Posted on 07/19/2002 10:29:32 PM PDT by AIG
NEW YORK - A decade ago it was Japan that touched off nationalistic fears among Americans who worry about being out-competed by Asian industrialists. Now it is China's turn to generate the scare stories. The reflex cannot be helped, but nor should it be indulged in any policy sense. China's rise is inevitable and should not be viewed as a threat.
Consider this front-page story in today's New York Times: "China Emerges as Rival to U.S. in Asian Trade." That sort of headline will become commonplace in the next few years as China increases its dominance of East Asia's economy. Yet at the same time, U.S. exporters will benefit from the growth of China's internal market, and U.S. consumers will benefit by buying China's low-priced and increasingly high-quality exports.
China's rise does call for an adaptive response from Washington, which must find a graceful way to accommodate itself to the new regional superpower. But in terms of trade, the key policy already is in place--China was last year ushered into the World Trade Organization, under whose auspices this formerly closed society will be fully integrated into the global economy.
Of course, there's still the little matter of Taiwan, which the U.S. is pledged (in vague terms) to defend. The best-case scenario: China's embrace of capitalism forces it to evolve into a full-fledged democracy, as people who gain economic control over their lives insist on political control as well. If that happens, Taiwan will end up clamoring to merge with the mainland in order to avoid the fate of China's other small neighbors, which will find themselves overshadowed by the revitalized Middle Kingdom.
Let's minimize the hand-wringing over this situation. Would anybody seriously prefer that China had remained shackled to the Maoist precepts that kept its economy small and weak? In any case, that's not an option. China's emergence is a fact to be recognized rather than fretted over. And it is also an opportunity, because America with its flexible economic system is well positioned to adapt to new realities and benefit from them.
The supposed threat from Japan generated a lot of concern in the early '90s, yet nowadays the scare headlines are all about Japan's economic decline, which is seen as bad for the United States. If China's economy runs into serious trouble, that too will be bad news for America.
But China, even if it stumbles along the way, is a much better bet than Japan to eventually achieve regional dominance, both politically and economically. This will make some Americans nervous. They may as well start getting used to the idea now--and make plans to take advantage of it.
Yeah, we're just so eager to go from sole economic superpower to co-equal economic superpower.
If China takes the US's handling of foreign affairs as it's model, that is it avoids foreign entanglements for another -say- fifty years, it will do alright.
It will become more Taiwan than Taiwan will become PRC however.
Maintaining power by repression and fear isn't progress. Communism has totally failed in every country where it's been instilled.
Whip them into a 3rd world sewer where they belong.
Right. The Chinese know it. That's why they started reform.
PRC will become more Taiwan and absorb Taiwan without pain.
Without pain to either of them.
I think they'll have to have a government with "separation of powers"- or some inventive equivalent- to support a large middle class, but supporting a large middle class is the only thing they must do to appease Taiwan.
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Together the United States, E.U., and Japan received about 88 percent of China’s total exports in 2000, and took over 90 percent their exports in manufactured goods.
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Investment and China’s Rise as an Exporting Platform - Throughout the 1990s, FDI flows into China, which have been primarily concentrated in the manufacturing sector, helped China become a world center for manufacturing and continue to have a significant impact on China’s export-led growth. The Commission has reviewed a study reporting that over 90 percent of FDI into China was for the establishment of new businesses, while over 90 percent of the FDI into the United States was for acquisition of existing U.S. businesses.5
The share of exports to the United States produced by foreign-invested firms has steadily increased over the last decade and a half. China required export performance as part of its investment agreements with foreign firms. In 1985, foreign-invested firms produced 1percent of China’s exports. In 1990, they produced 12.5 percent, and in 2000 48 percent.6 Researchers at the New York Federal Reserve Bank estimate that only 20 percent of China’s total imports reach China’s domestic markets, while the other 80 percent consist of capital goods and industrial inputs used for the country’s exporting zones.7
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Currency Manipulation - The exchange rate of the Chinese yuan (or Renminbi) to the dollar is also an important contributing factor to the U.S. deficit. While the United States has a free-floating exchange rate in which official intervention is both rare and done in small amounts, China holds a soft peg to the dollar with its currency nonconvertible on the capital account. In 2001, despite the country’s $23 billion global trade surplus and FDI inflow of $46.8 billion, China maintained its soft peg. China accomplishes this through large official purchases of dollars in order to maintain an exchange rate lower than would otherwise occur by market forces alone. By holding down the exchange rate, China gains an unfair trade advantage that increases the U.S. trade deficit beyond what the market would dictate. Ernest H. Preeg, Senior Fellow in Trade and Productivity at the Manufacturers Alliance/MAPI, who testified before the Commission in May 2001, wrote in his testimony to the Senate Banking Committee in May 2002:
Based on the IMF definition, China has clearly been manipulating its currency for mercantilist purposes. The Bank of China has made protracted large scale purchases of foreign exchange- $150 billion since 1995- in order to maintain a large trade surplus as an offset to poor growth performance in the domestic [Chinese] economy.16
If the Soviets had truly believed in Marxism like you say....then they wouldnt have tried to go socialist.
They had to try to open up to a mix of government controlled capitalism and communism in an attempt to keep up with us financially.
That is exactly what the Chinese are now trying to do. And like the Soviets....they will fail. The Communist Government will collapse and centuries old ethnic strife, regional grudges will reappear.
We'll reach out to different groups within China proper both politically and financially, dividing & conquering from 3000 miles away.
Same song different bassackwards dictatorship.
I think the democracy in China has to be realized like this. First of all, the CCP has to be a democracy (becaue multi-party politics is not a feasible solution to China in a foreseeable future). Different factions repersenting different groups must be allowed to exist and share power within the party. Once the CCP becomes a democracy, the political reform will be easy.
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