SPEAKING
FREELY The dangers in talking to
China By William R Hawkins
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
During the week
leading up to the second US-China Strategic
Economic Dialogue (SED), held in Washington from
May 22-23, a coalition of financial-services trade
associations formed to support economic
cooperation with China.
Calling their
group Engage China, they ran ads promoting the
slogan
"China's growth, America's opportunity". The ads
ran online and in print media from May 16-23.
Engage China includes the American Bankers
Association, the American Council of Life
Insurers, the American Insurance Association, the
Council of Insurance Agents and Brokers, the
Bankers' Association for Finance and Trade, the
Financial Services Forum, the Financial Services
Roundtable, the Investment Company Institute, and
the Securities Industry and Financial Markets
Association.
The first SED took place in
Beijing last December, having been initiated by US
Treasury Secretary Henry Paulson to calm trade
tensions with China. Paulson is the former chief
executive officer of Goldman Sachs, a very active
investment bank in China. He made a fortune
helping build Chinese economic strength and has
shown no desire to confront the monster he helped
to create.
A central issue is Beijing's
manipulation of the exchange rate of its currency,
the yuan. Economists have estimated that the yuan
is undervalued by as much as 54%, according to a
recent survey by the Congressional Research
Service. The US Congress requires the Treasury to
determine whether foreign countries set exchange
rates for the purpose of "gaining unfair
competitive advantage in international trade".
Such a finding would require the treasury
secretary to initiate negotiations on an
"expedited basis" for the purpose of eliminating
the unfair advantage. Paulson has refused to find
Beijing guilty of this charge, saying only that
the yuan is "misaligned" with the US dollar.
So instead of negotiations, Paulson is
engaging China in a "dialogue" that no one expects
will change Beijing's behavior in any meaningful
way. That is why Paulson's old comrades from Wall
Street want to support the SED. They are all
heavily involved in trying to profit from Chinese
expansion and do not want any confrontations
between Beijing and Washington.
A more
accurate slogan, however, would be "China's
growth, America's peril". While corporations see
the gains from trade and investment in terms of
profit, Beijing uses its gains in industrial
capacity, capital and technology to rise as a
major power in world politics - with an agenda
hostile to the interests of the United States. At
every danger point around the globe, be it Iran,
North Korea, Sudan, Venezuela, Cuba, Myanmar,
Zimbabwe or Central Asia, China is on the opposite
side of the United States. It is this "strategic"
aspect that is missing from the Strategic Economic
Dialogue.
Two days after the SED
concluded, the US Defense Department issued its
annual report to Congress on "The Military Power
of the People's Republic of China". The new
Pentagon report repeats what was said in the 2006
Quadrennial Defense Review, that China "has the
greatest potential to compete militarily with the
United States and field disruptive military
technologies that could over time offset
traditional US military advantages". The 2007
Military Power report discusses the economic
foundations of China's rise as a global power:
Sources for PLA [People's Liberation
Army] modernization include domestic defense
expenditures, indigenous defense industrial
developments, and foreign technology acquisition
... Beijing seeks a wholly indigenous defense
industrial sector. China's defense industries
benefit from foreign direct investment and joint
ventures in the civilian sector, technical
knowledge and expertise of students returned
from abroad, and state-sponsored industrial
espionage - all of which are driven by the
performance of the economy. China's economic
growth has enabled Beijing to invest ever
increasing resources in its defense sector over
the past 15 years.
Economic
globalization, based on transnational corporations
and free trade, cannot survive in a world still
beset by geopolitical rivalries where the
distribution of wealth, technology and productive
capacity are key elements in the balance of power.
Thus major business interests seek to deny that
such dangers exist as they lobby against any
restrictions on their commercial operations.
National Foreign Trade Council (NFTC)
president (and a Commerce Department official
during the administration of US president Bill
Clinton) William Reinsch has been lobbying his
former department against tightening export
controls on sales of dual-use technology to China.
He argues that security restrictions "undermine US
competitiveness", by which he means the ability of
certain corporations to make money selling the
Beijing regime whatever it wants, regardless of
the consequences. The NFTC membership consists of
major transnational corporations and banks whose
top priority is "advocating public policies that
foster an open international trade and investment
regime".
The NFTC may have provided the
model for Engage China when it created USA*Engage
in 1997 to oppose economic sanctions against rogue
states. An early concern was to protect the
military dictatorship in Myanmar, which is heavily
backed by China. On May 9 this year, USA*Engage
and NFTC joined other trade associations to urge
the US Senate to reject legislation that would
"impose broad, unilateral US sanctions resulting
from foreign entities doing business with Iran".
The Business Roundtable, the National Association
of Manufacturers, and the US Chamber of Commerce
were among the co-signers.
Yet US
sanctions, especially closing down Iran's access
to foreign financial institutions, have been
particularly successful in putting pressure on the
Tehran theocratic regime. That Iran is supporting
terrorism across the Middle East - including acts
against US troops in Iraq - and is developing
nuclear weapons does not seem to bother these
leaders of Big Business.
But it should
bother the American people and their
representatives in Washington. Though everyone
acknowledges that national security should trump
private interests in international affairs, the
necessary governmental oversight is often lacking
or skirted by unscrupulous traders and their
lobbyists. And the revolving door between
government officials and corporate executives has
done more to erode the ethical duties of public
service than to instill in the business community
any sense of patriotic purpose. There is nothing
equivalent to the Chinese strategic concept of
"comprehensive national power" motivating US
policymakers to reject the blandishments of
corporate-sponsored engagement campaigns.
No wonder Chinese Vice Premier Wu Yi, who
led Beijing's delegation at the SED, called the
event "a complete success".
William
R Hawkins is senior fellow for
national-security studies at the US Business and
Industry Council in Washington, DC.
(Copyright 2007 William R Hawkins.)
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click hereif you are interested in
contributing.
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