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China's two-pronged
offensive
By Michael A
Weinstein
Last week, China flexed its
muscles in the economic and military spheres,
setting off a flurry of reactions in Washington
that threaten to complicate Sino-American
relations and reveal long-term risks for the
globalization process.
China's stepped-up
assertiveness on the world stage came in the form
of bids by Chinese businesses to acquire US
appliance manufacturer Maytag and oil company
Unocal, as well as Beijing's test firing of its
most advanced and longest-range intercontinental
missile, the JL-2. Those moves spurred protests in
the US Congress that, in turn, were met by
ambivalent responses from the George W Bush
administration, which is cross-pressured by
conflicting interests.
Following the
acquisition in May of IBM's personal computer
business by China's Lenovo Group, the bid for
Maytag by Haier America Trading - the US arm of
appliance giant Haier - and the move to acquire
Unocal by China National Offshore Oil Company
(CNOOC) mark a new stage in Beijing's
export-driven strategy of economic development
that is geared to make China an "all-round" great
power with state-of-the-art industries in all
strategic sectors over the next 20 years.
The test of the JL-2 missile, which has a
6,000 mile (9,656 kilometer) range, advances
toward Beijing's aim of enhancing China's military
capabilities in order to make the country the
dominant power in East and Southeast Asia,
gradually eroding US influence.
Both the
economic and military moves show that Beijing's
geostrategy is firmly in place and that the
Chinese political class is confident the strategy
is working.
New stage of
development
Up until Lenovo's acquisition
of IBM, Beijing's development strategy had been
based on attracting foreign investment into China
on the basis of its massive pool of cheap labor
and its potential market in order to build up its
industries and acquire advanced technologies.
Having succeeded in creating an industrial base
with some powerful and cash-rich companies, the
opportunity exists for China to expand its export
markets and secure supplies of the energy and
mineral resources it needs to run its burgeoning
industrial machine through the purchase of foreign
corporations.
The acquisition of foreign
businesses has the added strategic advantage of
creating interest groups in the countries in which
those businesses are based that are economically
dependent on China and, therefore, would tend to
be favorable to its interests in political
conflicts.
Haier's US$1.28 billion bid for
Maytag illustrates the continuation and
intensification of Beijing's export-driven growth
strategy. Having already gained a foothold in the
US market through its sales of refrigerators and
air conditioners to the Wal-Mart and Target
discount chains, Haier would like to expand its
penetration by buying a company with a name brand
and an established distribution and servicing
network. Analysts agree that if Haier's bid is
successful, the company would move Maytag's
production to China and utilize the acquired
company's distribution and servicing system to
market its own lines in addition to the Maytag
brand, which might eventually be eliminated.
CNOOC's $18.5 billion bid for Unocal has
greater strategic significance than Haier's move
to acquire Maytag. Already the target of a
takeover effort by Chevron, Unocal is especially
attractive to Beijing because of the drilling
rights the company has in Thailand and Myanmar,
which Beijing includes within its prospective
sphere of dominant influence.
In order to
achieve its goal of transforming China into a
comprehensive world power, Beijing must have
secure access to raw materials in markets that
have become increasingly competitive and tight,
due in great part to China's growth. The bid for
Unocal signals that Beijing is aware it must act
quickly to guarantee its resource supplies, at the
expense of competitors, especially the US. As part
of Beijing's overall strategy, Chinese enterprises
have recently purchased mines in Australia and
Canada, and Beijing has pursued trade deals geared
to natural resources in South America. Unocal is
part of that larger picture.
On the
military front, Beijing's test of the JL-2
missile, first reported in the Washington Times,
marked, according to an anonymous US Defense
Department official, "an unexpected advance in
technological capability". The JL-2's range of
6,000 miles is greater than that of any other
missile in China's arsenal, and it is designed for
the new generation of Chinese nuclear submarines,
the first of which was launched in 2004. With its
defense spending estimated at $78 billion per
year, Beijing's strategy of creating a
technologically advanced military deterrent is
bearing fruit.
China's growing
assertiveness awakened a predictable response in
both houses of the US Congress, where legislators
- especially those from California, where Chevron
is based - expressed concern about the Unocal bid.
Chairman of the House Resources Committee Richard
Pombo, a California Republican, said that a
Chinese takeover of Unocal would be contrary to US
security interests. Responding to similar
criticism in the Senate, US Treasury Secretary
John Snow promised that the government's Committee
on Foreign Investments would investigate the
takeover if a deal was consummated.
The
Bush administration's tepid response to the
Chinese bids reflects its conflicting commitments
to globalized markets, national security and
domestic interests that increasingly appear to be
irreconcilable. Protectionist sentiment, aimed
mainly at China, is rising in Congress and could
ultimately threaten the globalization process. In
a pattern that is becoming familiar over a broad
range of international issues, the Bush
administration is facing increasing difficulties
in sorting out its priorities, giving the
advantage to states with more coherent strategies.
The bottom line
China's next
stage of development brings the incipient conflict
between Beijing and Washington into full view.
Holding back Chinese expansion - if that is even
possible - carries the high probability of
derailing globalization; allowing it to occur
makes the realization of Beijing's geostrategic
aims far more likely.
Look for Beijing to
proceed confidently on its course and for
Washington to be incapable of mounting an
effective resistance.
Published with
permission of the Power and Interest News
Report, an analysis-based
publication that seeks to provide insight into
various conflicts, regions and points of interest
around the globe. All comments should be directed
to content@pinr.com |
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