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Published on: April 30, 2012
High Noon in Beijing

Secretary of State Hillary Clinton will be arriving in Beijing at perhaps the diciest moment in US-China relations since Richard Nixon reached out to shake Chou Enlai’s hand on his historic visit to what American conservatives then still called Red China. Last fall, the Obama administration pulled off a diplomatic revolution in maritime Asia — […]

Secretary of State Hillary Clinton will be arriving in Beijing at perhaps the diciest moment in US-China relations since Richard Nixon reached out to shake Chou Enlai’s hand on his historic visit to what American conservatives then still called Red China.

Last fall, the Obama administration pulled off a diplomatic revolution in maritime Asia — the coastal and trading states on and around the Asian mainland that stretch in an arc from Korea and Japan, down to Australia and Indonesia, and sweep around through southeast Asia to India and Sri Lanka. Via Meadia has been following this story closely; it is the biggest geopolitical event since 9/11 and, while it builds on a set of US policies that go back at least as far as the Clinton administration and were further developed in the Bush years, the administration’s mix of policies represent a decisive turning point in 21st century Asian history.

The legacy press, still befuddled from drinking too much of the ‘US in decline’ Koolaid so widely peddled in recent years, has still not grasped just how audacious,  risky and above all successful the new strategy is: the United States is building a Pacific entente to counter — though not to contain — the consequences of China’s economic growth and military posture in the region. The US is lending its unequivocal support to the smaller Asian states who have boundary disputes with China in the resource-rich, strategically vital South China Sea. It has announced new deployments of troops and new military agreements as it extends its military network from northeast Asia (Japan, Korea, the Pacific islands) south and east to Australia, Singapore and beyond. It continues to deepen its strategic relation with India — Asia’s other nuclear superpower with a billion plus citizens and a country which openly states that the purpose of its (growing) nuclear arsenal is to balance China.

Additionally, the US has launched a new round of trade talks, the Trans-Pacific Partnership, or TPP that will open markets dramatically among a group of Asia-Pacific countries. China has not been invited to join.

These are bold moves. Many China specialists were unnerved as the administration rolled the new policy out last fall, fearing that the US push back would strengthen hardliners in Beijing to commit to a full-on anti-US policy.

That hasn’t happened yet, largely because in spite of all the misguided hype about China’s inexorable rise there isn’t actually much Beijing can do about Washington’s new activism. The more it pushes its territorial claims in the South China Sea, the more tightly the other countries will cling to Washington’s skirts. Dumping its dollar hoard would wreck the Chinese economy. Taking a super hard line on Syria and Iran will annoy the Gulf Arabs whose oil keeps China’s factories running. Naval exercises with Russia don’t even impress North Korea, much less cow Washington.

While a formidable power in many respects, and one potentially with a great future, China is simply not a peer competitor of Washington in Asia at this point, and its illusions and pretensions left China uncomfortably exposed when the real world power decided to raise its game in the Pacific Basin.

Fine tuning diplomacy is a difficult thing, especially when adjusting the relations of great powers. Since the administration began to roll out its maritime initiatives last fall, a number of things have happened — some by coincidence, some as unforeseen consequences of steps the US took — that have actually made our China policy much stronger and more effective than planned.

It is these follow-ons and the coincidences more than our actual Asia policies that make Clinton’s Beijing trip so fraught. Look at what has happened since the new US Asia policy launched last year:

  • Myanmar, one of China’s only two regional allies, has switched sides, and is working increasingly closely with America’s partners in the Pacific Entente.
  • The Philippines have taken a highly visible, confrontational posture toward Chinese ‘interlopers’ in waters Manila claims, and have attempted to engage direct US support.
  • China’s economic growth has slowed and its exporters are experiencing shrinking demand even as labor unrest at home puts new pressure on manufacturers.
  • The Bo Xilai fiasco has exposed the fissures in China’s leadership, destroyed hopes of a smooth power transition and shone a spotlight on entrenched corruption and the conflict and rivalries at the heart of China’s ruling elite.
  • Now, the daring night time escape of Chen Guangcheng and his race across 500 kilometers to the shelter of the US embassy has both enraged and humiliated China’s government — hours before Secretary Clinton’s scheduled arrival.

