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4 CHINA AND APPEASEMENT, Part
2 Not much rise,
and even less peace By Henry C
K Liu
counter-revolution. What
China needs is to rediscover the participatory
democracy, socialist ideological cohesiveness, and
commitment to socio-economic justice of its
revolutionary days and in the first decade after
the founding of the socialist republic in the
context of a Confucian civilization of a society
governed by social rites. This is the direction in
which China is moving with its harmonious-society
policy. Any suggestion that this approach is
moving
China toward Western democracy and rule of law is
merely adding to confusion and encouraging
counterproductive Western fantasy.
Zheng
lists several dynamic forces in the carrying-out
of the three strategies: numerous clusters of
vigorously developing cities in the coastal areas
of eastern and southern China, and similar
clusters emerging in the central and western
regions, constituting the main engines of growth
as major manufacturing and trading centers, and
absorbers of surplus rural labor. They also have
high productivity, advanced culture, and
accumulated international experience that the rest
of China can emulate and learn from. The expansion
of China's middle-income strata and the growing
need for international markets come mainly from
these regions.
China's surplus of rural
workers, who have strong aspirations to escape
poverty, are another force that is pushing Chinese
society into industrial civilization. About 10
million rural Chinese migrate to urban areas each
year in an orderly and protected way. They provide
Chinese cities with both new productivity and new
markets and help end the backwardness of rural
areas. Innovations in science and technology and
culture are also driving China toward
modernization and prosperity in the 21st century,
Zheng asserts, notwithstanding that the conditions
endured by China's migrant workers in the export
sector are as bad as, if not worse than, Charles
Dickens' industrial England.
Yet income
and wealth disparity is the structural outcome of
this top-down approach to development through
globalized trade and export-driven urbanization,
particularly if China continues to rely on
low-wage export as the main engine of growth.
Further, this approach runs directly against the
new policy of balancing rural development to
correct lopsided growth in the coastal regions,
and to create employment in rural regions to
reduce worker migration to urban centers. The
solution to Chinese developmental imbalance is to
shift the economy away from export-dependency
toward balanced domestic development, and away
from dependence on foreign capital toward
effective use of sovereign credit, as suggested in
my article Liberating
sovereign credit for domestic
development (HenryCKLiu.com, September
2004).
Zheng reports that the Chinese
government has set up GDP targets for development
for the next 50 years, with 2020 per capita GDP
expected to reach $3,000, achieving a "peaceful
rise" by 2050. This is a discouragingly long time
frame for a dismally low target, particularly if
income disparity needs to widen continually to
achieve the target. Three thousand dollars in 2020
is less than half of the World Bank projection of
world average per capita GDP of $7,111. US per
capita GDP is 2006 was $43,500. Such a slow growth
rate cannot possibly lead to sociopolitical
stability or a harmonious society, let alone world
peace for the next four decades. It will lead to
dangerous social disharmony rather than a peaceful
rise. It is misleading to suggest that slow
economic growth in China will contribute to peace
or lead to any peaceful rise of China as a major
power. By 2050, China's per capita GDP is
projected to reach $8,000, while the US per capita
GDP is expected to exceed $85,000.
China
must seek an alternative development path away
from neo-liberal market fundamentalism to speed up
its development on par with a fast-growing world.
The alternative path needs to achieve growth
without the income and wealth disparity and
polarization that are structural with neo-liberal
market fundamentalism. Embracing current
globalization will not lead to peace or rise for
China. It is not enough for the Chinese Communist
Party merely to call itself communist. If its
policies abandon socialism, the CCP will fall like
any other bourgeois political party under Chinese
conditions.
The most problematic argument
Zheng provides for China's "peaceful rise" is that
it will further open its economy so that its
population can serve as a growing market for the
rest of the world, thus providing increased
opportunities for, rather than posing a threat to,
the international community.
Notwithstanding that many modern wars have
been fought between great powers over competition
for markets in less-developed countries, Zheng
seems oblivious to the fact that foreign trade has
proved in the past decade to be a
counterproductive path toward domestic development
everywhere in the world. Factual data indicate
that international trade under dollar hegemony has
only increased the wealth gap between national
economies as well as within the domestic economy
of every country, even for winners such as the US
itself.
For China to be a "stakeholder" in
the current globalization regime is a path to
neither peace nor a rise. If China embarks on a
path of domestic development rather than the blind
alley of exporting for dollars that cannot be
spent at home without creating a monetary crisis,
with economic growth coming mostly from a rise in
domestic wages and consumption, putting export
back in its auxiliary position of comparative
advantage, China's growth will not pose any threat
to the world. There is no need to bribe hostile
foreign neo-imperialist powers with China's huge
market.
That approach was the open-market
policy in the form of free-trading ports agreed to
in a series of "unequal treaties" starting in 1840
by Li Hongzhang, the top appeaser of the late,
decrepit Qing Dynasty. Li's appeasement policy was
so appreciated by Britain that Queen Victoria made
him a Knight Grand Cross of the Royal Victorian
Order. Li's open market-policy landed China in
semi-colonial status for almost two centuries that
took two revolutions to depose.
Zheng
explains that China is not the only power that
seeks a peaceful rise. China's economic
integration into East Asia has contributed to the
shaping of an East Asian community that may rise
in peace as a whole. And, he says, it would not be
in China's interest to exclude the US from the
process. Zheng asserts that Beijing wants
Washington to play a positive role in the region's
security as well as economic affairs. The
beginning of the 21st century is seeing a number
of countries rising through different means, while
following different models, and at different
paces. At the same time, the developed countries
are further developing themselves. This is a trend
to be welcomed, according to Zheng.
Yet
Zheng's vision of the current world economic order
is through a rose-color lens. World trade under
dollar hegemony has proved to be a highly
destructive regime not only in the less developed
economies, but also in the developed countries
such as the US, which is seeing the rise of a new
wave of anti-trade populism sweeping through its
body politic. Less than two years after Zheng's
message to the US of China's "peaceful rise",
trade-war drums against China are beating loudly
in the US Congress, with a lame-duck
administration forced to put heavy selective
pressure on China to ward off a full-scale trade
war. US-China trade will be a key issue in next
year's US presidential election in response to
rising anti-China trade protectionism. Just as the
dissolution of the Soviet Union in 1991 robbed
US-China rapprochement of its geopolitical
foundation, a new trade war now between the US and
China will rob US-China relations of their
economic foundation.
Far from China
needing to become a "stakeholder" in the
US-imposed existing world order, the United States
needs to transform itself into a stakeholder of a
new world order of justice and equality that will
enhance homeland security by removing the root
causes of worldwide anti-US hostility. It is not
instructive or productive for the US merely to
label such hostility evil or hatred of freedom.
Everyone loves freedom. Anti-US hostility grows
out of what many around the world perceive as
decades of US abuse of the meaning of "freedom" as
freedom of the strong to exploit the weak and
freedom to impose its national values on others.
Next: China's misguided experts
on the US
Henry C K Liu is chairman
of a New York-based private investment group. His
website is at www.henryckliu.com.
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