China: Already on Top?

Posted January 7, 2010

Categories: Articles, China

“The Communists have taken over the World Bank!”

So far, this phrase hasn’t appeared on Glenn Beck’s infamous chalkboard. I’m still waiting for Beck or Rush Limbaugh to make a big stink that the World Bank’s chief economist is from Mainland China. Justin Yifu Lin has been in his position for more than two years and the right-wing crazies have been largely silent. Maybe they’re too busy attacking their fantasy version of President Barack Obama – the Muslim/elitist/socialist-in-chief – to pay much attention to what’s going on in the real world.

Of course, Justin Yifu Lin is not your typical communist. Born in Taiwan, he was an outspoken nationalist in his student days. That was before he defected to the Mainland in 1979. In the 1980s, he earned his PhD in economics from the University of Chicago and then studied at Yale. On his return with the first such degree granted to a Chinese national since the Cultural Revolution, he was instrumental in guiding the market transformation of the Chinese economy. Now he’s based in Washington, DC, where he’s applying his experiences to transitional economies around the world.

Lin is an advocate of China’s “tinkering gradualist approach.” He has criticized the IMF’s shock therapy approach as “shock without therapy.” And he’s agnostic about what kind of government is best for implementing economic reform. “I think that we do not know what kind of governance structure is the best in the world,” he told Evan Osnos of The New Yorker. “If you look into Japan, and also Germany and the U.S., they are all so different.

The coverage of Lin’s appointment in The New York Times and The Weekly Standard stressed that Lin was the first chief economist not from Europe or the United States. He was also the first appointment from a “developing country” (this word choice seems odd: if the world’s second largest economy is a “developing” country, then perhaps we’ve outgrown this particular nomenclature). But the decided lack of controversy surrounding Lin’s installation at the World Bank suggests that an even more radical transformation has taken place. China has become such an indispensable world power that its penetration of the top levels of international financial institutions is, basically, a non-story.

It gets more interesting. Earlier this month, Forbes magazine released its list of the most powerful people on the planet. At the top wasn’t Bill Gates or the Google boys or even Obama (who was head of the class last year). It was Chinese leader Hu Jintao. “Unlike Western counterparts, Hu can divert rivers, build cities, jail dissidents and censor Internet without meddling from pesky bureaucrats, courts,” observed Forbes wistfully. For all its criticism of big government, the Forbes crew clearly yearns for a leader with a firm hand.

China’s international influence is measured not only by its presence – in the World Bank, on the Forbes list – but also by its absence. Obama recently toured Asia in a sweeping arc around China’s borders to India, Indonesia, South Korea, and Japan. The agenda was all too transparent: encourage our friends to buy weapons, sign up for missile defense, and keep an eye out for a restive China. Loose talk of China’s ambitions for a blue-water navy has encouraged Asian allies to huddle closer and boost military spending, although China’s naval intentions are more likely defensive, as Foreign Policy In Focus (FPIF) contributor Greg Chaffin points out in a Focal Points blog post. Meanwhile, Washington cozies up to Russia with a new plan to cooperate on a system to protect against long-range missiles, which conspicuously leaves China out in the cold.

Still, China is too important to ignore, so the Obama administration is trying to have it both ways. The United States, I write in With a Lot of Help from Our Friends, “has pushed through a large arms deal with Taipei but also restarted military dialogue with Beijing (China cancelled military exchanges in response to the Taiwan deal) and possibly space cooperation as well. The administration has intervened in the South China Sea dispute but also indicated that it might lift the 21-year-old arms embargo by selling C-130 transport planes to Beijing. The United States realizes that it needs China – to influence North Korea, to maintain economic growth, to balance Russia and India and even Iran.”

This have-it-both-ways attitude extends to the global economy. In Seoul at the G20 summit, the United States failed to force China to raise the value of the yuan or to agree to limits on trade surpluses and deficits. “The artificial setting of a numerical target cannot but remind us of the days of a planned economy,” said China’s top negotiator at the G20, tweaking his capitalist interlocutors. At the same time, Washington can’t afford to alienate the largest holder of U.S. treasury bonds. Any serious attempt to pull the global economy out of its rut must involve China, if not as a partner than at least as a willing participant. This need for Chinese support extends to the key demands of economic justice activists, namely a financial speculation tax and controls on excessive speculation in commodity markets, which FPIF guest columnist Sarah Anderson spells out in Fighting Finance from Below.

So, like Sarah Palin, China is suddenly everywhere. It’s just a matter of time before Hu Jintao will have his own reality show (Hu Jintao’s China) or appear on Dancing with the Stars to whirl Snooki around in a foxtrot. And when that happens, it won’t seem out of the ordinary. That’s the true mark of hegemony: to slip into power by invitation not intervention. In the end, the strategic competitors simply shake their heads. “China,” they’ll say, “Can’t live with it, can’t live without it.”

Conflict in Korea

North Korea, according to news reports, shelled a South Korean island today, and South Korea responded with 80 shells of its own. Prior to the attack, South Korea conducted a test firing near the North Korean coast, but denies that any shells passed over the disputed maritime border. However, the risk of mistakes – and misperceptions – in such a contested area is very high.