It is a safe bet that some Chinese nationalists, including people high up in various state and military organizations, are shaking with rage and frustration as they contemplate these events. Conspiracy theories popular in some circles associate the US with the Bo Xilai scandal — after all, it was to the US consulate in Chengdu that Wang Lijun fled and where he spilled the beans about the reign of Bo in Chongqing. Chen’s flight to the embassy will further deepen the angry paranoia in some circles; it will seem obvious to some that he could not have made this escape without more help than a handful of dissidents could provide, and the timing is so spectacular that it must be part of some secret, long prepared American scheme. Put these ‘facts’ together with the new American assertiveness in the region, and many serious people in China will draw the conclusion that the US is trying to do to China what it did to the Soviet Union. Furthermore, they will think we are perilously close to success — so close, that any further concessions and retreats must be resisted as a matter of life and death.

(That within a few months a leading Chinese official and a leading dissident should both have turned in extremis to American diplomats should, by the way, make Americans everywhere stand a little taller. We have somehow managed to acquire a reputation for honest dealing and political courage in China; it should be our goal to preserve that. There are times when it is appropriate to be proud of your country, and this is one of them.)

These events tap into some deep wounds in Chinese historical memory, and fears of being ignored, humiliated and pushed around by a self-righteous and imperial West, never far beneath the surface in modern China, are flaring up. It’s worse because so recently China seemed to be riding so high; many people inside China believed all the hype about China’s rise and America’s decline as thoroughly as any group of European intellectuals, and the shock of realizing how wrong they were is severe.

Meanwhile, the strategy of China’s current leadership had been to use both the Bo Xilai affair and the painful blow back from China’s South China Sea adventure to deepen their hold on power and strengthen the country’s adherence to the path of reform at home, “peaceful rise” abroad. Wen Jiabao was using Bo’s fall as an opportunity to target the entire left-nationalist-populist bloc in Chinese politics and cement the power of the more modernizing, reformist wing of the ruling party. Bo’s fall allowed the political leadership to reassert its leadership over the military as well, as military leaders fell in line to fight against those in the army who favored Bo’s nostalgic, left-tinged nationalism.

From a US perspective, that looked like a pretty good outcome. The Obama administration was ready to approach China with open hands, offering its newly strengthened reformist leadership an opportunity to move forward even as it applied some discreet pressure on issues like Iran and Syria where it hopes for more Chinese help.

The Chen escape seriously complicates that strategy. From the standpoint of China’s leadership, the flight points to a degree of incompetence and laxity that is deeply humiliating to all concerned. How can a single blind man in poor health outwit the security establishment of the most powerful one party state on earth? How can a dissident under house arrest pop up in American hands on the eve of vital talks with the American Secretary of State?

And finally there is another shadow that will hang over Secretary Clinton in Beijing. Japan’s Prime Minister Noda will be meeting President Obama while Secretary Clinton is meeting the Chinese, and the Japanese and American leaders are expected to discuss enhanced security cooperation that would see Japanese troops training on US bases even as the island nation expands military ties, arms shipments and “strategic” aid throughout Asia. High on both President Obama’s and Prime Minister Noda’s to-do list: developing strategies to rein in China’s last remaining regional ally North Korea.

None of this suggests easy bargaining over the fate of Mr. Chen, nor does it make it any easier for the Chinese leadership to cooperate right now on other issues of mutual concern. The Obama administration cannot force Mr. Chen to walk out into Chinese custody without a serious loss of prestige and moral capital; the Chinese authorities cannot let him go without paying a high price.

When the Obama administration set out to check China last year, it did not intend to corner or contain it. But America is a bit stronger and China somewhat weaker and more fragile than most people thought, and our policies have succeeded perhaps a bit more than we might have liked.

Kurt Campbell, Clinton’s chief Asia deputy, flew quietly to Beijing to try to prevent the Chen question from spoiling the summit; no doubt he and Secretary Clinton will have to talk fast and talk well to provide their hosts with some reassurance that the US genuinely does want reasonable and respectful relations with Beijing.

