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Friday, November 07, 2003

Coming in from the Cold

This is my OP-Ed today from Living in China:

Well it's Friday, and it's been a fairly long week, so I'll be off after this till Monday. Still, since its better to sign-off with a bang than a whimper, I'll lace this post with a whiff of contoversy. First through the door is US economist Brad Delong, who is probably pretty well known to you regular blog readers as the editor of Semi Daily Journal . Now Brad had a piece yesterday where he takes to task Aaron Friedberg of the US Vice President's office, where he is Deputy National Security Adviser and Director of Policy Planning, for not being too impressed with the benefits which might accrue "from peace, prosperity, and trade", nor with the ambition of making "the Chinese more like us by maximizing economic, social, cultural, and political contact."

Now Brad undoubtedly has a point here. US China policy since the Nixon-Kissinger era has definitely been centred on bringing the giant panda in from the cold. I have no doubt that Brad's heart is in the right place, but equally I have no doubt that he dismisses far too easily Friedberg's problem. The US - as distinct from the EU - has made a strong game-play of the use of military force in conflict resolution. It is natural that others might be tempted to respond in kind. So when Friedberg says:

According to advocates of "engagement" with the PRC, international trade and investment will fuel economic growth, economic growth will speed democratization, and a democratic China will be far less likely to use force or threats against other democracies, including the United States. It is... possible that... [a] richer China will also become... more benign. But... this may not happen... the United States will be faced with a challenge with which it has not had to cope in over a century: a strategic rival that is economically and technologically dynamic... whose total output may come eventually to approach America's own...

...the sheer size of the potential Chinese market has also helped to create powerful business lobbies favoring... the PRC... these groups can be expected to pressure their own governments in favor of policies that happen also to be in Beijing's interest.... The activities of pro-PRC lobbying groups may be perfectly legitimate and predictable; but... they... dull the reactions and limit the strategic repertory of governments. These effects have been especially pronounced in the United States...

...trade with China will continue to exercise its muffling influence on American strategy...

I think he is to be taken seriously. The global dominance of the US may well be challenged (and not just by China, but also by India). Stories are not always guaranteed to have happy endings, and we should be aware of this.

Where Brad is right I feel is in the remedy: there is no alternative to trying to tame the giant. What he argues is this:

To point out that rich and stable democracies are relatively peaceful, that it is thus in the U.S.'s interest to try to make China as rich as possible, as peaceful as possible and as democratic as possible as quickly as possible, and that the U.S. has no more need to be "master" in Asia than Britain, France, or Germany has to be "master" in Europe--empire-builders like Aaron Friedberg dismiss such points of view as naive, lilly-livered, and foolish.

I, by contrast, see Aaron Friedberg's position as poorly thought-out and analytically badly flawed. Perhaps the most powerful and important of the many reasons we won the Cold War was that we regarded western Europe as a region to be strengthened and developed, rather than an area in which we needed to remain "master."

Sticking, for the moment, to the same theme, US based Indian blogger Reuben Abraham has been talking about similar topics. Apart from noting that the Chinese govt seems determined to come up with a national standard for Linux, he goes on to reply to comments posters Stephen Miller and Laurence Kelly who argue, a propos the China space programme that:

Hmmm. Well, I do agree that the Economist's supercilious tone is annoying at times. And the remark was a little rude. But the point behind it seems to contain a germ of truth: namely, that countries with the luxury to pursue expensive vanity projects like space programs perhaps are not the best candidates to receive aid from the international bodies set up to help the very poorest. Hard to argue that, for example, Mali or Haiti or Laos is not closer to the indended type of government and population for whom the WB etc. were created, and for which rpurposes many countries, not only rich ones, donate funds, Maybe the uneven distribution of growth and wealth in China causes this sort of developmental cognitive dissonance; maybe it's that a one-party state can allocate resources to that kind of thing, through command-economic decisions, of a scale that would be associated with much higher GDP incomes in free economies. (How rich was the USSR in 1957, anyway?)............
Stephen Miller

China cries "Poor!" in begging for, e.g., "developing nation" status in entering the WTO. Using this ploy, it is devastating the manufacturing base of countries who pay a living wage (as opposed to China's 20 to 50 cents an hour --"no uninons, please, or you go straight to our good old gulag!"). Grow up -- both you, and your China. China and its 20 to 50-penny manufacturing wage (often as much as a100 to 1 wage advantage over western "competitors") is laughing all the way to the bank as it cleans the clock of the naive "developed nations". And, "Conquering space!" on the side (on the side, and on our money, as we turn over manufacturing to the 50-centers).

I say, stick a wage-based tariff on the dirt-cheap Chinese labor -- and let's see the growth rate in real competition. But, China has its defenders (for some bizarre reason), so ... "Let the clock-clean
Laurence Kelly

and Rueben replies:

Where to start? What exactly is the developing nation status for entering th WTO? And what is a developing nation supposed to call itself if it is one? Does Mr. Kelly have a clue about what living wages are in China? Why is he comparing living wages in China with living wages in the U.S.? Clearly, he has no idea about comparative advantage or competition, for that matter. Needless to say, he doesnt seem to understand what sticking tariffs onto Chinese imports would do to prices at Wal-Mart.

Normally, I would let this sort of tripe be. But this anti-China nonsense (of the sort Mr. Kelly spouts) has been appearing everywhere in the media and I figured perhaps I should highlight it, especially for the benefit of non-american readers who probably have no idea about the protectionist sentiment that's becoming fashionable in the U.S.

If Mr. Kelly and his ilk are serious about educating themselves beyond Gephardt-ian rhetoric (common world-wide minimum wage etc), they should read this piece by Andy Xie or this one by Mark Clifford.

OK, that's enough for this week: I'm off to the beach, even if it is a bit cold at this time of year. Next week I will try and bring you some more from the pro-and-anti China economy debate.

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