Posted on 11/23/2004 8:41:42 AM PST by Willie Green
For education and discussion only. Not for commercial use.
The scariest ride I have ever had was not at any amusement park. It was the ride I took recently through Shanghai, China from Hongqiao international airport to the Bund area along the Huangpu river front. It was just after dark, and this mammoth city was lit up in an awe-inspiring display the likes of which I had not seen even in Beijing. Shanghai has a skyline that puts New York or Chicago to shame, but then Shanghai has a larger population than New York and Chicago combined. Mile after mile of new high rise office buildings, many boosting the names of the world's major corporations, stun the viewer with their proclamation of wealth and power. Unlike the boxy concrete and steel designs I had seen in Tokyo, the Shanghai skyline is marked by some of the most beautiful urban architecture I had ever seen.
And that was before I saw Pudong, the new economic area on the other side of the river. I took a boat tour down the river to get a better look at this new economic zone for Shanghai development. It is already crammed with office towers and factories along the route to the new Pudong international airport. One impressive complex is the new Krupp steel plant. Another is the Jinmao Tower, the third tallest building in the world. It is an impressive 88-story office complex, but even more noteworthy was the forest of other towers around it. Over half of the high-rise buildings in the Shanghai-Pudong area have been completed in the last five years, and the new structures are much more massive than those that existed before. With the grandiose designs inherent in the development of this area, China is clearly sending a message to the world that it playing for keeps.
American security concerns have been focused on terrorism and the Middle East. This is understandable. Muslim terrorists are plotting more American deaths and must be combated. Yet, terrorism is the weapon of the weak. It cannot change the global balance of power. And Islamic fundamentalism is a backward looking doctrine of social and economic stagnation.
It is the rise of China that poses the greatest challenge to America's position in the world. Endowing an empire of 1.3 billion people with modern industry, technology, and capital gives the authoritarian central government in Beijing immense resources with which to support its ambitions. And what is driving China is the impassioned spirit of nationalism and the limitless energy of capitalism. This combination will rock the world.
Military threats always loom largest in the public mind, and China is creating such a danger. My visits to Beijing and Shanghai were preludes to the real reason for my trip, which was to attend the 5th Aviation and Aerospace Exhibition in Zhuhai. This event is held every two years. It has two purposes: to showcase China's advancements and to attract American and other Western companies who want to sell technology and systems to Beijing.
China's space program was highlighted, from the capsule astronaut Yang Liwei used to orbit the Earth in 2003 to animated projections of how China plans to land on the Moon and exploit its resources. Most of the displays, however, were devoted to Chinese fighters, remotely piloted (unmanned) military aircraft, helicopter gunships, and missiles of all types.
It was clear from the displays that there is no segregation of civilian from military aviation activities. The Chinese aerospace industry is run by the state. Its largest agency is Aviation Industries of China I (AVIC I), whose displays featured, side by side, a variety of civilian airliners and numerous military projects for fighters, bombers, military transports, trainers, and reconnaissance aircraft. Its sister organization, AVIC II, which was split off in 1999 to create competition and improve management, concentrates more on business jets, helicopters, and missiles. One display featured a row of cruise and air-to-air missiles under a large poster of a corporate jet, again showing the guiding Chinese principle of "Jun-min jiehe," which translates as "combine the military and the civil."
This principle was very evident as I strolled through the two halls devoted to American and Western firms trying to sell high-tech products to China. These firms are only supposed to be engaged on the civilian side of Chinese development. But that line cannot be drawn, and it is doubtful those marketing their wares in this booming market care.
Italian Deputy Minister of Defense Salvator Cicu was on hand for the signing of a co-production agreement between Agusta Westland and AVIC II for a new helicopter project. Italy, along with France and Germany, have been pressing the European Union to lift is arms embargo on China. But this embargo has long been undermined by the sale of dual use equipment and technology to Beijing. Helicopters are a prime example. Why else would a defense official be celebrating an allegedly civilian project?
One display showed two identical remotely piloted helicopters. One was configured for crop dusting, the other for military reconnaissance. It didn't take much imagination to consider what the crop duster might also be used for if armed with chemical or biological weapons.
American companies have been just as guilty as European in helping China improve its capabilities. Boeing had a large mural at its booth touting not only how many airliners it had sold to China, but also how much production work it had outsourced to Chinese industry, how many Chinese engineers and technical workers it had trained, and how much it was investing in Chinese research facilities.
It may not come to a military showdown. The economic changes may be so large, that America will simply back down if there is a major confrontation. It is really the economic changes that determine what resources governments can mobilize to advance or protect national interests. Wars, when they occur, test whether the changes have been sufficient to reorder how the world is run and whose decisions matter.
In Shanghai, I stayed at the Broadway Mansions hotel in the Bund. The Bund is the area where the European powers had their offices when they ran China's affairs. The British were the most powerful of the imperialist powers and the Broadway Mansions was built by a British businessman in the 1930s when England was still considered the leading global superpower.
