Listening Post: China Rails at U.S., Seeing Its Own Money at Risk

But China does not have many options beyond wringing its hands. Despite its efforts to steer its economy away from exports and toward domestic demand, China generates billions of dollars of excess cash that it needs to park somewhere. And for all the chaos in Washington, Treasury bonds remain a safer investment than most of the alternatives.

That dependence may help explain the stridency of a recent commentary published by the official Xinhua news agency. It called for the replacement of the dollar as the world’s reserve currency “so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about,” the news agency said, “it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.”

Chinese officials made similar noises five years ago, when the United States was being buffeted by a banking crisis. In March 2008, the leader of China’s central bank, Zhou Xiaochuan, proposed creating a new “supersovereign currency” that would diminish the importance of any individual national currency, not least the dollar.

But economists who follow China’s monetary policy say that while Beijing has somewhat diversified its foreign exchange reserves, it continues to rely heavily on Treasury bills and other American government-backed debt.

Part of the problem is the lack of easy alternatives: euro-denominated debt has been hurt by the European Union’s crisis, except in Germany. Analysts estimate that 60 percent of China’s $3.66 trillion in reserves are still in dollar-denominated debt, though the precise numbers are a secret.

In its commentary, Xinhua embellished its call for a new reserve currency with a scathing indictment of the United States’ broader role in the world, saying that the Obama administration claimed “the moral high ground” while covertly “torturing prisoners of war, slaying civilians in drone attacks and spying on world leaders.”

Edwin M. Truman, an economist and former Treasury Department official, said: “This is political blather. It is a politically defensive response to the choices China has made.”

That does not mean a brush with default will not have long-term damaging consequences for the United States. Even if China continues to buy Treasury bonds, economists said, it may opt for those with shorter maturities, which would drive up long-term interest rates in the United States, hurting home buyers and owners of small businesses.

The sour taste from the budget impasse will also motivate the Chinese to intensify their efforts to deepen their own debt markets. Already, China has negotiated swaps for its currency, the renminbi, with the European Central Bank and other institutions, a step toward making the currency convertible and, someday, a rival to the dollar and euro.

“This gives them a kick in the pants to do it,” said Kenneth S. Rogoff, professor of public policy and economics at Harvard and a former chief economist of the International Monetary Fund.

Any decline in the status of the dollar will be gradual, said Mr. Rogoff, who pointed to the erosion of the British pound sterling over several decades as a precedent. But, he said, “Memories are long: you do this once, you do this twice, and people start to think.”

President Obama appeared to have those long-term effects in mind when he was asked last week what message he had for big bondholders like the Chinese and Japanese. After saying that he had assured world leaders that the United States would continue to pay its bills, he noted that the specter of default, and the fact that the United States had flirted with it once before, could sow lasting doubts overseas.

“We saw what happened in 2011,” Mr. Obama said. “I think the assumption was that the Americans must have learned their lesson, that there would be budget conflicts, but nobody again would threaten the possibility that we would default. And when they hear members of the Senate and members of Congress saying maybe default wouldn’t be that bad, I’ll bet that makes them nervous. It makes me nervous.”

For all the anxiety, though, the prevailing belief overseas is that the United States will avert a default. At last weekend’s meetings of the World Bank and I.M.F. in Washington, Mr. Rogoff said, none of the visiting finance ministers expressed genuine fear that Congress and the White House would not find a way out.

The fiscal deadlock, he said, cast such a long shadow over the gathering that the ministers did not have to dwell on the financial and structural problems in their own economies.

China is a case in point. While the Chinese government has taken steps to shift its economy from a dependence on exports toward one fueled by domestic demand, the progress has been fitful. At the behest of its exporters, it continues to artificially depress its exchange rate, which it does by using its export earnings to buy dollars and other foreign currencies.

In the first quarter of this year, economists say, the Chinese government added more to its foreign exchange reserves than in all of 2012.