What we all seem to be learning in Asia is that events have a logic and a pace of their own. America can set a policy in motion, but we can’t control or fine tune the consequences of our policies as they ripple out across the world. Many conversations with US officials in this and in prior administrations have left me convinced that the US is not trying to contain China the way we once contained the Soviet Union. While virtually all Americans at senior levels believe that over time economic progress will lead to political change in China, this is because most Americans are hardwired to think in those terms and this whiggish faith in the historical process is not a statement of policy or intent.

Leading Americans in both parties generally hope for a peaceful and gradual reform process rather than violent conflict in China; they do not want to dismember or impoverish China and they would not welcome its disintegration. Nor do Americans see the evolution of a future Asian security order in zero-sum terms. The United States wants to prevent Chinese domination of Asia but we do not want to dominate the region ourselves.

Many Chinese, I have found on my visits there, have a much darker view of our intentions, and see the US and China entangled in a zero sum battle for dominance which only one side can win. For now, it appears that the US, surprisingly to some Chinese analysts, is winning that contest. We should not expect Chinese hard liners to accept that situation with calm and resignation, even if their present options are limited.

Secretary Clinton will be flying from China on to India by way of Bangladesh. With Japan’ Noda in Washington and Clinton in New Delhi, the view from Beijing is likely to remain dark. Additional irritating events are sure to occur. It is in the interest of smaller powers like Vietnam and the Philippines to exploit their new support from Washington for what they can; this will make them more assertive in the South China Sea and new incidents will likely occur that confront the Chinese government with an unpalatable choice between looking weak or enduring a crisis. The question of US arms sales to Taiwan will no doubt come up. North Korea can be expected to misbehave. More actions by more dissidents at home will agitate domestic opinion and affect China’s standing abroad. The global economic uncertainties will force China’s hand on economic policy in ways that may complicate its relations with trading partners, including the US. During the interminable US election campaign now already under way, the two candidates and their surrogates will compete to sound tough about China on trade, security and humanitarian issues.

America’s new stance in Asia is real and it won’t be changing soon. The consequences of that shift for Asian politics and for US-China relations are complex and won’t be fully understood for some time. But this is a murky and even a dangerous time; we wish Secretary Clinton every possible success as she attempts to build bridges between two very different political cultures and world views.

Image courtesy Shutterstock.

show comments
  • Kansas Scott

    This is one of many postings where I feel guilty that I get to read this for free. Not guilty enough to start paying mind you, but guilty nonetheless. Thank you.

  • James

    How much of this success is due to the 10 year transfer of power going on in China? I imagine the internal politics have a significant priority over Washington’s current policies.

  • Anthony

    “Last fall, the Obama administration pulled off a diplomatic revolution in maritime Asia – the coastal and trading states on and around the Asian mainland that stretch in an arc from Korea and Japan, down to Australia and Indonesia, and sweep around through southeast Asia to India and Sri Lanka.”

    “The United States is building a Pacific entente to counter…The United States wants to prevent Chinese domination of Asia…We should not expect Chinese hard liners to accept that situation….”

    WRM, America’s current position in Asia from China’s point of view interferes with its power-projection in northeast and southeast Asia; as a potential hegemonic power China views regional strategic advantage sine qua non.

    According to some proponents of power politics, it is in China’s interest to be hegemonic actor in its region of the world (not because China has wicked motives but because it’s the way to maximize China prospects for survival from power politics perspective); now, it is equally not in America’s interest for this to happen from power principle hegemonic point of view (realism suggests that actions taken by Obama administration are in line with structural imperatives of current international system and balance of power logic – we shall see).

  • Kenny

    Excellent post, Mr. Mead. Well thought out.

    1. “It is a safe bet that some Chinese nationalists, including people high up in various state and military organizations, are shaking with rage and frustration as they contemplate these events.”

    They can shake with rage all the want — get it out of their system, so to speak — just as long as they behave themselves internationally. Otherwise, it’s off to the wood shed China goes. Fact.

    2. ” ..many serious people in China will draw the conclusion that the US is trying to do to China what it did to the Soviet Union. ”

    Hmmmm. Not a bad idea entirely.