Today, Britain no longer holds that position in the world hierarchy or in Chinese affairs. In 1999, there was no serious thought given in London to holding on to Hong Kong. This beautiful city of free and prosperous people was handed over to the Beijing dictatorship without a whimper. The balance of power had obviously changed from what it had been in 1842 when England first laid claim to Hong Kong, or 1945 when London reclaimed the city after it had been captured by Japan at the outbreak of World War II..
The British were on the winning side of both world wars. Indeed, England has not lost a major war since the Duke of Wellington defeated Napoleon at Waterloo in 1815. But they still declined as their economy fell out from under their empire. And the danger to us, as the British example should make clear, is that we have embraced the same classical liberal economic notions about "free trade" and the neglect of international economic strategy that had their origins in 19th century British thought.
Economic strategy is at the top of Beijing's agenda: the core of its pursuit of "comprehensive national power." Zhuhai, like Pudong, is a designated economic development zone. It has a new international airport, about 25 miles from the port city. There is an 8-lane superhighway running from the city to the airport, mainly through farm land with very little traffic. But there are massive housing projects built (and being built) for the expected future workforce. Near the city, new factories line the highway. A friend of mine who had been to the 4th Aviation Expo noted that where there had been a single line of factories two years ago, the plants are now 2-4 deep along the road.
The first challenge China poses is economic. It goes beyond the lop-sided trade imbalance which is menacing American domestic industry and the value of the dollar as the international medium of exchange. The longer term threat is from the vast new wealth and array of modern capabilities that will be available to a regime whose strategic ambitions clash with those of the United States.
Washington must concentrate its attention on enlarging and sustaining its own economic capabilities – industrial, technological, financial, to ensure that its stays generations ahead of China. This will take more effort than was needed to defeat the Soviet Union, as Chinese capitalism is a much more vigorous contender than was Russian communism. But safeguarding America's preeminence is just as imperative, regardless of the nature o f the threat.
China has far worse problems. It is separated by clan; region; and religion. None of its religions, save Christianity, jibe with economic growth. It has no democratic system. Let me know when these three issues have been resolved.
Good post Willie.
No, I care a great deal about geopolitics, and if you notice, Russia was in the "other" camp too . . . until the market and Ronald Reagan caused them to collapse. Reagan merely provided the fence: communism was the "mad cow" that caused the Russian collapse internally. China has no more chance of success than did Russia as long as it has a commie government.
"Thank GOD for the subsequent miracle, by which I started to learn things they don't teach at Wharton or Columbia - things that are probably considered "bad for market morale." Yes, we are selling Communist Red China the rope which they will use, in concert with their Axis partners, to hang the West."
Welcome aboard, GOP_1900AD!!! Nice to have someone who truly understands the so-called free trade mentality on OUR SIDE. Look forward to more posts from you--TTS
Wrong. As Milton Friedman shows, economics comes first. There is no instance in history where you have a free political system but not a free economic system, but as your own example shows, there are several examples where you can have free economic systems without/before having a free political system. Economics comes first.
A deadly combination if you are a bully. That is what makes China worrisome.
I have recently been to Shanghai and Beijing - I can say that both cities have very bad polution problems. The residents walk around wearing white masks to guard against black lung disease. China does have a booming economy at the price of destroying their environment. QED
---> Chuck
I've got news for you. China already is an economic powerhouse. Only the US economy is larger.
the thing to worry about are the old fossils (fossils with nuclear weapons and a huge army) and senile intentions watching capitalism run roughshod over Mao's ideas...
i've always figured that the Chinese are genetically pre-disposed to capitalism and Marxism was a aberrant period which is quickly receding...does this mean they are not a danger to the US? of course not... but on the other hand the chinese can contribute a lot to this world, make no mistake -- the rest of the world can't afford the stuff we build (thanks to the US unions), but they can afford Chinese goods. i personally think human movement to other planets & space in general won't really happen until the chinese start selling cheap (and somewhat unsafe) lift vehicles...
"What we have to fear is an economy based on public/private partnerships, called fascism, that is the type of economy promoted by the WTO."
I prefer to call it the 'new feudalism'...but we are saying the same thing.
My theory starts with a question...just who is George Soros...and what does he represent? He makes billions in a capitalist system, but appears to promote global socialism. Ive concluded that he represents the vanguard of the new feudalists.
China, I believe, will be the first society to fully evolve into the prototype of a feudal society. Capitalism / fscism for a select few at the top political / economic rungs of their society, and a socialist peasant / serf worker class at the bottom. This is inevitable without the strong cultural and moral underpinnings of society as established by the men who founded the United States.
Great post...I hope people read carefully and understand what you are saying.
