Monday, December 06, 2004

Dan Blumenthal describes a 'Unhelpful China'


He's got some good points, though I think the Bush administration already sees China as a strategic competitor. That was one of Bush's first policy statements after 2000. That Bush might draw a happy face on the relationship doesn't necessarily change that.

My take on China is this: they have followed the vision of Deng Xiaoping who said China must open markets, allow some capitalism and avoid confrontation with the U.S. After the century they've had, living under Mao for decades, and now feeling the first traces of prosperity, that probably sounds like sage advice. I seriously doubt China would resort to military force to keep their N. Korean buffer. I'm not sure how successful we've been pushing China on N. Korea, but I suspect our diplomacy has been more fruitful that Blumenthal thinks. Taiwan is a different story. China seems intent on absorbing them. Our position is pretty clear: Taiwan and the mainland will re-unite when they agree two. In other words, not while the mainland is communist. A classic standoff, but one that China would retaliate to any undue provocation.

China's economy is the worrisome part. Much of their growth is because of artificially cheap labor (a result of the yuan fixed to the dollar, making it undervalued and artificially stable), a herd mentality by foreign investors that have convinced themselves that China is the place to be, and mammoth government projects like most of the building in Pu Dong or the Three Gorges dam. Back in 2001, you couldn't sling a dead cat without hitting some infrastructure work along a road way or the demolition of old neighborhoods to make room for industrial complexes. On the one hand, it is good that the Chinese economy is growing. However, their growth is in a race with their unemployment. Their banking system is corrupt and favors pro-government business. The projects that the government oversees are woefully inefficient and costly. Capitalism has not let the people down, but government control has. Yet, the young people are largely hyper nationalists. When the economy jumps the rails, it won't be the Party that they blame, but the U.S. But that's a ways off. Until then, we should pressure them on human rights, show some resolve to defend Taiwan, urge democracy and reform, and get them to take off their training wheels.

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