    But just what did the U.S. do to the USSR but prevent it from eating up Europe and continuing its policy of mass murderers on its its godless road to Utopia

    3. “How can a single blind man in poor health outwit the security establishment of the most powerful one party state on earth? ”

    Easy. As John Gotti might say, the Chicom establishment is loaded with rats.

  • james wilson

    Even the educated Chinese mind thinks in zero-sum game. So does almost all of Latin-America, and, increasingly, our ruling elite. That may be the default setting of human DNA.

    Asked to choose, many Chinese will select Rome as the most admired civilization, and the one to be emulated. They are attracted to stability, certainty, and power. That not one thing evolved after the discovery of cement does not occur to them. And as is well said, what is not improving is deteriorating. Liberty is even more an alien concept to the Chinese mind than it is here.

  • http://facingzionwards.blogspot.com/ Luke Lea

    The more I learn about China and its history (see a few links below) the more worried I feel. The fundamental problem: there is no rule of law in China. And without the rule of law there are no property rights. What’s more the situation now is fundamentally no different than it was fifty, a hundred, or two hundred years ago — or a thousand years ago!

    We’ve been kidding outselves when we imagine tha,t somehow, as it builds up its infrastructure and export industries, China will make the transition to liberal democracy. That it will evolve an independent judiciary, that will be established, crooks and thugs will surrender their political prerogatives and government officials their crooked ways the way they did in Taiwan and South Korea.

    But we forget that Taiwan and South Korea, besides being much smaller than China and the U.S., made these transitions under the guiding hand and with the military and economic support, not to say the hegemony, of the U.S. at a time when our cultural example was much more influential than it is today . We don’t have any of those things going for us now.

    Containing Chinese expansionism in Southeast Asia, while doable and necessary, is the least of our problems. Naively, in our faith in the power of free markets and the liberal idea, we’ve joined ourselves at the hip to an 800 lbs gorilla.

    Books to read:

    Imperial China 900-1800 — http://tinyurl.com/6nz8mru

    China’s Last Empire: The Great Qing (History of Imperial China) — http://tinyurl.com/79syepz

    Search for Modern China — http://tinyurl.com/76a799m

    On the contemporary state of China with regard to:

    The legal system — http://tinyurl.com/7wz7xoe

    The economy — http://tinyurl.com/6rldsy6

    The political system — http://tinyurl.com/6qvhsh9

    The prospects of democracy — http://tinyurl.com/7vmdtwx

    The culture of corruption — http://tinyurl.com/7pss923

  • http://knownofold.blogspot.com J R Yankovic

    Very good overview. Nonetheless I remain nervous about the Chinese – and so leery of provoking them (which of course tells us nothing about how to disentangle ourselves: I mean, if I’m a fool to “make surety” – to use the Biblical phrase – with a known INDIVIDUAL sociopath, shouldn’t I be that much more loath to long-term contract with a collective one?).

    My deepest hunch is that we Westerners had “all along” a pretty good grasp of the Russian inferiority complex (however conveniently and often we may have chosen to ignore it), which made the Soviets all the easier to predict, confront and raise the stakes with. The Chinese superiority complex – which explains their constant bristling at their 1.5 (at most) century-long humiliation – exactly reverses the Russian predicament. One thing we can continue to do in any case, it seems to me (and yes, I may be a lunatic), is to keep inviting the best of the Chinese to keep questioning themselves: e.g., “Is this thing, this capitalism with a Maoist face – given its pseudo-strengths, real weaknesses, and longterm instabilities – what we really want for ourselves and the world?”

    “While virtually all Americans at senior levels believe that over time economic progress will lead to political change in China, this is because most Americans are hardwired to think in those terms and this whiggish faith in the historical process is not a statement of policy or intent.”

