China's Rise Is Inevitable -- So Deal With It

Forbes Magazine ^ | 6-28-02 | Mark Lewis

[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.

[Jhoffa_]

By your reasoning, China has reason to be concerned about America.

After the way they treated our EP3 and it's crew, they should be worried.

It's our own fault if they are not.

[AIG]

There's no need to point a gun when Taiwanese CEO's are moving to the mainland voluntarily in the first place. The mainland couldn't be in a better position by having an enemy, Taiwan, whose leading hi-tech CEO's, the backbone of Taiwan's "economic miracle," voluntarily move their factories to the mainland, weakening Taiwan's own economy and its ability to pay its future defense budgets.

[Jhoffa_]

Like I said.. "voluntary" is the magic word..

(Personally I think them fools, but.. )

[AIG]

Even during the EP-3 incident, President Bush did not even consider starting a trade war as a viable punishment option. It just shows the importance of China to America's economy these days. If Pres. Bush wasn't willing to start a trade war, he'd probably also not start a nuclear war.

[kennyo]

China is far less powerful than the Soviet Union was, and we now know what a sham that communist country was.

We in America know that it is personal and political liberty that makes a nation great,not the size of it's population.China is one of the earth's oldest civilizations,and yet it stagnates under ideological backwardness.

[lewislynn]

China's Rise Is Inevitable -- So Deal With It

I'm not concerened with their "rise" as much as I am about what price I have to pay for it.

[Jhoffa_]

It just shows the importance of China to America's economy these days. If Pres. Bush wasn't willing to start a trade war, he'd probably also not start a nuclear war.

Ironically enough, we agree.. I think we would manufacture an excuse to sell taiwan down the river.

And we certainly wouldn't nuke them. (as much as I might enjoy it, shall never come to pass)

[TheLooseThread]

"It's American consumers themselves that are helping make China rich. Maybe you ought to start blaming yourselves."

Interesting that you said "yourselves" and not "ourselves".

[DoughtyOne]

I don't even like to address this issue anymore. What with the idiots that think it's great to arm China and gift them with our patent database, finance their military and their proliferation of WMDs to the planet's rogue nations, it's pointless. Why watch people who haven't got the brain power to know this is all wrong make fools of themselves. Frankly it's depressing. As for Taiwan, we haven't got the class to defend them. It's the almighty buck. Screw character and doing what's right. Our founding fathers would line us up and shoot us if they could see what we've done with the nation they gave us.

[Jhoffa_]

Frankly it's depressing. As for Taiwan, we haven't got the class to defend them. It's the almighty buck. Screw character and doing what's right. Our founding fathers would line us up and shoot us if they could see what we've done with the nation they gave us.

That should be quote of the day..

[AIG]

Democracy is great in theory, but it's been no panacea for today's Third World democracies, which are a lot more mired in general backwardness than China. The success or failure of a democracy seems to be whether it has developed a large, majority middle-class population to begin with who, in any democratic election, will vote for politicians favoring capitalist policies like low taxes over socialist politicians who tend to try to block all capitalist reforms. Third World democracies have mostly poor populations so they naturally elect more socialist Gephardt-type politicians than free traders. S. Korea, Taiwan, etc. all first developed their economies and developed majority middle-class populations under one-party, authoritarian rule over the past 50 years before adopting full-fledged democracy in just the last 5 years. America and France during the American and French Revolutions had majority middle-class populations which rebelled against high taxes, and these countries' revolutions were led by their middle-class or "bourgeoisie" classes.

[AIG]

I said "yourselves" for effect.

[happytobealive]

I said "yourselves" for effect.

hmmm?

[Jhoffa_]

I said "yourselves" for effect.

Translation: "I am the great white capatalist! I am above you vermin! Hear me whine! Uber! Uber!"

(Or words to that effect.. )

[TheLooseThread]

"I said "yourselves" for effect."

It is interesting that you wrote "I said" rather than "I wrote".....

Hmmm....

[DB]

Why do you suppose that is?

Do we have them pointed at Japan?

They wouldn't be pointed at China if they weren't pointing theirs at us and increasing the number constantly. We would be foolish not to return the favor.

[AIG]

Taiwan's in a tough bind. If its factories don't move to the mainland, then they risk losing their competitiveness to their Japanese, Korean, American, etc. couterparts. The best Taiwan can hope for is that the Taiwanese businesses that do move to the mainland send some money back to Taiwan, but the overall picture is still gloomy because even the more "value-added" businesses that currently remain in Taiwan and have not moved to the mainland will eventually move too. For instance, LCD monitors are a higher-margin product that Taiwan has tried to keep production of in Taiwan, but even LCD monitors are increasingly being manufactured in the mainland now because of the mainland's lower overall production costs (land, labor, utilities, etc.). Taiwan was an export-based economy to begin with and never developed much of a large, domestic, internal economy in anything, so Taiwan doesn't have much to fall back on as its hi-tech crown jewels continue to migrate to the mainland.

[Jhoffa_]

What would you have us do in the event China invades (reunifies, storms with roman candles, whatever..) Taiwan?

You mentioned "vague language" so I assume you are ready to trash our treaty.. And if not, how far would you go to support them? Nuke conflict if the need was there?

Come on, you posted this thread so don't be vague.. don't hide or parse.. We had 8 years of that already.

[happytobealive]

AIG, you obviously have spent a lot of time studying China.

How much of a military threat do you think they pose?

[AIG]

It would take China a very long time to develop as many ICBM's as America currently already possesses. The recent Congressional commission released a report saying China might have a total of 60 ICBM's (up from 20) in 10 years, but even with 60 that would just be 1% of the number America currently already has. I would suspect that during the Cold War, America programmed its ICBM's to be targeted on China long before China even manufactured its first ICBM. And China has generally been a lot slower to build new ICBM's over the past few decades. The 20 ICBM's today are very old, liquid- rather than more modern solid-fuel type ICBM's. And their warheads aren't even kept on the missiles but in storage. After first exploding a nuclear device about 4 decades ago and having only 20 ICBM's today with their warheads kept in storage, China's not been the big assembly-line manufacturer of ICBM's as you portray.