China the Indispensable?

Posted January 3, 2007

Categories: Articles, China

<p><b>China is everywhere you turn: the label on your sweater, every second item on the shelf at Wal-Mart, the computer on which you read this essay, the weather satellite zapped out of the sky in January by a ballistic missile. Unlike Britney Spears, however, China is not merely ubiquitous. It is an essential part of the international community. </p></b>

 

<p>So, for instance, in the most recent agreement to freeze North Korea’s nuclear program, China proved indispensable as the host and facilitator of the talks. Officials of the U.S. Treasury will readily admit that China’s purchase of bonds is indispensable in keeping the U.S. economy afloat. The representatives of 48 Africa nations, who gathered last fall in Beijing, believe that Chinese investments in the continent are indispensable for economic development. Then there’s China’s rising trade with Latin America, its new activism at the United Nations, and its efforts at regional multilateralism through the Shanghai Cooperation Organization in central Asia. </p>

<p>China: the indispensable nation. But wait, isn’t that America’s role? Bill Clinton used the phrase in his second inaugural in 1997. Madeleine Albright picked up on the refrain, explaining that America is indispensable because “We stand tall. We see further into the future.” </p>

 

<p>Well, America didn’t see very far into the future of Afghanistan or Iraq. We didn’t see into the future of New Orleans, climate change, or global terrorism. If Britney wishes to put her ubiquity to good use, here’s a lyric for her next song about U.S. foreign policy: <i>It doesn’t matter how tall you stand when your head is sunk so deep in sand</i>. </p>

 

<p>China, on the other hand, is putting its experience of drawing up Five Year Plans to good use in charting a future course. Beijing wants nothing less than to occupy the very center of the world economy, as it did from just before Christ’s birth until the early 19th century. As late as 1820, China still commanded the lion’s share of world GDP. As Anders Gunder Frank has suggested, China is in the process of “re-orienting” the global market.<a name=”_ednref1″ href=”#_edn1″>1</a>  Future historians may well look back at the two centuries of transatlantic domination — with all the colonial rapaciousness, world wars, and devastating genocides — as a mere intermission in the larger saga of China’s rise and fall and rise again to superpower status. </p>

 

<h3>Too Big to Fail</h3>

 

<p>Many Americans look across the Pacific at China and see nothing but a vast digestive tract. A billion-plus people are developing quite an appetite: for oil to run their factories, for sheet glass to sheathe their skyscrapers, for grain to feed themselves and their livestock. Behind every recent resource depletion, it seems, lurks a growing Chinese market. Officials in Maryland have scrambled recently to stop the commercial harvest of diamondback turtles because the Chinese market for expensive turtle soup has endangered the population in the Chesapeake Bay. When manhole covers started disappearing from such far-flung places as Chicago and Edinburgh, journalist James Kynge writes, rocketing Chinese demand for metal turned out be the culprit.<a name=”_ednref2″ href=”#_edn2″>2</a> And Africa has become a veritable Home Depot of raw materials for Chinese business. </p>

<p>At the other end of the tract, China is befouling itself with air, water, and soil pollution. Compressing 150 years of Industrial Revolution into mere decades is having an industrial-strength effect on the environment – and not just in China itself. China’s air pollution shows up on the U.S. West Coast, Chinese loggers are leveling hardwood forests in Southeast Asia, and China will shortly surpass the United States as the world’s leading greenhouse gas producer. </p>

<p>Americans, of course, can’t speak from any high moral ground. It takes one to know one. As a longtime consumer of a disproportionate amount of the world resources, the United States is a charter member of the Big Gulp Club. This elite group is as exclusive as the nuclear club, and the planet can’t really handle any new members. </p>

 

<p>But indispensable nations learn quickly that, however sandy the soil on which their foundations lie, size indeed matters. The U.S. government bailed out New York City in 1975, the Chrysler auto company in 1980, and the airline industry in the wake of September 11. The world is currently bailing out the United States and its burn-the-credit-cards mountain of debt. And now China, too, has attained this almost-magical status of too big to fail. </p>

 

<p>Everyone wants China to be big: the foreign investors that dream of huge profits, the Chinese banks that loan only to expanding firms, the Chinese enterprises that increasingly compete internationally, the Chinese leaders who know that only constant growth can sustain their political legitimacy, the American consumers that want more and more, the American government that has to find someone to underwrite its debt. Aside from the acolytes of E. F. Schumacher, the world is the enabler of China’s gigantism. Even the Taiwanese, who have something to be afraid of from big bad Beijing, profit directly from economic growth across the strait. </p>

 

<h3>Running the Numbers</h3>

 

<p>Forget the year of the dog: 2006 was really the year of the dragon. The Chinese economy grew by 10.7 percent. China passed Japan to become the world’s second largest investor in research and development. It passed Mexico to become America’s second largest trade partner. And Beijing became the world’s largest holder of foreign exchange reserves, much of it invested in U.S. treasury bonds. </p>

 

<p>And the U.S. trade imbalance with China keeps reaching new, historic levels: <a href=”http://www.census.gov/foreign-trade/balance/c5700.html#2006” target=”_blank”>>$232 billion</a for 2006. U.S. officials can grumble all they want about barriers to trade, an artificially undervalued currency, low-wage workers, and weak intellectual property protection. Many of these complaints are exaggerated. As the writers of <i>China: The Balance Sheet </i>point out, China dropped its average level of tariffs from 50% in 1982 to under 10% by 2005, Chinese wages are low because productivity is low, and the largest marketplace for counterfeit and pirated goods is eBay (and the U.S. government is doing nothing about it).<a name=”_ednref3″ href=”#_edn3″>3</a>  </p>