    Isn’t that the problem with far too many even highly-cultured and expert Americans: – either love (and trust) or hate? When are we going to learn simply to be careful with people we don’t like, and partic. with regard to how, and how far, we may confront them at a given time? Otherwise it’s the same old moldy “whiggish” dogmas of Trade Heals All Things, besides covering a multitude of cross-cultural sins, bigotries, confusions, misunderstandings and presumptions. OTOH, as I recall, if anyone knew how (not) to trust Russia, it was Churchill. Might we use some of his wisdom with China? Isn’t it even high time we applied some real Salisburian (maybe even Disraelian?) Toryism to foreign affairs, and bade a final goodbye to “bloody Whiggery”?

  • Tblakely

    On the other hand it wouldn’t suprise me if this administration handed over Chen Guangcheng to the Chicoms after getting ‘reassurances’ that he wouldn’t be punished in an attempt to sooth feelings.

    While the success of this policy of containment is both suprising (mainly due to the arrogant, bullying nature of the Chinese) and welcome, it is also dangerous. The Chinese have a serious self-esteem (face) issue given their failures of the past several centuries. The Chinese cultures’ inbred sense of superiority has been riding high and recent setbacks is feeding a fear of returning to the bad old days of humiliation. It wouldn’t suprise me if such a fear would override common sense in China and result in a military adventure in an attempt to get some ‘face’ back.

  • http://facingzionwards.blogspot.com/ Luke Lea

    A full-scale replica? Sounds more like the real thing. From the BBC:

    “Take the story of Mr Wang for example. He is one of China’s new rich.

    In the days of Mao, Mr Wang would have been condemned as a capitalist and sent to a labour camp.

    Today he not only controls a huge private fortune, he is no longer afraid to flaunt it.

    Half an hour outside Beijing, amid the corn fields and poplar trees, stands Mr Wang’s latest, and most extravagant creation: a full scale replica of a baroque French chateau.”

    Every single piece of stone has been imported from France at a cost of £50m ($90m).

    http://tinyurl.com/7gln6vu

  • http://facingzionwards.blogspot.com/ Luke Lea

    China as a Giant Corporation

    “In a review of the book China’s Megatrends: The Eight Pillars of a New Society by futurologist John Naisbitt and his wife, William A. Callahan wrote in China Brief: Rather talking about the PRC as a nation-state, many Chinese entrepreneurs “see China as a corporate enterprise. This formulation caught the Naisbitts’ attention, leading them to conclude that “China has reinvented itself as if it were a huge enterprise.”

    This appeal to corporate governance also helps explain the Naisbitt’s idea of vertical democracy: people in corporations don’t have rights, they have tasks; a corporation is not a commonwealth organized for the good of its members — its purpose is profit. As the Naisbitts explain, “Survival of the company has to take priority over individuals’ interests and benefits. Those who would prefer to fight against the company’s culture and goals would have to choose: leave or adjust.” Since this is a country we are talking about, I suppose resigning means you leave China, while being fired means you end up in jail.”

    http://tinyurl.com/6rldsy6

  • Brendan Doran

    The problem with Military alliances is you have to back it with War. And we have lost the stomach for it’s ugliness. Air and Sea only Mr. Mead. You people can’t handle ground war. It looks bad on TV and is awkward at faculty or embassy parties.

    A Ground Warrior.

  • Jacksonian Libertarian

    “Additionally, the US has launched a new round of trade talks, the Trans-Pacific Partnership, or TPP that will open markets dramatically among a group of Asia-Pacific countries. China has not been invited to join.”

    Of all the things said in this article this is the most significant. It is China’s growth rate which is the most threatening thing about China, not its present economic and military position. If China’s neighbors start getting all the capital investment that China has been getting (capital investment in China has been declining for the last 5 months), because they have become much more business friendly. Then they will start growing faster than China, and China ceases to become a larger threat every year.

  • http://www.ulyssessrant.com Ulysses S. Rant

    China’s biggest problem is its rapidly aging population: China will grow old before she grows truly rich. Chinese leaders understand this; that’s why they’re trying to expand their influence in the region while they still can. But China lacks two critical assets in this attempt:

    1.) A real navy.
    2.) A “benevolent” reputation.

    President Obama has gotten a lot of things wrong, but I’m glad he’s at least getting this right. We seem to be hemming China in quite effectively. Great post, Mr. Mead. Agree with Kansas@1: it’s almost criminal that we get this stuff for free.

