The China partnership

Editorial Notebook

December 18, 2004|By Robert Benjamin

IN THE LAST two episodes of the TV show West Wing, U.S. President Josiah Bartlet, whose multiple sclerosis flares up now and then, found himself in a wheelchair as he flew to a Beijing summit.

What a sad but apt metaphor for the rapid ascendancy of China these days relative to America. Skipping considerable caveats for the big picture:

America - gushing red ink from its profligate spending - confronts the limits of its vast military power, wealth and influence in the world. Its popularity is falling, along with the value of its currency.

China - undergoing the largest and fastest wave of industrialization in history - increasingly and boldly projects its new economic power across a globe eager to buy in.

More and more, America seems sidelined, while China is everywhere - buying oil in Latin America and iron ore in Australia; acquiring an American fixture, IBM's personal computer business; signing the world's largest free-trade pact with Southeast Asia; stabilizing the U.S. economy by holding almost $200 billion in Treasury bonds.

If most every day seems a Chinese celebration, just look under your tree Christmas morning: Rare may be the gift not made in China. West Coast ports have been clogged for months with trans-Pacific ships stuffed with Chinese goods. Deep in hock, Americans keep buying - sending their cash to China, which in turn reinvests in its development and lends back to the United States, sustaining low U.S. interest rates and Americans' prodigious spending. On a global scale, it's a self-fueling spiral.

But as economists remind us, unsustainable things tend not to be sustained. And if Americans stop buying, or China (and Japan and Europe) stop lending, there'll be big trouble - on both sides of the Pacific.

In this, it's tempting to cast China as a zero-sum competitor of America, but these two engines of world growth are increasingly locked in symbiosis, their economies twinned.

China needs America to right its finances - and the falling dollar - by putting big dents in its budget and trade deficits, and America needs China to fix its feeble banking system so it can adjust its currency upward.

And it's in both nations' interests for those repairs to take place without tipping the boat they now share.

That integration is the direct outcome of three decades of U.S. strategic engagement with China. Trouble is, if America has succeeded in opening China and facilitating its dramatic rise as a world power, it is now partnered with an authoritarian and, at best, shaky political system often in competition, if not direct conflict, with American political interests.

For the United States, potential perils abound. A bursting of the Chinese economic bubble or even political upheaval, however desirable, could wreak havoc across a globe now reliant on its production. Alternatively, an ever richer and stronger China could throw its growing military weight around in Asia, a region that has been a U.S. sphere since World War II. Taiwan certainly fears that, and so does close U.S. ally Japan. China vows it just wants peace and stability - space to prosper - but once wealthier, will Beijing stop at just that?

The North Korean crisis - which, by the way, TV President Bartlet neatly solved in direct talks with his Chinese counterpart during Wednesday's show - provides an early test, and so far it has not been encouraging from an American point of view. China, no less than the United States, has a clear interest in defusing the North Korean nuclear threat and, unlike America, it likely has the economic and political clout with Pyongyang to accomplish that. But so far Beijing has not done enough, with a key result being that it continues to enjoy a large degree of U.S. dependency - a transfer of political capital as valuable as the very dollars American consumers and corporations are sending to China. With such partners ...

- Robert Benjamin

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