 

<p>Other charges, such as the undervalued currency, are accurate. But rare is the invitation to the Big Gulp Club. China, like South Korea or the United States before it, has had to break the rules to get in. </p>

 

<p>It’s one thing to break the economic orthodoxy to leapfrog into the global winner’s circle, but what about all the rules that China seems to be breaking internally? Sometimes it seems as though China is one very big pyramid scam. Every day there is a new story of fraud: 140,000 cartons of 32 varieties of fake cigarettes <a href=”http://english.people.com.cn/english/200003/14/eng20000314N102.html ” target=”_blank”> seized in Taiyuan</a>, 10,000 fake police officers <a href=” http://search.ft.com/nonFtArticle?id=020621000608” target=”_blank”> arrested</a> in Beijing from 1997 to 2002, <a href=” http://www.foodnavigator.com/news/ng.asp?id=51626-china-in-fake ” target=”_blank”> dozens of babies dead</a> after consuming fake milk powder in 2004. According to one of the informants in Sang Ye’s brilliant oral history <i>China Candid</i>, “Counterfeit money is so widespread nowadays that even the hicks with their stalls in the cities have their own ultraviolet-light counterfeit detectors.  The only problem is that a lot of the devices are substandard themselves and often can’t detect fake currency.”<a name=”_ednref4″ href=”#_edn4″>4</a>    </p>

<h3>Some Hard Truths</h3>

<p>The world might prefer to see China as a predominantly soft power, relying on economic influence and flexing its multilateral muscles. “In a short period of time, Beijing has proven that it can shift its foreign policy quickly and woo the world, often focusing on countries America has alienated,” Joshua Kurlantzick writes in his new book <i>Charm Offensive</i>.<a name=”_ednref5″ href=”#_edn5″>5</a>  But China is not Japan of the 1970s and 1980s: a growing economy with a defensive army. Diplomatically adroit and economically powerful, China is not bound by a “peace constitution.” </p>

 

<p>Like all countries, of course, China claims that its military is for defensive purposes only. And it has never demonstrated much in the way of military prowess, getting its nose thwacked by little Vietnam in 1979. The Taiwanese don’t take much solace in that record. </p>

<p>Nor does the United States. “Last month’s antisatellite tests, China’s continued fast-paced military buildup, are less constructive and are not consistent with China’s stated goal of a ‘peaceful rise,’” warns none other than Vice President Dick Cheney. And, indeed, China recently announced an 18% increase in military spending for 2007. U.S. analysts focus on the fact that the increase is the largest in a decade. The Chinese leadership points out that the increase is “quite modest” compared to the spending of other countries. Beijing no doubt has the sharply increasing Pentagon budget in mind as well as Taiwan’s newly announced capacity to strike Shanghai and Hong Kong with missiles. </p>

<p>In general, the Bush administration has been uncharacteristically realistic in its dealings with China. But the history of rising superpowers (Japan, Germany, the United States) is not encouraging. And the United States has not exactly put out the welcome mat for competing hegemons. China and the United States are like two alpha males, one invoking God and the other History as they mark off their territory. </p>

<p>It would seem the height of folly for the United States to contemplate yet another war, particularly with a country that has real, existing nuclear weapons. And yet, the pundits are worried. In <i>China: Fragile Superpower</i>, former Clinton administration official Susan Shirk begins with a scenario in which Washington and Beijing escalate to war over Taiwan.<a name=”_ednref6″ href=”#_edn6″>6</a> And Michael O’Hanlon and Richard Bush devote the entirely of their new book <i>A War Like No Other</i> to imagining the coming conflict with China.<a name=”_ednref7″ href=”#_edn7″>7</a>  </p>

 

<p>This kind of talk drifted to the margins of the policy debate after September 11. But with a growing consensus in the United States to withdraw troops from Iraq and a perception strong among presumed centrists that Washington has ceded too much of the world stage to Beijing, publishers and pundits are anticipating which crisis-driven message the next presidential administration will want to hear. </p>

<h3>How Indispensable? </h3>

<p>Barry Commoner used to speak of how the Pentagon, if it only would invest in solar panels or some other eco-friendly technology, could by its very size paint the market green. So it is with China. If Beijing decides to go eco, imagine the demonstration effect. </p>

 

<p>Just consider <a href=” http://news.independent.co.uk/environment/article2241450.ece ” target=”_blank”> the story of Dongtan</a>. </p>

 

<p>On Chongming Island near Shanghai, China is working with a British engineering group on the largest single building project in the world. The city of Dongtan will house 500,000 people in a car-free environment that produces no greenhouse gasses and recycles virtually everything. The buildings will be energy self-sufficient and made from local materials. Organic farmers on the island will make the city self-sufficient in food. </p>

 

<p>At the moment, Dongtan exists only in the imaginations of the architects and city planners. But it is proof that China is trying to stand taller in order to look further into the future. Perhaps it wants to be more than a huge digestive tract. Perhaps it will be the first country to renounce its membership in the Big Gulp Club. </p>

 

<p>For this to happen, though, the United States and China will have to cooperate. Ronald Reagan once imagined that a space invasion could unite Washington and Moscow against a common threat. So must global warming bring together Washington and Beijing. China in this sense can prove most indispensable by one-upping the Tofflers and tutoring America in futurology. </p>

 

<p>Will the China Century succeed the American Century? Not if the tide keeps rising. In the pitiless gaze of nature, we are all quite dispensable. </p>

FPIF, March 9, 2007

 

 

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