Wednesday, June 22, 2005

China's Looming Threat

Are we funding our own enemies? Both through buying oil from the Saudis and fueling China's growth? If so, what can we do about it?

China's Looming Threat

In China: The Gathering Threat, Menges advocates an immediate end to trade deficits with China to bolster American industry and to aid democratic allies whose economies are also being ravaged in competition with Chinese exports. The gains from trade should be shared between countries who have compatible interests and values; not used to increase the capabilities of rivals. Such a change in U.S. trade policy would also dramatically slow the Chinese economy and discredit the Beijing dictatorship, opening the door for democratic reformers to make their case that China can only progress if it adopts a liberating system of popular government. Menges does not want to fight a war with China, but to promote change in Beijing before the regime thinks it is powerful enough to risk a war. Rapid economic growth under a dictatorship that views the United States as its "main enemy" poses a threat even more potent than the Soviets. Many in the West have naively hoped that this alone would bring about political reform and an eventual move towards democracy. But what has actually transpired is the movement of Beijing from communism to fascism----the use of capitalist energy to fuel the ambitions of a tyrannical government.

The Cold War strategy of containment was based on cutting Moscow off from outside sources of capital, technology and trade until the system collapsed. In stark contrast, China has benefitted from a flood of outside support. Since 1993, the United States alone has given China some $800 billion in hard currency from its expanding trade deficit. The 2005 deficit will likely give Beijing $200 billion more, putting the cumulative total of wealth transferred from America to China at over a trillion dollars. Add to that the surpluses China has run with Europe and Japan, plus foreign investment, World Bank loans and technology transfers, and it is clear that transnational entities are primarily responsible for the rise of Beijing's power. And here is where democracy cuts both ways. Corporate lobbyists work very hard to prevent the U.S. government from taking action to contain or deter Beijing. Chinese strategists assume, writes Menges, "that all private businessmen are self-interested and self-seeking and that they do not consider or care about the broader national or geopolitical consequences of their actions" and that the transnational corporations "will continue to help China accomplish its purposes in the years ahead." It is imperative that in Washington "government officials, not businessmen, decide what is in the broader national interest of the United States." But how to wean politicians from corporate influence (and money) is not an easy task.


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