Frankly, neither the Democrats nor the Republicans often get things right about China. Which is certainly understandable. Most any westerner who claims to get things in China right with any real frequency is someone you should avoid with prejudice if you're in need of truth.
Credibility also has much to do with the confession I must necessarily make: I subscribe to the online editorial pages of the The Wall Street Journal Online, which is about as right as right can get back in the States. I also read it, which is not good for my blood pressure, but being informed in my business is my business. Enough said.
Now I just want you to start reading the unsigned editorial below, which I am reproducing in full due to the subscription issue:
The Long China View How to manage an emerging power without a crisis.
We're often told that Chinese politicians take "the long view." True to form, when Chinese President Hu Jintao meets President Bush today, he'll reportedly give him a copy of Sun Tzu's "Art of War," the centuries-old classic of how to conquer an enemy through craft and cunning. How ironic a gesture that would be, given that the U.S.-China relationship is as friendly as it's been in years, and that America's policy toward China is itself a long-run strategic calculation worthy of Sun Tzu.
Managing the rise of any great power is an enormous foreign-policy challenge that can easily go awry, as the world learned with Germany and Japan. China's transition is complicated by decades of isolation and poverty wrought by Mao, and now by rapid economic growth amid a still authoritarian one-party state. While China's emergence is creating a solid economic partner, it's also empowering a leadership that doesn't always share America's values or interests.
Over several administrations, the U.S. has pursued a two-track strategy of engaging on trade and economics while pushing back on security when China muscles its neighbors or creates other trouble. There have been strains along the way, such as the ill-advised U.S. textile quotas and the occasional foreign-policy dispute. But taking the long view, this strategy has worked well for both countries.
Over the past decade, China's GDP has more than doubled, lifting millions out of poverty and creating, for the first time in centuries, hope for a better future for its 1.3 billion citizens. All of this has been helped by the mainland's steady, if uneven, embrace of international legal and trading rules, which should grease the wheels for more liberalization in the future--and especially for the steady rise of a Chinese middle class.
For America, more efficient Chinese production has slashed the price of consumer goods and created investment opportunities for U.S. companies, which poured more than $15 billion into China in 2004 alone. These U.S. companies then export their goods back to the U.S. or elsewhere around the world. This doesn't merely help China; it makes American companies more competitive. The Chinese government's purchase of U.S. securities has also kept bond yields low, extending the U.S. and world economic expansion.
The hue and cry over America's trade deficit with China is a distraction that masks this broad and beneficial economic relationship. It's also misleading. China runs a trade surplus with America, but it also has a deficit with the rest of Asia. That's because Asian companies that once exported goods directly to the U.S. now send them to Chinese factories for assembly and export. More than half of all Chinese "exports" aren't really "Chinese" at all. And here's a trade statistic you won't hear much about: China's relative share of the U.S. trade deficit is shrinking as wages rise on the mainland and American businesses source cheaper goods from other countries.
That's all news to Capitol Hill, where China bashing is as fashionable as Japan-phobia was 20 years ago. The favorite canard is to claim that China artificially depresses its currency to boost exports. But the truth is that China has merely pegged its exchange rate to the dollar, thus subcontracting its monetary policy out to the Federal Reserve. The real problem is China's retrograde financial system, which is still dominated by political controls.
Yet here, too, there's positive, incremental change. China's central bank announced last week that it would begin easing capital controls. In the long run, freer flows of money should give Chinese consumers and companies more foreign buying power, and help rebalance U.S.-Chinese trade.
The security challenge posed by China's rise is a more difficult matter. The Pentagon estimates that Beijing spends $75 billion to $100 billion annually on defense. This wouldn't be worrying if China was a democracy without larger global ambitions. But Chinese leaders are taking a larger role on the world stage, and not always responsibly. This includes their refusal to join U.S. efforts to pressure North Korea to give up its nuclear ambitions, and only last week blocking sanctions against Sudan's leadership for supporting genocide in Darfur.
Some of this, as in Darfur or cutting deals with Iran, is motivated by what it perceives as economic self-interest. Beijing wants access to energy supplies to fuel continued growth. Yet over time its diplomats need to understand that promoting rogue regimes leads to instability and thus less secure energy supplies. American politicians didn't help on this score by panicking last year when a Chinese company sought to buy one of the smaller American oil companies.
More dangerous are the nationalist passions that sometimes erupt, and which the Communists sometimes pander to as a substitute for their own lack of democratic legitimacy. Talking up "reunification" with Taiwan or posturing menacingly toward Japan are both politically popular in China.
The Clinton Administration did too little to resist these impulses, and it once had to resort to sending a carrier through the Taiwan Strait as China tried to see how far it could really go. The Bush Administration has pushed back harder and more consistently, in particular imposing sanctions on Chinese companies that violate proliferation rules and calling for more transparency on defense spending (even while seeking more useful military-to-military contacts). The U.S. has also been strengthening its alliances with Japan, Australia, and most recently India, as strategic counterweights should Chinese nationalism come to a boil.
The larger strategic bet here is that sooner or later China's economic progress will create the internal conditions for a more democratic regime that will be more stable and less of a potential global rival. This may take many more years, but the seeds of political change are already evident. Rural protests numbered more than 87,000 last year, journalists are staging walkouts to protest censorship and more ordinary Chinese citizens are demanding that the Communist Party uphold their legal rights and respect their right to worship.
Mr. Bush can help that process by prodding Mr. Hu to improve China's disgraceful human rights record. But the changes aren't taking place because the U.S. demands it. China's burgeoning middle class, created and buoyed by economic growth, will drive internal change.
That's why Congressional threats to impose tariffs or brand China a "currency manipulator" are so dangerous. They damage American business interests, and they could also endanger the prosperity that will drive China's political change. For their part, China's leaders believe they can maintain one-party political control even amid all of this dynamic economic growth. History, as Sun Tzu might argue, would suggest they are wrong.
