Obama and Hu's Theater of the Absurd - Opinion

NEW YORK (TheStreet) -- President Hu Jintao visits the United States, leader of an industrial juggernaut and heir apparent to American global economic leadership.

China is growing at a breakneck pace, its exporters capturing a lion's share of global markets in strategic industries and its citizens enjoy rising prosperity and economic security.

The United States endures a mediocre growth, its businesses fleeing for Asia and Russia, and its citizens endure falling wages and uncertain futures.

This is not how the historic struggle between socialism and capitalism was to end, but it is how President Obama willed it.

Abroad, the president refuses to defend American capitalism, and at home, he recklessly abuses private enterprise.

International competition between China and the United States is governed by rules -- spelled out by the World Trade Organization and other agreements. President Obama has stood idle while China violates the letter and spirit of those rules to boost exports, restrict imports and enjoy steroidal growth that handicaps U.S.-based businesses and destroys American jobs.

Economists no less prominent than Federal Reserve Chairman Ben Bernanke, Nobel laureate Paul Krugman, and former Assistant Treasury Secretary Fred Bergsten have joined me in enumerating how China's undervalued yuan affords its exports huge subsidies, slows U.S. growth and raises unemployment.

Krugman, Bergsten and I have suggested strategies: an import tax, counterinvention in currency markets by the Treasury and a tax conversion of dollars into yuan.

Last fall at the UN, President Obama exclaimed that if China does not move the U.S. can act unilaterally. Hu called Obama's bluff, and the president flinched.

No surprise: China won't let markets determine the value of the yuan any time soon.

Businesses are leaving the United States because of Chinese procurement regulations. For example, China requires 70% of the parts in turbines purchased by state-owned wind farms be produced domestically, and 80% of China's wind farms are state owned. As China and the United States are the two largest markets for wind turbines, only a fool would not locate production in China to service both markets.

Subsidies and similar problems persist in solar panels and for other critical emerging technologies.