Why Chinese Think Geithner is Wet Behind the Ears

Kindred blogger Kindred raises some interesting points in his most recent posts at IPE@UNC. First, despite being an IPE guy, he comes to the defense of economists receiving a thrashing at the hands of one Will Wilkinson. Even within IPE, readers should note that there are clear differences among practitioners--especially across a transatlantic divide. Benjamin Cohen has come out with an article in the Review of International Political Economy asking why American and British IPE are so different. (There's a non-subscription version, too.) Having studied IPE in both educational systems, I vouch for Cohen's idea that US IPE is more prone to capture by "economic imperialism." At the same time, British IPE is more open to heterodox approaches such as Marxist ones that are a no-no in a country whose government once convened something called the House Un-American Activities Committee. What US practitioners rightly point out is that British IPE is weak on quantitative stuff, though I try to remedy this failing by presenting you with numbers to back my assertions if possible--stuff I largely learned Stateside.

This brings me to the next and main discussion here. Kindred dismisses the assertion that there has been a change of tone in US-China relations. What of course prompted this was incoming US Treasury Secretary Timothy Geithner relaying President Obama's conviction that China was manipulating its currency. If one were to take an economistic approach here, then nothing has changed. The US is merely calling a spade a spade with regard to currency manipulation--something that many commentators acknowledge, although opinions differ widely.

However, if you were to take a more nuanced approach, Geithner made a very basic no-no. In the eyes of the Chinese, (perhaps innocently) saying what his boss thought marked Geithner out as the proverbial "ugly American"--loud, brash, and lacking in cultural sophistication. The reason is something standard-issue economists would probably gloss over but anyone who's taken a course in cross-cultural communication should be aware of. In Chinese culture, face is a very important concept. Even if stating what's patently obvious to most observers, many Chinese were jarred by the severity of the dressing down as if it were an assault on national pride. I was struck by this excerpt from a news article from a recent post:

Mr Geithner’s comments were also criticised in strong terms by prominent academics in China. “This is a sign of his immaturity and his inability to do such an important job,” said Shen Dingli, professor of American studies at Fudan University.

Even something as plebeian as a Wikipedia entry will tell you why I expected the Chinese to react strongly immediately after Geithner's faux pas:

Face refers to two separate but related concepts in Chinese social relations. One is mianzi (Chinese: 面子), and the other is lian (Traditional Chinese: 臉, Simplified Chinese: 脸), which are both used commonly in everyday speech rather than in formal writings. Lian is the confidence of society in a person's moral character, while mianzi represents social perceptions of a person's prestige. For a person to maintain face is important with Chinese social relations because face translates into power and influence and affects goodwill...

Notice that directly lying does not cause a loss of face. For example, if a flight is cancelled by an airline, then they may lie that it is merely delayed. Inability to arrange the trip would cause a loss of face, while lying that it is delayed would help to save face. So-called "polite lies" are acceptable.

What The Great Paulsonio understood given his fabled 50+ visits to China as Goldman Sachs chief that his successor at Treasury Geithner doesn't is precisely what's in bold above. Paulson knew better than to pull China's pants down in front of the whole wide world by tagging it a "currency manipulator." Instead, Paulson tried for "currency flexibility" and flattering China by saying it was doing so well that it could accommodate a stronger currency. In his inconsideration of saving the Chinese face, Geithner caused major offense. It's so simple yet so important to the Chinese psyche.

Returning to the idea expressed at the outset, economics would gloss over such details. After all, two Nobel Prize-winning economists came up with the idea of de gustibus non est disputandum, or there's no arguing about tastes (as an aside, the link is appropriately numbered "666"). Unfortunately, such economistic thinking would run roughshod over the very things that have branded Geithner a parvenu in China. In writing this blog, I try to explain why an interdisciplinary toolkit is necessary for analyzing issues in the world economy. Economics is just one of many tools including, in this case, sociology and anthropology.

Here's the thing: if IPE cannot do anything more than regurgitate economistic reasoning--whatever its merits and demerits--why bother with IPE at all? I should trademark a new tagline: The IPE Zone - Not an Economics Retread™ [!]

UPDATE 1: Kindred still thinks I'm making too much of this.
UPDATE 2: A commenter astutely observes that Geithner took up Asian studies at Johns Hopkins. A very strange lapse from TG, indeed.