  • bill phelps

    The strategy and birthing military alliances have to be backed up with hard military power. Our navy is being reduced and well as the other armed forces. The navy’s building program is focused on the LCS, an under armed corvette size ship. The Navy air does not have sufficient pilots and aircraft to fully man a carrier and there is insufficient reserve pilots to make up for losses, etc. The PRC can count hulls and personnel as well as we can.

  • Kris

    “what American conservatives then still called Red China.”

    We still do. Just not, for the sake of politeness, to the ChiComs’ faces when we’re in Pekin.

    [/hum]

    Isn’t it wonderful to be the Middle Kingdom and not have to learn lessons from the 20th century story of the small island nation of Japan?

  • Xenophon

    Hmmm. This article is all about Chinese weakness. How long can we sustain an aggressive posture in the Western Pacific?

    So Chinese growth is slowing? What about the rickety state of OUR economic health. Everything that Meade talks about here depends on our global financial protection racket. Can the dollar what is to come? Can we continue to impose our fiat dollars on the producer and exporter nations? That’s the key question.

  • James Johnson

    Not much mentioned about the political unrest in just about every part of the country. The corruption at every level is what I see at China’s biggest problem. When a tiny fraction enjoys all the benefits and a huge majority sees no real way to succeed you have the makings of revolution. I expect major unrest soon (within 5-10 years) and then many years of violence.

  • Sam

    I think that way too much attention is being paid to America in this discussion. The cold hard geography of the surrounding waters of China make a blockade of Chinese shipping very cheap for the ASEAN nations plus Japan and S K and horrendously expensive for China to prevent.

    If America throughs a Nuclear Umbrella over these countries and allows a blockade, China will fall apart with in a very short time. Note, these American actions are essentially cost free.

    I am retired US military, Viet Nam war Vet and live in Viet Nam

  • teapartydoc

    Arrogance is often a veil for weaknesses. If this is true, judging from what I see of the students they send here there are many, many weaknesses being hidden.

  • Kansas Scott

    In light of this post and prior postings here on the Bo incident, there is a fascinating read in yesterday’s China Daily USA edition
    http://usa.chinadaily.com.cn/china/2012-04/29/content_15176262.htm.

    Under the headline “Rumors about Bo Xilai incident ungrounded” the article lampoons the western media portrayal of the Bo incident saying that the incident is a simple criminal case.

    A sample of the writing: “reports made by some foreign media have been circulated long ago on some websites sponsored by the evil cult that the people despise. Isn’t it a startling anecdote in international press history that rumors from cult-run websites appear in traditional media?”

    Why is the west reporting this way? “There are some in the West who are uneasy about China’s development. They may wish to slander or destabilize China, hoping to see the country collapse as the former Soviet Union did instead of watching it become a democratic, modernized socialist nation. Criminal case has nothing to do with political struggles. Foreign media entities that have disseminated rumors will have to face the music when the truth comes out.”

    Via Media better watch out. You’ve been warned.

  • Atanu Maulik

    Thinking of the longer term, it is the trifecta of US, China and India which will determine the course of history in the 21st Century. Hopefully the leaders of these three nations will get better at managing this threesome.

  • Kris

    China Daily quote from @20: “some websites sponsored by the evil cult that the people despise”

    They just can’t help themselves, can they? (Apropos.)

  • Hutcher

    Luke Lea @#6 makes some interesting points.

    I agree that a Western-style multi-party liberal democracy will not take hold in China, or elsewhere in Asia, for a long time if ever. The Confucian influence on East Asian culture prevents it. Only recently did Japan, supposedly a parliamentary democracy, begin to emerge from the grip of the Liberal Democratic party. And Asia’s greatest success story, Singapore, remains under the heel (politically) of Lee Kuan Yew and Co.

    Yet in terms of economic freedom, Singapore ranks well ahead of the United States due to its established institutions of property rights, rule of law, and an independent judiciary (not to mention reasonable levels of taxation and regulation). We can only hope that China can someday achieve a similar status for its politics and economy.