Tensions were already running high on the peninsula. North Korea recently revealed to a visiting U.S. delegation its brand new uranium enrichment facility and a rudimentary light-water reactor. This was Pyongyang’s way of saying that sanctions haven’t done anything to retard its nuclear development. As for the timing, North Korea was clearly impatient with the Obama administration’s policy of “strategic patience.”

The nuclear revelations, by themselves, do not change the geopolitical dynamic. According to Siegfried Hecker, the former director of Los Alamos National Laboratory who toured the facilities, “I believe that although this peaceful program can be diverted to military ends, the current revelations do not fundamentally change the security calculus of the United States or its allies at this time. Pyongyang has gained significant political leverage already from the few plutonium bombs they have.”

As two other members of the delegation Robert Carlin and John Lewis point out in The Washington Post, the United States should not dismiss negotiations with North Korea or simply let South Korea or Japan take the lead. “What is needed, right away, is a thorough review of the past 16 years of engagement with Pyongyang, analysis of the facts as we best know them and an honest assessment of the options,” they write. Unfortunately, even before the artillery exchange, the United States rejected the idea of restarting negotiations and was cool to Pyongyang’s proposal to transfer its nuclear rods to a third country in exchange for a U.S. recommitment to a declaration of no hostile intent.

For the moment, though, the deterioration of relations between North and South will likely dominate the news for a while. The artillery attack reverses what had been a very, very modest warming in north-south relations. In Seoul last week, I heard rumors that the Lee Myung Bak administration was thinking about pursuing a summit with North Korea next year. And the South Korean government had slowly backed away from its linking of nuclear negotiations to its demands for an apology for a ship, the Cheonan, that Seoul has accused Pyongyang of sinking back in March.

The Cheonan story, meanwhile, refuses to go away. In September, the South Korean government issued its full report on the Cheonan incident, which put the blame squarely on a North Korean torpedo. Rather than dispelling any lingering doubts, however, the report generated more criticism. “There are several sources of public skepticism, particularly from the scientific community,” write FPIF contributors Peter Certo, Greg Chaffin, and Hye-Eun Kim in The Cheonan Incident. “Furthermore, the secretive attitude adopted by the Lee government, its heavy-handed approach in dealing with the incident, and its reluctance to address or even allow for questions or concerns have served to fuel skepticism and allowed for conspiracy theories to abound.” Last week, the state-run TV station KBS aired a documentary that refuted several key elements of the South Korean report, including evidence that the tell-tale torpedo parts had been in the ocean, and not part of a recent explosion.

Let’s hope that both North and South Korea step back from the brink. As I wrote in 2003, “The Korean War was a cataclysm, a terrible outpouring of blood and destruction. The 1953 armistice that halted the war may well have been only a provisional peace. Fifty years later, nearly two million soldiers face off across the DMZ, weapons of mass destruction abound on both sides, and military forces in the region are at hair-trigger readiness. Unless North Korea and the United States embark on serious negotiations rather than dead-end talks, a bigger, badder sequel to the 1950 conflict will be the unintended consequence. After the Deluge, as the old spiritual put it, ‘God gave Noah the rainbow sign. No more water, the fire next time.’”

Blowback from Sanctions

Meanwhile, the other nuclear crisis with Iran continues as the major powers prepare for one more round of negotiations on December 5. Tehran insists on its right to enrich uranium. As long as Europe and the United States insist on a policy of isolation, then Tehran will cultivate other friends – such as Venezuela and Brazil. The United States is “spending considerable political capital in convincing its main European allies to isolate Iran,” writes FPIF contributor Richard Javad Heydarian in Iran’s Adventures in Latin America. “This diplomatic effort has the unintended consequence of forcing Iran to find friends elsewhere. In the end, then, the United States is in part responsible for Iran showing up in its backyard and challenging the Monroe Doctrine.”

Djamel Ameziane is an inmate at Guantánamo. Born in Algeria, he worked in Austria and Canada before going to Afghanistan when his claim for political asylum was denied. His timing wasn’t so good, since he arrived shortly before the United States launched the war against the Taliban in October 2001. “Ameziane has never been charged with a crime,” writes FPIF columnist Frida Berrigan in Trapped by Guantanamo. “There is no credible evidence that he took up arms against the United States or posed a threat to this country. He remains at Guantánamo because the United States cannot send him back to Algeria and has not found a third country to host him.”

This week, we have reviews of two books that look at U.S. empire. Steven Weber and Bruce W. Jentleson challenge the unilateralism and unipolarism of U.S. foreign policy in their new book The End of Arrogance. “Shedding American exceptionalism is the only way to remain relevant on a global stage,” writes FPIF contributor Samer Araabi in his review. “Otherwise, we may soon find ourselves on the receiving end of something arguably worse than international mistrust: global indifference.”

FPIF contributor Caleb Rossiter, meanwhile, examines how we can roll back U.S. power projection. “The Turkey and the Eagle is a sweeping, detailed, and at times eccentric exposition on the imperative of changing America’s global role,” FPIF contributor Peter Certo writes in his review. “Properly read, it can change the way we talk about empire and how we go about dismantling it.”

Finally, on a sad note, FPIF friend and contributor Chalmers Johnson passed away this week. As I write in the FPIF blog, “Chalmers Johnson explained the how and why of U.S. empire, and for that we all owe him an enormous debt of gratitude. It is a shame that he did not live long enough to see that empire dismantled. But in the work we do toward that goal, we honor his name and his work.”

FPIF, November 23, 2010

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