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4 CHINA AND APPEASEMENT, Part
2 Not much rise,
and even less peace By Henry C
K Liu
expected to be
labor-intensive and relatively low-tech for a long
time to come.
Forcing Chinese imports to
the United States to rise in price through
exchange-rate manipulation would only cause US
inflation without lowering the trade deficit, as
the trade imbalance would remain unchanged while
the actual amount of goods exchanged
would
adjust. Spending is a function of available
disposable funds. As dollar hegemony produces the
opportunity for the US to run a trade deficit
financed by a capital-account surplus, a US trade
deficit will continue as long as US consumer
credit can be finance by external debt from Asia
in general, and China in particular. Prices of
goods are irrelevant under such circumstances. In
fact, the possibility of a higher exchange rate of
the yuan increasing rather than decreasing the US
trade deficit with China is very real if higher
Chinese import prices are financed by higher
Chinese dollar reserves, allowing the US consumers
to take on more debt.
Further, the share
of Chinese exports to the US has been shrinking as
a percentage of total Chinese exports, from 37% in
2000 to about 25% in 2006, being replaced by
Chinese exports to markets outside the US. Chinese
exports to the European Union remain stable at
about 20%, and to East Asia they declined from 25%
in 2000 to 20% in 2006. Exports to the rest of the
world, such as the Middle East, Africa, and
Central/Latin America, grew from 16% in 2000 to
30% in 2006 and are expected to grow more in
coming years to pay for increases in imports in
key commodities. While China's foreign reserves
keep growing, most of the growth is now
increasingly coming from other countries than
directly from the US. The day is fast approaching
when US-China trade, while continuing to be
important, will cease to be the all-consuming
factor in determining Chinese policy and US-China
relations.
For the first time since World
War II, Japan's biggest trade partner is no longer
the United States. In the fiscal year ended on
March 31, 2007, China overtook the US as Japan's
largest trading partner, with trading volumes
reaching 25.43 trillion yen ($215 billion).
Japan's trade with the US in the same period was
25.16 trillion yen. Japan's trade surplus widened
to 74% from a year earlier at 1.633 trillion yen.
Trade between the two Asian giants is boosted by
Japanese firms shifting their manufacturing work
to China to lower labor costs and to tap into
China's fast-growing market, helped by a weaker
yen.
The US administration's decision to
file two complaints against China with the WTO
caused the Chinese government to express "deep
regret and strong dissatisfaction" with the move.
Zhang Yansheng, head of the International Economic
Research Institute at the Economic Planning
Ministry, said the tough US protectionist stance
on its uncompetitive sectors would make it hard
for China to compromise in the future. He said the
US should act as "an ordinary member of WTO,
rather than the lawmaker".
Higher-level
response came a few days later from Vice Premier
Wu Yi, who heads China's economic strategic
dialogue with US Treasury Secretary Henry Paulson,
warning that complaints to the WTO over commercial
piracy in China will "badly damage" cooperation
with Washington and bruise bilateral trade ties.
The unilateral US action "flies in the face of the
agreement between the two countries' leaders to
propose dialogue as a way of settling disputes",
Wu said, adding that never before had a WTO member
simultaneously mounted two cases against another
country. "This will have an utterly negative
impact and will inevitably badly damage bilateral
intellectual-property cooperation," she said,
while also warning it would "harm" cooperation
over market-access issues.
This new US
toughness on China is the opening phase of the new
trade war in which the battle is really being
waged within US domestic politics between the
White House and Congress, with the White House
trying to ameliorate protectionist moves in
Congress. The administration's new assertiveness
toward China is designed to score points for
President George W Bush as he tries to get
Congress to renew by June 30 presidential
fast-track authority to negotiate trade pacts.
China is merely the scapegoat in a new war inside
US domestic politics between the finance
internationalists and the domestic populists.
On the other side, China's tough response
is in part driven also by domestic politics where
complaints about appeasement to illegitimate US
demands are rising. The dispute on
intellectual-property rights is exaggerated partly
because Hollywood, which is a special-interest
party in the dispute, is traditionally a heavy
political contributor to Democrats, who regained
control of Congress in last November's mid-term
elections.
Even if China should be
successful in shaking off creeping US
neo-colonialism, the rules of competition within
the current global economic order will inevitably
move China toward a traditional rise as an
imperialist great power. The leadership has
repeatedly asserted that China will "never be a
hegemon, never practice power geopolitics, and
never pose a threat to its neighbors or to world
peace". To keep these promises, China must avoid
acting as a stakeholder in the existing
international system that requires every
participating nation to aspire to hegemony through
power geopolitics and to pose threats to its
neighbors and to world peace.
The
responsibility of World War II cannot be laid
exclusively on the fascist governments of Germany
and Japan. The Western democracies were equally
responsible for creating the underlying
geopolitical causes of war, as evidenced by the
historical facts relating to the manipulations at
Munich. The global economic collapse in the Great
Depression, the bastard child of unregulated
market capitalism, was also a major cause of war.
World peace can come only from a new world order
of economic equity and social justice, away from
the current economic order of exploitation of the
weak and the poor by rewarding greed of the strong
fueled by debt and speculation.
Toward
a harmonious society Zheng Bijian
identifies the third strategy as transcending
outdated modes of social control and to construct
a harmonious socialist society. China is
reportedly strengthening its democratic
institutions and the rule of law and trying to
build a stable society based on a spiritual
civilization. A great number of ideological and
moral-education programs have been launched,
according to Zheng.
Yet it is undeniable
that China has moved away from economic democracy
in the past two decades, and educational programs
alone cannot be effective without a reality of
equality and justice on the ground, conditions
that are under relentless attack in any market
economy.
In defending China from unfair
Western accusations of human-rights violations,
Zheng is appeasing Western liberal propaganda by
trying to explain that China is beating its
grandmother less these days, and some day it can
even be expected to stop entirely. Much of the
mismatch on human-rights issues between the US and
China traces to cultural differences between
China's Confucian heritage and Western liberalism,
exacerbated by Cold War moralism.
The
Information Office of the State Council of the
People's Republic of China released on March 9,
2006, its own critical report on "The Human Rights
Record of the United States in 2005". Friends of
the US in Europe and elsewhere have grown
increasingly impatient, disappointed and annoyed
with anti-human-rights actions by Washington. The
US was voted off the United Nations Human Rights
Commission on May 4, 2001, for the first time
since the panel's founding under US dominance in
1947.
John Bolton, then US ambassador to
the UN, voted against a draft resolution submitted
to the 191-nation General Assembly on creating a
new Human Rights Council to replace the old Human
Rights Commission, even though advocates such as
Human Rights Watch and Amnesty International
voiced support for it. A group of 12 Nobel Peace
Prize laureates endorsed the draft and urged the
General Assembly to adopt it. They included former
US president Jimmy Carter, Archbishop Desmond Tutu
of South Africa, and former Costa Rican president
Oscar Arias Sanchez.
China needs to
"strengthen its democratic institutions and the
rule of law" in the Western mode like it needs a
revisionist
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