Page 2 of 5 A dialogue of the
mute By Henry C K Liu
its
suitability to Chinese culture, historical
conditions and national purpose.
China
remains committed to the belief that socialist
construction, albeit requiring modification based
on lessons from past errors, is the correct
approach to the long-overdue revival of Chinese
civilization. Paulson's market model was tried by
misguided reformers of the late Qing Dynasty by
appeasing Western
imperialism and by the
Kuomintang (Nationalist) rightists following the
advice of Washington after World War II. Both
failed miserably, with China falling into chaos
and foreign domination until socialism rose over
the country. China is not about to go down the
same path again.
Paulson went on to say:
China is at a crucial juncture.
Decisions it makes in the next few years will
have long-lasting effects around the world. The
United States and China each have a vision of
how our relationship will evolve, and in many
respects our visions are similar. We both want
strong commercial ties that produce benefits for
workers and consumers in America and China. We
both want China to grow in a way that is
sustainable economically and environmentally and
that contributes to global prosperity. We both
want China to be a responsible stakeholder in
the global economy and in multilateral
institutions.
On the face of it,
Paulson's vision is a viable one. Yet the path to
his goal does not necessarily mean China must
follow the US model of development.
There
is no question that within the limits of his
personal commitment to capitalism, Paulson's
intention for China is friendly, peaceful and
well-intentioned. His own success in finance
capitalism understandably provides him with a
world view that finance capitalism is the best
path to solving the world's socioeconomic
problems. Yet unless and until he recognizes the
limits of the US model as being suitable only to
US culture and conditions, he runs the risk of
becoming the economic version of Graham Greene's
The Quiet American, whose well-intentioned
yet naive idealism caused enormous damages of
unintended consequences in global geopolitics
during the Vietnam War era.
Shanghai
Communique renounces policy of
transformation In the 1972 Shanghai
Communique, the US sides states:
The United States believes that the
effort to reduce tensions is served by improving
communication between countries that have
different ideologies so as to lessen the risks
of confrontation through accident,
miscalculation or misunderstanding. Countries
should treat each other with mutual respect and
be willing to compete peacefully, letting
performance be the ultimate judge. No country
should claim infallibility and each country
should be prepared to re-examine its own
attitudes for the common good.
The
Chinese side states:
The people of all countries have the
right to choose their social systems according
to their own wishes and the right to safeguard
the independence, sovereignty and territorial
integrity of their own countries and oppose
foreign aggression, interference, control and
subversion.
The two sides jointly
state:
There are essential differences
between China and the United States in their
social systems and foreign policies. However,
the two sides agreed that countries, regardless
of their social systems, should conduct their
relations on the principles of respect for the
sovereignty and territorial integrity of all
states, non-aggression against other states,
non-interference in the internal affairs of
other states, equality and mutual benefit, and
peaceful co-existence. International disputes
should be settled on this basis, without
resorting to the use or threat of force. The
United States and the People's Republic of China
are prepared to apply these principles to their
mutual relations.
US must accept
China as a socialist nation The only way
the United States and China can productively
cooperate is for the US to accept China as a
socialist nation with Chinese characteristics and
for China to accept the US as a capitalist nation.
There is no need for the separate socioeconomic
systems of the two nations to converge. The US
transformation policy of regime change by any
means, violent or non-violent, will not lead to
full cooperation or peace.
The problem
with Paulson's vision is that two decades of
global neo-liberal trade have not produced
equitable benefits for workers in either country.
And until the SED focuses on equitable
distribution of the benefits of trade by
restructuring the current dysfunctional terms of
trade, both internationally and domestically, all
the high-level bilateral dialogues will still not
prevent social instability that translates into
political instability in either country and
conflicts between them.
To appease
domestic political pressure from Congress, Paulson
has been forced to misidentify, against his better
judgment, mere symptoms as fundamental causes of
trade imbalance: "We do have our differences. The
United States believes China can do more to reduce
its trade surplus. We are encouraging China to
introduce greater flexibility for its currency,
consistent with economic fundamentals. And China
needs to do more to protect intellectual-property
rights."
Paulson went on to identify
"transparency and respect for the rule of law as
core principles that affect all economic-policy
and trade issues. Commitments to these principles
are essential to China's maintaining the
confidence of international businesses and of its
own investors and entrepreneurs." Yet China, with
its alleged lack of transparency and deficiency in
rule of law, is currently inundated by massive
foreign-capital inflow, which reveals Paulson's
assertion as pure ideological fixation.
He
also asserted that "working on these principles
across government ministries can enhance our
ability to reach agreement on a number of key
issues that we negotiate ministry by ministry".
The issues of transparency and rule of law are not
issues of bureaucracy. They are
philosophical/cultural issues that separate
societies. From China's perspective, the US system
is not transparent and its respect for rule of law
is highly selective. Yet China does not demand
that the United States change before it will trade
with it. The US openly advocates trade as a way
for regime change by peaceful evolution. Therein
lies the fundamental conflict in US-China economic
relations.
For tens of centuries, China
has traded with the rest of the world without
insisting that its trade partners be reformed to
be more like China. Must China now make itself a
mirror image of the US to trade with it?
Protectionist US presses China to open
markets Paulson went on: "One of the most
important topics for discussion is how to help
China manage its transition to freer, more open
markets, including capital markets.
"Every
strong, vibrant economy in the world has open,
competitive capital markets that attract
investment and allocate resources to their most
productive uses. Such markets will contribute to
sustained economic growth and boost job creation
in China. And strengthening and reforming
financial markets will ultimately allow the
Chinese to freely float their currency."
Free and open markets have elicited a
powerful protectionist backlash in Paulson's own
back yard. Such free and open capital markets have
produced recurring financial crises around the
world in past decades, and competition for markets
by big powers have caused two World Wars.
Still, according to the Institute for
International Economics, China's ratio of imports
to gross domestic product (GDP) soared from 5% in
1978 to 30% in 2005. By that measure, China is now
twice as open to trade as the US and three times
as open as Japan. China has in fact been the most
rapidly growing market for
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