On one level, China’s $3.66 trillion hoard is a symbol of its financial might. But on another, it has tied Beijing’s hands. China’s central bank, the People’s Bank of China, cannot dump its Treasury bonds without driving down their value and incurring a painful loss on paper.

“This is certainly a wake-up call for them that holding U.S. government securities is not risk-free,” said Nicholas R. Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics. “What they should be doing is quit adding to their foreign reserves.”

This article has been revised to reflect the following correction:

Correction: October 15, 2013

An earlier version of this article misspelled the name of the president of China’s central bank.  He is Zhou Xiaochuan, not Zhao.

In-House Counsel Say They're Seeing Litigation Increase

More than one-third of general counsel in a recent survey said the number of legal disputes their companies have been involved in increased during the last 12 months. And only 7 percent said they'd seen a decrease.

The Boss: Advisory Board Co.’s Chief, on Seeing Solutions Through

My mother is Dutch, so I didn’t grow up around her family, but my grandfather would often mail me games and puzzles, starting my lifelong love of solving problems. I would figure them out and mail the answers back to him in the Netherlands. He turned 100 last year, and we attended his birthday celebration there.

I started swimming competitively at a young age but still found time, during vacations in high school, to scoop ice cream at a local ice cream parlor, deliver magazines and give swimming lessons.

I attended Princeton and was a member of its swim team. One time, while our team was competing in the N.C.A.A. championships, I substituted as anchor of a relay race for an injured teammate and was almost caught by our opponents. We won, but that close call showed me how discipline and hard work could put you in a position to be lucky.

After graduating with an economics degree in 1992, I spent a year skiing in Colorado. I moved to Crested Butte and got a job in accounting. I spent my paycheck on rent and a ski pass and applied to law schools. The next year, I enrolled at Harvard Law School, where I met my future wife, Jeannie. After I graduated in 1996, I returned to Dallas to be a clerk for a Federal District Court judge. I had always assumed that, like my father, I would practice law, but Jeannie helped me realize that I do best around people, building teams and relationships, rather than being immersed in legal research.

I joined McKinsey & Company in 1997, working on a study of the petroleum industry, first in Dallas and then Houston. In 1999, I transferred with McKinsey to Amsterdam, where Jeannie and I lived for two years. When we returned to the United States in 2001, we moved to Washington, where we have since expanded our family to include three children.

At the Washington office of McKinsey, I continued to work with a range of clients in consumer products and other industries. I loved the problem-solving. But management consultants figure out the solutions and generally leave the implementation to others. I wanted to help drive the solutions through to completion.

In 2003, I joined the Advisory Board Company, working first as its executive director of strategic planning and new product development. I moved up to the company’s business intelligence unit, becoming executive vice president for general management.

Our principal clients are hospitals and health care systems, where we provide strategic guidance and analytic software and help them improve the quality of services they deliver at a lower cost. I was named chief executive in September 2008, just as the financial recession began. Despite that, we have grown steadily and now serve some 3,000 health care institutions. It has been very satisfying to work with health care leaders like the Cleveland Clinic and the Mayo Clinic and to work with other institutions to reduce hospital readmissions at a time when this issue is receiving national attention. We have also been branching out to work with higher-education institutions. We now have about 2,300 employees.

We are also committed to our communities. Staff members last year worked close to 20,000 free hours on community service projects. I serve on the board for Miriam’s Kitchen, a nonprofit organization in Washington that is dedicated to ending chronic homelessness.

New York Area Longshoremen Seeing Jobs Dwindle From Automation

Fifty feet above the deck, crane trolleys flew through the air, their jawlike spreaders plucking boxes from the giant vessel’s hold. As the boxes were lowered onto the wharf, they were gobbled up by a waiting fleet of straddle carriers, busy arachnid vehicles that alerted a computer to the cargo’s arrival, and hauled it off to preordained locations in the yard.

From the asphalt dock, the scene looked a little like the launching pad at Cape Canaveral: a sprawling techno-space dominated by Jurassic-size, seemingly autonomous machines. One astonishing thing about the longshore business these days is how its vast scope — tons of roses from Costa Rica, sneakers from South Korea and children’s clothes from Malaysia are moved each year — requires so few visible human bodies.

