Sino the Times
China fills the void left by a weakened America.
by Shelton Hull
Thursday, June 23 was a pivotal moment in the recent history of America’s political and pundit class, as it was the first day when the obvious fact of Chinese macro-economic ascendancy was addressed and raised to a higher level of discussion. This comes at the end of a month that began with Massachusetts Governor Mitt Romney — currently the darkest of dark-horse Presidential candidates for 2008 — calling China a “competitive threat” while stumping in New Hampshire. It also included the release of a book by New York Times star columnist Thomas Friedman, The World Is Flat, that states the frankest case for Asia’s bloom with little sympathy for US protectionists.
All that would remain on the periphery of popular consciousness, were it not for the boldest moves yet made by China to fully industrialize their massive country. After Lenovo’s purchase of IBM’s PC division in May, a deal heavily resisted by US interests in and out of government on national security grounds, state-owned firms made bids in consecutive days to buy Maytag and Unocal, the former employer of Afghan Prez Hamid Karzai and a longtime Bush family investment. The latter “unsolicited” bid effectively shanghaied Chevron, which had offered $16.8 billion in cash and stock. The Chinese National Offshore Oil Corporation (CNOOC), offered $18.5 billion, all cash at $67/share.
The NYT‘s report of June 23 dropped on the same day as Federal Reserve chair Alan Greenspan, Treasury Secretary John Snow (ex-CEO of CSX) and other experts went before the Senate Banking Committee to address concerns about these matters. Politicians who rigorously excluded any substantive discussion of China as late as 2004 were now queued up to demagogue the issue — too little, too late. “China must play by the rules,” said Snow, thereby mistakenly implying a) that there are “rules” to predatory capitalism and b) that the US is in a position to mete out punishment for say, outbidding US firms for assets that shouldn’t be for sale.
In reality, there is no way to punish or pressure China economically that wouldn’t have much more severe consequences domestically than abroad. After all, China and its global trading partners, unlike us and ours, are on the same page. The same conservatives who denounce Chinese expansionism today are the same ones who once trumpeted “free trade” and ballyhooed the dismantling of US manufacturing capacity. We were content to ladle out acronyms — MFN, PNTR — back when China’s major export was sweatshop clothes and bootleg DVDs, but their possession of the third-largest computer company and, eventually, the bulk of petroleum reserves in Asia and Africa conjures up fears of a new “yellow menace” among the great-grandsons of gunboat diplomacy.
China: quadruple our population, one-tenth our GDP. Are they making power moves? Yes. Is it a potential problem for the US? Yes. After all these years of “Red China”-this and “Tiananmen Square”-that, one might have expected some praise for China’s bold moves into modernity. What was once among the world’s most closed societies is betting its future on international relations, and the old Communist guard is no more relevant there than Bill Cosby at Freaknik.
As the first writer south of DC to correctly define the dynamics at play, I’m glad to see, finally, some straight talk about America’s response to China’s challenge. But, given the massive Chinese-American community’s long history of contribution to the nation, from the Transcontinental Railroad and opium, to Bruce Lee and Wu-Tang, it makes no sense to blithely and carelessly attack their integrity. They are engaged in a struggle to save millions of their people from the kind of privation that leads so often to violent upheaval. A smooth transition to capitalism means the end of Marx and Marxism forever, which is reason enough to view all this pessimism pessimistically.
Chinese banks have bought trillions in US bonds and currency, using our excess to their advantage, with the predictable result that lazy US financiers have blamed them for the dollar’s decline and corresponding shocks. But the fault lies with the American people, who were only too happy to exploit cheap labor until it became clear that it was us consumers and workers who were being exploited. American jobs get cut, and the people don’t blame Wall Street — they blame Beijing. The best and worst to be said of China’s controllers is that they’re acting more like Americans. Given how we botched the biggest economic boom in history, those might be fighting words.