    And regarding the absence of Lockean liberal democracy in East Asia, we would do well to keep our hand-wringing to a minimum. It aint gonna happen in our lifetime, nor does it need to.

  • Frank Arden

    China awaits inflation, unemployment and a devastating housing bust. Residential real estate values in large Chinese cities exceed 15 to 20 times annual incomes (US and UK equal 5 times, for example) where the financing of real estate development has been borne by municipalities, not banks.

    In the hinterland, peasants (still the majority of the one billion plus population) still scrape up twigs to fuel their woks.

    China chose to build an export platform fueled by demand from US middle class consumption, but failed to create a bona fide middle class (and internal consumption) to drive her own economy.

    These trade imbalances and huge profits had nowhere to go but back to the US to finance our largess from deficits and resulting national debt.

    While she continues to pirate intellectual property against international law without a reliable internal rule of law and of commerce, and without significant banking reform, China insured unfair trade by pegging the yuan below the dollar by effectively out- sourcing her monetary policy to the US Federal Reserve Bank. The chickens are coming home to roost. They always have.

    Her investments in US debt do not hold us hostage. They hold China hostage. In spite of all the vogue talk by the legacy media (or MSM, or whatever you want to call it) about China’s rise and America’s decline, it is quite true that she would wreck her economy were she to dump US bonds on the market. That would result in significant loss in bond values and inflationary supplies of her currency while she faces a housing bust and a declining economy as the US consumes less on credit.

    And yet, and yet. On the one hand, as economic imbalance seeks equilibrium, and as China seeks some way to counter the Great Pacific Entente of late by the US, on the other hand we must remember that our own fiscal mindset could serve to ruin an otherwise brilliant and appropriate US policy developed over the last twenty years.

    If the US continues to spend more than it has and to make social commitments greater its financial capacity to make, a real friction will result in hard choices between guns and butter. It is well said that our new policy seeks not to dominate the Asian Pacific, but it undoubtedly will require a larger presence of the US Navy’s assets and American power.

    It would be a shame if our budgetary constraints soon thwarted the success of this balance of power policy of entente if we can’t afford to enforce it because we have become too poor to do it.

  • http://facingzionwards.blogspot.com/ Luke Lea

    Will China corrupt us? From the New Yorker:

    “W
    almart allegedly covers up millions of dollars in bribes paid to local government officials in Mexico. A former Morgan Stanley executive is convicted of funnelling money to a Chinese official in connection with real-estate investments. The S.E.C. sends “letters of inquiry” to several Hollywood studios, looking into the possibility that they used bribes to crack the Chinese movie market. When you read the business pages these days, you can be forgiven for thinking that international commerce is a cesspool of graft. Yet, by historical standards, things have never been cleaner. What’s changed is how strenuously governments are cracking down on corruption.

    Until the nineteen-seventies, Western countries paid little attention to corruption overseas, and bribery was seen as an unpleasant but necessary part of doing business there. In some European countries, businesses were even allowed to deduct bribes as an expense. That began to change with a couple of high-profile scandals: the C.E.O. of the fruit giant United Brands killed himself during an investigation revealing that the company had bribed the President of Honduras in order to avoid an export tax; and it emerged that Lockheed Martin had, among many other misdeeds, bribed the Prime Minister of Japan and the President of Italy to win contracts. So, in 1977, Congress passed the Foreign Corrupt Practices Act, which banned the bribery of foreign public officials. The F.C.P.A. was symbolically important, but it didn’t do much: it was rarely enforced, and for almost two decades the U.S. was the only country with a law like it. But in 1997 the O.E.C.D. banned bribery of foreign officials, and in 2003 the U.N. called on its member states to do the same. Meanwhile, the Bush and Obama Administrations significantly stepped up enforcement of the F.C.P.A., to the point where insuring compliance has become an unavoidable part of any multinational’s business. In the past five years, companies have paid the U.S. government almost four billion dollars in F.C.P.A. fines.”

    [That last line disturbs me. Looks like companies are treating these fines as a cost of business — in case you get caught.]

  • http://facingzionwards.blogspot.com/ Luke Lea

    Think about it: an American corporate official who has paid a bribe in China can be blackmailed.

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