  • 10:51:50

    SHERMANAnd back to Robert's point a few minutes ago on rising wages, if they see that they may have internal tensions, they will let wages rise. They will insist that wages rise. They will do whatever they need to do to increase that stability. Chinese growing middle class, consumer class really wants products from around the world. They're willing to pay for them. The Chinese are willing to raise wages to make sure that over the next two years stability ensues.

  • 10:52:21

    KAPLANYeah -- just to quickly punctuate Wendy's point -- one of the indirect ways you encourage it is by human rights, by -- you know, by an emphasis on human rights and more opening up of the system because it's the system...

  • 10:52:34

    REHMBut how likely are they to respond? They've got the wife of the Nobel Prize winner under house arrest.

  • 10:52:44

    KAPLANYou have to keep pressing the issue, Diane, because the more that China opens -- and it won't be like fast-forward democracy like we saw in Russia which had bad effects. But the party itself may be split, you know, kind of forming into various factions. The more that China opens, the more its people will want and demand a better way of life, which means more consumption.

  • 10:53:10

    REHMRobert Kaplan, he's author of "Monsoon: The Indian Ocean and the Future of American Power." And you're listening to "The Diane Rehm Show." And finally, to Birmingham, Ala. Good morning, Wendy. You're on the air.

  • 10:53:29

    WENDYGood morning.

  • 10:53:30


  • 10:53:30

    WENDYGood morning. Thank you for taking my call.

  • 10:53:32


  • 10:53:33

    WENDYWell, we tend to view dominant cultures and societies as being able to teach smaller countries something. And it was discussed earlier that Indonesia is a democracy, and it's a country that is primarily Muslim. Yet it tolerates many religions. How can President Obama pass along what this country -- what we can learn from (word?) system and also from the emerging market without not appearing too un-American? I live in a very conservative part of the country, and I am so tired of hearing how un-American or how sympathetic President Obama is to other cultures when, in fact, he's truly trying to be a diplomat, I believe. But, I mean, he has to be a diplomat. So how can President Obama pass along what we can learn from Indonesian systems and other emerging markets?

  • 10:54:27

    REHMInteresting. Wendy Sherman.

  • 10:54:29

    SHERMANYou know, I think the caller makes a very important point. We are living in very insecure times. People have enormous anxiety in our country because they don't have jobs, because they don't see a future for themselves or for their kids. And that always makes, I think, most of us sort of retreat from the world because we're -- takes all of our energy just to take care of our day-to-day lives. But, in fact, I think this is a country that was built on tolerance. The United States of America, it was built on encouraging everybody's talents to come to the table. So in many ways we are, in our history, the example of what you're speaking of. And I think drawing the parallels to our own history, our own example with what other people are trying to do around the world is a mutually reinforcing process and why trips like these are important.

  • 10:55:20

    REHMHere's another message from Facebook. Ryan says, "I think President Obama should focus on trying to fix the issues that China is causing by fixing their currency. If they shifted that policy, we would see lots more products leaving our country than we would see entering our country from other places." Victor Cha, how much chance do you see of that happening?

  • 10:55:56

    CHAWell, I -- it's a good question. I think the caller makes the right point. How much of a huge change we'll see from China in terms of their currency? I'm not very optimistic at this point. I mean, there's a ritual that has taken place with China in which we complain about their currency, and they make token movements, appreciations of their currency, in advance of big meetings to take the pressure off. And that's certainly what they've done in advance of the G20 and APEC meetings. I think the broader problem, though, is -- and Bob referred to it earlier -- is that the difference between the United States and China is that the United States exercises global leadership and it tries to provide for the collective goods of the international system. China is a rising power, but it's still watching out only for itself.

  • 10:56:39


  • 10:56:39

    CHAAnd it's in part because it's a rising power, but it's still not a rich country. I mean, $3,700 per capita income versus $47,000 in the U.S. is still a poor country. But this is the dilemma we face. They're a big country, and what they do influence is the markets. But they still don't have that leadership quality to them.

  • 10:56:57

    KAPLANI think people -- Americans increasingly want some quick fix with China as if -- how do we solve this problem? What they don't seem to realize is precisely because China is rising as a great power, there's never ever going to be a complete fix. It's a process that we'll continue working on in a bilateral relationship that will go on for decades and which will define the global order.

  • 10:57:25

    REHMRobert Kaplan, Amb. Wendy Sherman, Victor Cha, thank you all so much. Thanks for listening. I'll be in Boston tomorrow at WGBH. I'll be back with you on Monday. Have a great weekend. I'm Diane Rehm.

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