Bert Caldwell: For China, hard cash buys political capital
China, armed with $1 trillion in cash, is making friends the old-fashioned way; by buying them.
President Hu Jintao has been all over South Asia this month, courting friends and former enemies alike. First, he attended the Asia-Pacific Economic Cooperation Summit in Vietnam, a country long wary of its northern neighbor notwithstanding arguments to the contrary when U.S. officials were justifying the war there. How ironic that Hu and President Bush should meet in Hanoi.
Next, Hu was in Pakistan and India, a nation China invaded in 1962 during a border dispute that lingers on today. Despite the distrust, trade between the two countries is expected to reach $20 billion next year. In Pakistan, Hu renewed a friendship fueled in part by Chinese help building two nuclear reactors. The two nations agreed on new military ties, and the lowering of tariffs that will triple trade between the two nations to $15 billion.
U.S.-China trade, by comparison, exceeded $285 billion last year, with an horrendous imbalance of $200 billion in China’s favor. The ongoing deficit has fattened China’s reserves of U.S. dollars to about $700 billion, a substantial share of its $1 trillion total.
China also scored a major international relations coup hosting leaders from all but one African nation earlier this month. The Chinese, who carry none of the taint that colonialism and the slave trade impart to Western nations, have created considerable good will by helping build the infrastructure that Africa so badly lacks. African nations as a whole also run a trade surplus with China.
The ever-present Hu announced new trade agreements during the Beijing gathering that will further expand ties. Trade between the African continent and China will reach $50 billion this year. Africa’s rich reserves of minerals and petroleum have become the apple of China’s resource-hungry eye.
Members of the Bush administration, notably Secretary of State Condoleezza Rice and Commerce Secretary Carlos Gutierrez, have lately expressed renewed concern about China’s military and trade objectives, but a new report from a congressional commission says the U.S. has not pushed hard enough to move China towards the norms of international trade and human rights.
Meanwhile, its status among Third World countries increases.
“China is coming to be regarded almost as a second superpower,” says the executive summary from the U.S.-China Economic and Security Commission, which adds “China’s regional activities in Latin American, Africa, and the Middle East and around East Asia are beginning to assume the character of a counterbalancing strategy vis-À-vis the United States.”
The report concludes by making a number of recommendations that focus on China’s responsibilities as an emerging international power, notably as an intermediary with countries like North Korea and Sudan that flagrantly violate human rights. It says the U.S. should also make sure technology exchanges are not compromising national security. Finally, the commission wants U.S. companies to be prohibited from disclosing the names of Chinese using the Internet. If compelled to do so, as many now are, they must notify the U.S. government. To what end is not clear.
With an incoming Democrat-controlled Congress more disposed to trade sanctions, the new report will find more receptive ears than did previous reports. Election results showed Americans are increasingly sensitive to the loss of jobs and personal income to China. But, as Christmas sales will almost surely show, we happily continue to consume Chinese-made goods in abundance.
Its foreign currency reserves have given China tremendous leverage, but also an ever larger interest in international stability. The commission report wisely addresses how China can be made a “responsible stakeholder.”
The recommendations ask an awful lot. “Almost” a second superpower downplays China’s status, and hardly touches on its sensitivity about preserving its prerogatives as an independent actor in world affairs.
It’s been little more than a generation since President Nixon decided to re-engage with China, and less time since the Chinese embraced capitalism. The journey toward establishing a co-equal relationship has barely begun.