Didn't the US in the 1930s sell the scrap steel to Japan that they used to build their navy?
>And don't forget Clintons nuclear missile treason. China never had a better friend.<
But didn't relationship begin with Tricky Dick?
Actually, Japan is doing quite well. It is the world's wealthiest nation in terms of total net external assets, as it has been for the last 13 years (my emphasis added):
SummaryJapan's international investment position (IIP) (balance of external financial assets of residents in Japan minus balance of external liabilities of residents in Japan) recorded a net asset position of 172.8 trillion yen at year-end 2003. The net asset position declined for the second consecutive year by 2.5 trillion yen or 1.4 percent from year-end 2002, from the historical high of 179.3 trillion yen at year-end 2001. This was because the increase in external liabilities exceeded that in external assets due mainly to the rise in Japanese stock prices, although both assets and liabilities increased from year-end 2002.
The major features of each instrument were as follows.
(1) Direct Investment (outward direct investment or assets: 35.9 trillion yen; inward direct investment or liabilities: 9.6 trillion yen)
Direct investment assets declined by 0.5 trillion yen or 1.5 percent from year-end 2002 due to (a) a reduction in the book value of stocks of some overseas subsidiaries, (b) liquidation and capital reduction of overseas subsidiaries, and (c) devaluation of assets denominated in U.S. dollars due to the appreciation of the yen against the dollar. Direct investment liabilities increased by 0.2 trillion yen or 2.6 percent due mainly to inward direct investment into the financial sector for business expansion in Japan.
(2) Portfolio Investment (assets: 184.4 trillion yen; liabilities: 92.9 trillion yen)
Portfolio investment assets increased, after decreasing in the previous year, at year-end 2003 by 17.2 trillion yen or 10.3 percent from year-end 2002. This was due to (a) an increase in the value of equity securities attributed to the rise in foreign stock prices, and (b) a significant increase in bonds and notes, reflecting brisk purchases by Japanese investors who usually raise foreign currency funds by converting their yen. Portfolio investment liabilities also increased, after decreasing in the previous year, by 19.7 trillion yen or 26.9 percent. This was due to (a) active purchases of Japanese equity securities by U.S. and European pension funds, investment trusts, and hedge funds, and (b) a sharp increase in the value of equity securities due to the rise in Japanese stock prices.
(3) Financial Derivatives (assets: 0.5 trillion yen; liabilities: 0.7 trillion yen)
Both financial derivatives assets and liabilities increased from year-end 2002 due to the rise in the amount outstanding of premium on option transactions by residents and nonresidents.
(4) Other Investment (assets: 92.6 trillion yen; liabilities: 109.5 trillion yen)
Other investment assets declined by 13.1 trillion yen or 12.4 percent from year-end 2002 due primarily to reduced lending by Japanese commercial banks. On the other hand, other investment liabilities increased by 1.9 trillion yen or 1.7 percent for the fourth consecutive year. This was because nonresident foreign banks lent their surplus funds actively to resident financial institutions given the negative cost of funding yen in exchange for the U.S. dollar and/or intervention by the monetary authorities in the foreign exchange market.
(5) Reserve Assets (assets: 72.1 trillion yen)
Reflecting continued intervention in the foreign exchange market by the monetary authorities, reserve assets increased for the fifth consecutive year, increasing by 16.0 trillion yen or 28.6 percent from year-end 2002.
Comparison with other major countries suggests that Japan has been the country with the largest net asset position, for the 13th consecutive year since year-end 1991.
If you look at page 19 of the document, you can see that Japan is about $1.7 trillion in the black on net external assets, or about 34% of their GDP. We are at -$3 trillion in net external assets, or about -24% of our GDP.
>They are making deals with their commie allies in Cuba and Venezuela and emerging socialist Brazil<
An Imperialist China! What goes around really comes around. I always say, "McCarthy spoke, but no one listened", and look where we are 50 years later.
RE: there are several examples where you can have free economic systems without/before having a free political system.
So this is the goal for you and your ilk? Economic freedom as the exclusive goal, and political freedom be damned? If so, I urge you to leave my country and move to the PRC or some other hellish fascist land, for you are not wanted by those of us who believe in the USA and its Constitution.
I participate in some forums of Chinese professionals. What I have found is that even the most financially successful and best educated ones are not necessarily anti Communist. In fact, most of them are not anti Communist.
China's "economic power" has come, if you look at the stats, totally from labor factor inputs. In short, they've put a lot of hands to the tiller. That is NOT economic productivity increases, which is what drives a true economic powerhouse.
yah, Japan is doing terrific. (End sarcasm)
Actually that's exactly how he did it.
Soros, Moore, the CCP and even some of the power players in Russia all have something in common. They hate tradition, they hate the idea of a nation state, as conceived within the constructs of the Western Tradition, they hate Judeo-Christian values, and they hate rule of law.
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