Much of the work takes place indoors. Up in a control room, sitting among some peers, a superintendent monitored a digital schematic of the ship, tracking the operation, step by step, in real time. His blinking, changing screen showed the number of containers already unloaded and the number still aboard. It showed how many crane lifts and straddle-carrier moves had been accomplished and, moreover, whether the ratio of moves-per-15-minute-increment was faster, or slower, than the terminal had planned.

Sitting in an office nearby was James Pelliccio, the president of the terminal, one of six such outfits that make up the Port of New York and New Jersey and lie in a loose semicircle south of Manhattan from Newark Bay through the Kill Van Kull to Upper New York Bay. “The way I see it, we’re not really in the transportation business anymore,” Mr. Pelliccio said. “We’re in the information business.”

It was a striking thing to say about the classic New York task of handling seaborne cargo, an activity that, if only in the collective imagination, still remains connected to the grueling leg-and-shoulder work immortalized on film by Marlon Brando. The truth, of course, is that today’s port is driven more by brains than by brawn. Terminal workers speak a florid corporate language of “space optimization” and “key performance indicators.” Longshoremen click computer mice and complain about Microsoft Windows as everyone else in the white-collar world does.

It is partly because of these mechanical and technological advances that the New York area ports are now booming, after the last few difficult years. In 2011, the six terminals in Brooklyn and New Jersey and on Staten Island handled the equivalent of 5.5 million container loads of cargo, more than at any point since New York was founded by the Dutch. The Port Authority of New York and New Jersey estimates that this year will be just as busy, leading one former Port Authority economist to write in August that the city is in “striking distance” of reclaiming from Los Angeles the title of the country’s busiest trade zone.

The history of the region’s port has always been marked by transformation, whether in 1825, when the Erie Canal was opened, allowing trade with the flourishing Midwest; or in 1956, when standardized containers began ushering out the era of winching unevenly shaped break-bulk cargo out of holds.

Those at the port today agree that this is another moment ripe with change, even if they disagree about what that change will bring. The Panama Canal is scheduled to be widened in a few years, and the Port Authority will, by then, have spent the better portion of a $3.8 billion capital investment plan to attract its massive freighters, which will have nearly double the capacity of current cargo ships. Terminal executives, like Mr. Pelliccio, have spent an additional $1 billion on infrastructure improvements, eagerly joining the “arms race” for business out of Panama against rival ports in Long Beach, Calif.; Norfolk, Va.; and Savannah, Ga.

While all this money and frenzied preparation have lent the port an atmosphere of energy, it has also destabilized its inherent balance of forces, as a small group of stakeholders — shipping companies, terminal owners, the Port Authority, the longshoremen’s union — jockeys to promote specific visions of the future. Not surprisingly, these conflicting visions have become a central issue in the bitter contract talks between the union and its local negotiating partner, the New York Shipping Association. The talks fell apart last month and would have resulted in a strike on Oct. 1, right before the Christmas inventory season, if a federal mediator hadn’t gotten both sides to agree to a three-month extension.

Beyond the specifics — the shippers’ frustration, say, with antiquated work rules or the union’s concern with protecting jobs against advancing automation — the debate has pitted self-professed visionary capitalists, who have spent a fortune hoping to seize the next big thing, against a shrinking working class that sees itself as besieged not only by management and an unsympathetic news media, but also by potential obsolescence.

“The longshore community is worried that the next phase of evolution will render them irrelevant,” said Jim Devine, the president of Global Container Terminals on Staten Island, which recently began a $350 million automation project. “In my opinion, that’s not true. While jobs will be lost, new jobs will be created.”

Officials from the International Longshoremen’s Association turned down repeated requests to answer questions for this article. Then again, the facts speak for themselves.

Thirty years ago, there would have been 40 or 50 longshoremen — lashers, hustlers, checkers — working on the CSAV Pyrenees. Now, there were fewer than half that.