Prime Edition

BRAHMA CHELLANEY
STRATEGIC IMPERATIVE

Author, most recently, of Asian Juggernaut: The Rise of China, India and Japan.

Why American policy is hamstrung on China

Chinese President Hu Jintao with U.S. President Barack Obama (FILE)

uccess breeds confidence, and rapid success produces arrogance. That, in a nutshell, is the China problem facing Asian states and the West. Rising economic and military power is emboldening Beijing to pursue a more muscular foreign policy. Having earlier preached the gospel of its "peaceful rise," China is now beginning to take the gloves off, convinced that it has acquired the necessary muscle.

That approach has become more marked since the advent of the global financial crisis in the fall of 2008. China has interpreted that crisis as symbolising both the decline of the Anglo-American brand of capitalism and the weakening of American economic power. That, in turn, has strengthened its twofold belief — that its brand of state-steered capitalism offers a credible alternative, and that its global ascendance is unstoppable.

Chinese analysts have gleefully pointed that after having sung the "liberalise, privatise and let the markets decide" line for long, the United States and Britain took the lead to bail out their troubled financial giants at the first sign of trouble when the global crisis broke out. By contrast, state-driven capitalism has given China economic stability and rapid growth, allowing it to ride out the international crisis. Indeed, despite the perpetual talk of an overheating economy, China's exports and retail sales are soaring and its foreign-exchange hoarding is now approaching $2.5 trillion, even as America's fiscal and trade deficits remain particularly alarming. That has helped reinforce the Chinese elite's faith in the country's fusion of autocratic politics and state capitalism, with the largest companies — all Government-owned — aggressively advancing the national strategy to secure long-term resource supplies from overseas.

The biggest loser from the global financial crisis, in Beijing's view, is Uncle Sam, whose international indebtedness has been steadily increasing. That the US remains dependent on Beijing to buy billions of dollars worth of Treasury bonds every week to finance a yawning budget deficit is a sign of shifting global financial power balance — an advantage China is sure to politically milk in the years ahead. The current spotlight may be on European financial woes. But the bigger picture for Beijing is that America's chronic deficits and indebtedness epitomise its relative decline. Add to the picture the two wars the US is waging overseas — one of which is getting hotter and increasingly appears unwinnable — and what comes to mind is Paul Kennedy's warning of "imperial overstretch".

{
The biggest loser from the global financial crisis, in Beijing's view, is Uncle Sam, whose international indebtedness has been steadily increasing.

Against that background, China's growing assertiveness may not surprise many. Late Chinese leader Deng Xiaoping's advice, "hide your capabilities and bide your time," seems no longer relevant. Today, China is not shy to showcase its military capabilities and assert itself on multiple fronts. As a result, new strains are appearing in China's relationship with the West. The strains came out in the open at the Copenhagen climate-change summit, where China — the world's largest polluter whose carbon emissions are growing at the fastest rate — cleverly deflected pressure by hiding behind small, poor countries and forging a negotiating alliance with three other major developing countries, Brazil, India and South Africa. Since then, continued Chinese practices like manipulating the value of the renminbi, maintaining an abnormally high trade surplus and restricting goods manufactured by foreign companies in China from entering its markets have added to the strains.

Kim Jong-il

<

n political and security issues, China has aroused no less concern. On North Korea, for example, it has frustrated Western and South Korean efforts to penalise Kim Jong-il's regime for the death of 46 South Korean sailors in the sinking of a warship. China seems more determined than ever to prop up the North Korean regime. Even on the Iranian nuclear issue, the Chinese position remains at odds with the Western stance, despite Beijing reluctantly supporting the new UN Security Council resolution on additional sanctions against Tehran. On other issues like Pakistan and Burma, China continues to aggressively push its narrow strategic interests. China's expanding naval role and maritime claims threaten to collide with US interests, including Washington's traditional emphasis on the freedom of the seas.

Yet the plain truth is that America's economic and military travails are crimping its foreign-policy options vis-à-vis China. Washington seems more reluctant than ever to exercise the leverage it still has to make Beijing correct policies that threaten to distort trade, foster huge trade imbalances and spark greater competition for scarce raw materials.

By keeping its currency ridiculously undervalued and flooding the world markets with artificially cheap goods, China runs a predatory trade policy that undercuts manufacturing in the developing world more than in the West. However, by threatening to destabilise the global economy, China threatens Western interests. Furthermore, its efforts to lock up supplies of key resources means it will continue to lend support to renegade regimes.

Still, Washington shies away from exerting any kind of open pressure on Beijing. US policy on China is a study in contrast to the way Washington unabashedly exercised its leverage when another Asian country emerged as a global economic powerhouse. During the 1970s and 1980s, as it rose dramatically to appear like a potential economic peer to the US, Japan kept the yen undervalued and erected hidden barriers to the entry of foreign manufacturers into its market. That resulted in the US piling up pressure on Japan and periodically arm-twisting it to make trade concessions.

Today, the US cannot adopt the same approach against Beijing, largely because China is also a military and political power and Washington depends on Chinese support on a host of international issues. By contrast, Japan has remained just an economic power.

It is significant that China became a global military player before it became a global economic player. China's military-power base was built by Mao Zedong, enabling Deng to single-mindedly focus on rapidly building economic power. Before Deng launched his "four modernisations", China had acquired a global military reach by testing its first intercontinental ballistic missile, the 12,000-kilometre DF-5, and developing a thermonuclear warhead. Without the military security Mao created, it may not have been possible for China to build economic power on the scale it commands today. In fact, the 13-fold expansion of its economy over the past three decades generated even greater resources for China to sharpen its military claws. China's rise thus is as much Mao's handiwork as Deng's. But for Chinese military power, US policy would have treated China as another Japan.

 
Newer | Older

Creative-for-SG


iTv Network : newsX India News Media Academy aaj Samaaj  
  Powered by : Star Infranet