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Published: Wednesday, 8/15/2007

China's economic, political influence growing in Asia

Dan Simpson, a retired diplomat, is a member of the editorial boards of The Blade and Pittsburgh Post-Gazette. Dan Simpson, a retired diplomat, is a member of the editorial boards of The Blade and Pittsburgh Post-Gazette.
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AS CHINA emerges and grows as a regional and world power it sometimes takes actions and positions that alarm the United States.

Examples include, in the military sphere, development and testing of anti-satellite weapons. America's intelligence collection and conduct of modern warfare depend on its unchallenged superiority in the use of satellites.

Perhaps even more alarming - and definitely more annoying, since this is a position we put ourselves into through imprudent budgeting and taxation policies - is China's recent threat to use the $900 billion in U.S. bonds it holds to damage the American economy if the United States takes economic measures against it.

Much light is cast on the whole picture - what China is doing and what U.S. policies should be - by a brilliant and useful new collection of essays published in June by the University of Pittsburgh Press. It is called China's Rise and the Balance of Influence in Asia. The book's editors (and the authors of the bookends of its 10 essays) are William W. Keller and Thomas G. Rawski. Mr. Keller is director of the Matthew B. Ridgway Center for International Security Studies and Dr. Rawski a professor of economics and history, both at Pitt.

Reading the book will not set your mind at ease about China's capabilities or intentions, particularly if you are attached to the concept that America is and will stay the world's sole superpower. The book's discussion of various aspects of China will, however, make its actions more comprehensible and provide a clearer context for evaluating evolving U.S. policies for dealing with China, including some of its more challenging aspirations.

These policies could include - one awful day - how the United States should respond if China grabs Taiwan.

I came away from the book comforted that one of my long-held bases of analysis - that China is basically a mercantile country - remained firmly in place. Perhaps because it is a traditional Chinese strength, but also because increasing prosperity in the country is the glue that keeps the country's 1.3 billion people accepting of rule by an aging, obsolete Communist Party, the book underlines that China is currently dealing with the rest of Asia and the world through commercial diplomacy. It is well-placed to do this; its foreign trade has grown in recent years at more than 14 percent per annum.

That's better than military conquest, such as Japan tried in the 1930s with its Greater East Asia Co-prosperity Sphere. At the same time, I hadn't realized - and the book points out - just how good the Chinese are at commercial diplomacy and the way their influence has expanded throughout the region. At a time when the use of coercive military force is generally considered unacceptable - unless you are the rogue U.S. government - the Chinese approach is more insidious, deeper, and longer lasting.

Facts that I found startling, reflecting my own ignorance, included China's having passed the United States as South Korea's and Japan's largest trading partners in the first half of this decade. That means that China's relationships with these countries now are most akin to America's with Canada and Mexico.

The implications for both Japanese and South Korean defense policies are critical. Japan is moving to even modify its post-war peace constitution if necessary to give itself a defense capacity independent of the United States. South Korea is dragging its feet on any measures the United States might advocate that would constitute augmenting confrontation with North Korea, still backed by China. South Korean President Roh Moo-hyun and North Korean president Kim Jong Il are scheduled to meet in Pyongyang later this month. The Keller-Rawski book suggests that the Chinese consider Korean reunification to be not far off.

China's pursuit of commercial diplomacy does not imply that the country is a closed room in economic terms. By 2005, China had become the world's largest destination of foreign direct investment. It is also the world's sixth-largest source of foreign direct investment. The overall economic picture that emerges is one of an active - almost hyperactive - economy in dynamic commercial contact with its immediate neighbors, the Asian region, and the world. China's adventures in pursuit of resources, particularly oil, are becoming painfully legendary. On Monday the New York Times front page had China positioning itself to slurp up the oil of a new producer, Chad, deep in the heart of Africa.

So what about the United States? Various essays in the book suggest that China is basically running circles around the United States in Asia. Some of that is due to the fact that China's is an aggressively growing economy in Asia (while ours is growing much more modestly) and continues to be preoccupied primarily with its domestic market and internal issues. If the Chinese do that with a domestic market of 1.3 billion and we do it with a domestic market of 300 million, guess who loses in the long run? The exploitation of China's vast internal market is only just beginning.

Now, the book doesn't suggest - nor is it the case - that China doesn't have large, constraining economic and political problems. There is an important development gap between the coastal area and the interior, as well as between the north and south. If democracy is essential to development, a hypothesis still being tested in China, it has yet to get further than village elections. China also has neighbor problems - Japan, North Korea, and Taiwan. The need to import oil and other resources imposes limits. Its sclerotic, ideological, obsolete form of government is at risk from challenges by domestic or external forces. A young man standing in front of a tank in Tiananmen Square in 1989 made the system shake. Who knows how good China's armed forces are? The last time they fought a war was 1979.

The major U.S. fault in dealing with China is lack of full attention and an insufficient response in Asia and in bilateral relations to what China is doing. That is easy to change, with new leadership, free of the Iraq war.

Dan Simpson, a retired diplomat, is a member of the editorial boards of The Blade and Pittsburgh Post-Gazette.



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