Santa Claus,
were Christianity to disappear, would live on in China
as a minor prosperity god. The Chinese love to shop and
have naturalized the American symbol of Yuletide
acquisitiveness. America's contribution to Chinese
prosperity goes beyond symbols, though. The United
States gave China precisely what it lacked, namely an
open market for goods, access to financial markets, and
a store of value for savings, among other things.
Providing a global reserve currency has been America's
decisive contribution to Chinese success. The result
will be a Sino-US duopoly rather than a unipolar world.
If there were a minor god of strategy, though,
we might call him Santa Clausewitz, after the
19th-century Prussian military theorist. He is a god not
of prosperity but of creative destruction, and his
sleigh bells are tinkling over the rooftops of Beijing.
The Sino-US power duopoly constitutes the most
disruptive force in world economic life since cheap
British textiles crushed India's weaving industry at the
outset of the 19th century. An impossibly high threshold
confronts any other part of the world seeking economic
success. Not in their wildest imaginings could American
planners have invented a more effective way of
projecting US power and suppressing prospective
challengers.
Something like a folie a
deux unites US neo-conservatives who fear China
with America-haters who hope that China will undermine
US world influence. Before radical Islam appeared on
the radar, the likes of William Kristol and Robert
Kagan warned in 1996 of the "emergence of China as a
strong, determined, and potentially hostile power". As
recently as December 13, Mark Helprin complained
in opinionjournal.com that "China is now powerful
and influential enough ... to make American world
dominance inconceivable". Nonsense. It is China's success that
is inconceivable without US world dominance. If US
financial markets were to break up, China would go into
a tailspin.
The neo-conservatives take
exception to China's political system, which no one will
mistake for Anglo-Saxon democracy. By the same token,
the anti-imperialists claim that China offers an
alternative to the US model, proof that economic success does
not depend upon the Anglo-Saxon legal template.
Ideology overwhelms reason in both arguments. China's
success leans upon US financial markets, which cannot
exist without Anglo-Saxon law. The Chinese are willing
to take risks in China precisely because they can share
local risk with international investors, while keeping
their own savings safe in the United States.
The
Chinese are famous for caution with respect to core
savings, and just as famous for gambling with money they
can afford to lose. No nation saves more of its income;
if one believes the official numbers, Chinese salt away
nearly half their earnings. The United States makes it
possible for Chinese to take risks and stay safe at the
same time.
China's half-trillion dollars
of foreign-exchange reserves, according to the same
critics, display China's strength and the United States'
weakness. On the contrary: the reserves are there because
the government of China knows that the Chinese
trust US banks rather than Chinese ones, and wisely keep
a hoard of rainy-day savings in US funds. China
cannot invest its savings at home until such time as
Chinese laws, regulations, and politics give rise to a
banking system as strong as America's, that is, until
China's legal system looks a lot more Anglo-Saxon.
War and revolution have destroyed the savings of
generation after Chinese generation. It may seem
disadvantageous for Chinese to sell goods to the US in
return for paper assets, but beauty is in the eye of the
bondholder. People who just have struggled up from
poverty place great value on knowing that their children
never will know what it is to be poor. Once they have
made themselves secure, Chinese business people take
risks on a scale that astonish their counterparts in
other countries.
China is successful because
Americans are willing to take the risk of letting
foreigners break the rice-bowl of its own citizens.
Chinese imports have wiped out entire industries in the
United States, notably electronics, toys and textiles.
The US has imposed upon its own citizens the risk of
finding alternative employment. It allows foreign
students to compete for places in its top universities
on equal terms with natives, and protects foreign
businessmen under the same laws.
It is hard to
imagine what sort of geopolitical quarrel might arise
between China and the United States, leaving aside the
matter of Taiwan, an eminently manageable issue. On the
contrary, Beijing and Washington agree about North
Korea, and have a common interest in suppressing radical
Islam. Where European leaders uniformly backed Senator
John Kerry's failed bid for president, China's leaders
quietly hoped for a victory for George W Bush, as
Singapore's former leader Lee Kuan Yew observes in the
upcoming issue of Forbes magazine.
With Bush's re-election, China is assured
of continuity in US policies, especially those
concerning Taiwan ... China, therefore, has reason to
welcome this second Bush term ... Islamist terrorists
are active in the southern Philippines and Indonesia
... Only when al-Qaeda and its Arab affiliates are
seen to fail will their disciples in Asia lose heart.
Unintentional strategic collaboration
between the United States and China, however, transcends
the visible areas of agreement. By assisting the birth
of China as an economic superpower, America has shut the
door to prospective challengers. The more populous
Muslim countries - eg Indonesia, Pakistan, Egypt and
Iran - have
missed the boat and will remain poor for at
least another generation. In the Islamic world, Turkey
alone has had export growth within an order of magnitude
of China's.
A rising tide does not lift all boats.
It swamps the ones that are anchored to the bottom.
"Comparative advantage" in international trade sounds
well enough, but not all countries have one. Asia
controlled half of world manufacturing during the 17th
century because of the skill of its weavers. When the
industrial revolution in England cut the cost of making
cotton fabric by a factor of 300, famine overcame
formerly prosperous Bengal. The Indians turned to
farming opium for sale to China, to the detriment of
both countries but the enrichment of the British East
India Company.
Chinese resentment at colonial
exploitation never will fade, but it is offset by the
delicious fact that it is China's turn to disrupt the
world economy. In September, Spanish workers burned
warehouses containing shoes imported from China in the
center of Spain's shoemaking industry. That does not
compare, of course, with the burning in Guangzhou of
East India Company opium in 1838, but there is something
of a parallel.
Europe has less to fear from
Chinese competition than from the shrinkage of its own
labor force, however. The biggest losers will be
countries with young and growing populations that need
light manufactures to absorb migrants from the
countryside but cannot compete with Chinese efficiency.
Two generations behind in building infrastructure, India
should be worried. For the Middle East and North Africa,
I fear, the train has departed.
(Copyright 2004
Asia Times Online Ltd. All rights reserved. Please
contact us for information on sales, syndication and republishing.)
Santa Clausewitz, a minor Chinese
god
missed the boat and will remain poor for at
least another generation. In the Islamic world, Turkey
alone has had export growth within an order of magnitude
of China's. 
