My comments on the FT article "Why America and China will clash"

Folks,

On 19 January 2010, I read a piece in the FT titled "Why America and China will clash". I was moved into responding by the nonsensical logic spluttered out by the author, Gideon Rachman, on his FT blog.

The article is pasted below, followed by my response on the FT blog!

WHY AMERICA AND CHINA WILL CLASH
Gideon Rachman

Google’s clash with China is about much more than the fate of a single, powerful firm. The company’s decision to pull out of China, unless the government there changes its policies on censorship, is a harbinger of increasingly stormy relations between the US and China.

The reason that the Google case is so significant is because it suggests that the assumptions on which US policy to China have been based since the Tiananmen massacre of 1989 could be plain wrong. The US has accepted – even welcomed – China’s emergence as a giant economic power because American policymakers convinced themselves that economic opening would lead to political liberalisation in China.

If that assumption changes, American policy towards China could change with it. Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America’s only plausible geopolitical rival, is a different proposition. Combine this political disillusionment with double-digit unemployment in the US that is widely blamed on Chinese currency manipulation, and you have the formula for an anti-China backlash.

Both Bill Clinton and George W. Bush firmly believed that free trade and, in particular, the information age would make political change in China irresistible. On a visit to China in 1998, Mr Clinton proclaimed: “In this global information age, when economic success is built on ideas, personal freedom is essential to the greatness of any nation.” A year later, Mr Bush made a similar point: “Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy ... Trade freely with the Chinese and time is on our side.”

The two presidents were reflecting the conventional wisdom among America’s most influential pundits. Tom Friedman, New York Times columnist and author of best-selling books on globalisation, once proclaimed bluntly: “China’s going to have a free press. Globalisation will drive it.” Robert Wright, one of Mr Clinton’s favourite thinkers, argued that if China chose to block free access to the internet, “the price would be dismal economic failure”.

So far, the facts are refusing to conform to the theory. China has continued to censor new and old media, but this has hardly condemned it to “dismal economic failure”. On the contrary, China is now the world’s second largest economy and its largest exporter, with foreign reserves above $2,000bn. But all this economic growth shows little sign of provoking the political changes anticipated by Bush and Clinton. If anything, the Chinese government seems to be getting more repressive. Liu Xiaobo, a leading Chinese dissident, was recently sentenced to 11 years in prison for his involvement in the Charter 08 movement that advocates democratic reforms.

Google’s decision to confront the Chinese government is an early sign that the Americans are getting fed up with dealing with Chinese authoritarianism. But the biggest pressures are likely to come from politicians rather than businessmen. Google is an unusual company in an unusually politicised industry. If the Googlers do indeed head for the exits in China, they are unlikely to be crushed by a stampede of other multinationals rushing to follow them. To most big companies the country’s market is too large and tempting to ignore. Despite Google, US business is likely to remain the lobby that argues hardest for continuing engagement with China.

The pressures for disengagement will come from labour activists, security hawks and politicians – particularly in Congress. To date, the Obama administration has based its policy firmly on the assumptions that have governed America’s approach to China for a generation. The president’s recent set-piece speech on Asia was a classic statement of the case for US engagement with China – complete with the ritualistic assertion that America welcomes China’s rise. But, after being censored by Chinese television in Shanghai and harangued by a junior Chinese official at the Copenhagen climate talks, Barack Obama may be feeling less warm towards Beijing. An early sign that the White House is hardening its policy could come in the next few months, with an official decision to label China a “currency manipulator”.

Even if the administration itself does not move, the voices calling for tougher policies against China are likely to get louder in Congress. Google’s decision to highlight the dangers of cyberattack from China will play to growing American security fears about China. The development of Chinese missile systems that threaten US naval dominance in the Pacific are also causing concern in Washington. Impending US arms sales to Taiwan are already provoking a dispute.

Meanwhile, protectionism seems to be becoming intellectually respectable in the US in ways that should worry China.

A trade war between America and China is hardly to be welcomed. It could tip the world back into recession and inject dangerous new tensions into international politics. If it happens, both sides will share the blame. The US has been almost wilfully naive about the connections between free trade and democracy. The Chinese have been provocative over currency and human rights. If they want to head off a damaging clash with America, changes in policy would be well advised.



MY RESPONSE

The rise of China is not predicated on Western theories of economic growth neither is it dependent on acceptance by the US.

Rachman states:

"Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America’s only plausible geopolitical rival, is a different proposition."

Well, I beg to differ, and on two fronts. First, the US is not, and has never been, the sponsor of Chinese rise to economic prominence. The US trades with China because it is in its own interest to do so and China, love her or hate her, is nothing short of an unavoidable and colossal force of nature. It is China who sponsors the lavishness and false impressions about the true state of the American economy by essentially funding it. Yes, China funds much of America's excesses via its vast holdings of US Treasury Bills.

Second, the impression that the US welcomes the rise of a giant Asian economy in the form of China is misleading. The US doesn't "welcome" it. In fact, the US is theatened by it; afterall, China is one of the very few countries in the world that doesn't jump at the beck and call of Washignton - a country so powerful and so self-assured that it gives the US sleepness nights, what with the States' desire to remain the sole superpower in the world for all of time. As opposed to welcoming China's elevation, the US merely acknowledges the factual state of affairs. To deny China's place in global economics would make any professor look foolish. The US, and the whole world in fact, must come to terms with China's position.

On a separate note, countries other than the US, particularly developing nations, should welcome the emergence of a rival power to that of the US given the enormous, monopolistic oppression that the US has visited on many developing nations over the years with the aid of its economic might. What the world needs right now is not a world polarised into US and China arms (like the USSR and USA) but a series of regional powers, preferably with differing ideologies and a powerful and credible international organisation (unlike the UN) to stand in the middle to balance competing goals and interests. India, Brazil, Iran, Russia and Nigeria are all countries with the potential to step up to the plate. Whether and how they in fact do so, only time will tell.

- Olu Omoyele