China - Rising Power

Last Updated on Tuesday, 09 February 2010 12:01 Saturday, 06 February 2010 23:31

China is flexing it's muscles. After a long ascent it's making the final push to claim it's place as a global player. It's rise as a superpower has been built upon the foundations of autocratic rule, cheap labor and an artificial exchange rate determined by themselves. But with it's new found status, the West - meaning America and to a lesser extent Europe, is beginning to push back against what they see as an uneven playing field created by the Chinese through their own unaccountability to their people. It's a playing field that threatens the west in a future that could see wars being fought over scarce economic resources. Limiting Chinese military might must therefore be a key long term strategy. That strategy can be achieved by applying economic and social/political pressure on China.

China has taken full advantage of the economic crisis and subsequent crash to strengthen it's own position of power. It's been busy snapping up sources of raw material worldwide - buying mines, oil, coal and rare materials essential to modern technology. China is also one of the greatest infringer of copyright laws, with replica's of goods protected by patents in the west mass produced and sold. It's ability to sell into the west unrestrained by normal considerations such as exchange rates and labor rates make have made it an economic powerhouse with surpluses each year running into billions.

Chinese company buys Hummer from GM

That money has flooded into two key areas in China - it's armed forces and infrastructure. It's armed forces have grown phenomenally - both in numbers and technological capabilities. It now ranks second in the world after the USA for spending on it's military. It's infrastructural boom has only served to reinforce it's economic success. Roads, rail, ports and telecommunications infrastructure have been built to serve vast industrial estates mass producing goods at a rate and cost that the west cannot hope to compete with.

China's success have led to increased clashes with the west on all fronts, as countries losing jobs and money to China seek to level the playing field. An essential component of that strategy inolves provoking more freedom and competition in the business and political domains. One way the west can stem the loss of jobs to China is to force China to pay it's workers more and release it's currency from it's artificially low exchange rate - Chinese goods would become more expensive to produce and more expensive in foreign markets. This twofold effect would make it less attractive for companies to outsource manufacturing to China or import goods from the communist country. Achieving this aim is critical in stemming the rise of China both as an economic power robbing the west of their wealth and as a military power.

The efforts to contain China will be varied and spread over numerous issues. These can be broken down into economic, social/political and military areas. Often times, spats between China and the west overlap into all areas.

Economic Arena

Removing what the West sees as unfair competitive advantages the Chinese have is a crucial component in reducing the massive revenues flowing into China. The Google incident is likely to be replicated in various forms over the coming years - the ultimate aim being to dissuade companies from relocating or moving manufacturing to China.

Bejing - Massive infrastructural imporvements

Google threatened to leave China due to hacking attempts against it, which Google say originated in China. Google also threw in the social tangent that it would no longer filter it's search results according to the diktats of the Chinese government. Very quickly, the Obama administration waded in, supporting Google's stance and saying free speech must be respected by the Chinese and the copyright and patent breaches in China addressed. Everybody stopped short of openly accusing the Chinese government of hacking - despite reports from the US Government itself explicitly stating the the Chinese were the most prolific hackers of commercial and state companies in the USA.

The Obama administration has also been more vocal in it's criticism of the Chinese exchange rate. Obama told US Senators that he would be putting 'constant pressure' on the Chinese to stick to their end of trade deals. President Obama said "One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price,"

He stopped short of saying that tariffs on Chinese goods would be implemented, but if America keeps loosing money to the Chinese at the rate it currently is - and China refuses to change it's stance, an agreed approach by all western countries to place tariffs on Chinese goods could be one approach that would seem a very attractive option.

The Chinese would certainly come out the worse - they export more than they import from the West. The danger for the west is that the Chinese can afford to hold out longer in any trade war. More jobs being lost in the West in companies that export to China are the biggest threat to any policy to place tariffs on Chinese goods. With unemployment still rising, a policy that sees American workers laid off may be politically unacceptable.

Military Arena

The USA still dwarfs China in military spending per annum. Technologically, America is streets ahead. But America cannot keep it's military spending at the current level in the face of rocketing national debt - at over $108 trillion, something has to give soon. China has been objecting strenuously of late to American arms sales to countries. Most notably Taiwan, which China regards as part of it's territory but which is democratically ruled. The $6.4 billion in arms sales has drawn a strong reaction from China with an unprecedented threat of imposing sanctions on American firms that supply the arms.

Chinese Military Parade

Why arm nations around China? They serve as a bulwark. In a long term strategy, well armed neighbours around China may make it think twice about making any move to claim back territories. Denying China territory also limits it's labor force, strategic bases, raw materials and economic growth. Additionally, in any future war well armed neighbours will inflict some damage on China before the US gets involved - much like Russia and the UK had inflicted losses on Nazi Germany before the USA joined the fray. However small the losses inflicted on China, it's still a loss, and a loss that comes comparatively free to the USA in terms of it's own armed forces.

Forcing China to increase it's military spend, perhaps disproportionately to the armies of it's neighbours, has a number of effects. It drains Chinese revenue from being invested in productive sectors of the economy. It reduces the money available for social services - hospitals, schools, education, infrastructure and all the other things that people demand. Thirdly, it produces a phycological effect in citizens with the help of propaganda - that of an armed state that maintains a massive army to repress it's people.

China, for it's part is employing a similar strategy, most notably in it's stance over Iran. Blocking sanctions against Iran and calling for more diplomacy serves to drain American resources, in much the same way arming neighbours of China does to it. It's a game of subtle brinkmanship that will continue long into the future. North Korea is another country where China will seek to thwart and drain American economic and military resources.

Social and Political Arena.

The importance of the social and political arena is often overlooked. The Chinese regime fears it's own population more than any external threat. It's a fear that the west will play on. Encouraging Chinese people to demand greater freedom, both economic and social, destabilizes the structure of Communist China. Social freedom, primarily democratic government, can be brought about by encouraging dissent.

Tiananmen square aftermath, when China cracked down on protestors. 3,000 estimated killed. 1989

Dissent can be fermented by contrasting the freedom western people enjoy with that of Chinese people. Nobody likes being under control. It's no different for citizens in China. The Google incident is one small pinhole in the governments attempt to restrict it's people's freedom. Google withdrawing from China would raise questions amongst the people as to why their information and news has to be censored by the government. Continued pressure and focus on this area can increase dissent amongst the people, a dissent that is not aimed at western powers, but at their own government.

President Obama is also set to meet the Dalai Lama, a move bitterly opposed by China. Meeting the Dalai Lama is seen by the Chinese as support for Tibeten independence, long an area in which the Chinese have sought to stamp out Tibeten culture and nationalism, fearing the region would someday seek to break away and starting a chain of claims from other regions forming part of China. A spokeperson for China said this week that America should not allow it's territory to be used by "Tibetan separatist forces."

A meeting between President Obama and the Dalia Lama can be viewed in the context of raising internal tension in China between the people of Tibet and the Chinese government. It again forces China to divert more resources to controlling it's internal affairs through military means, reducing it's economic resources whilst simultaneously increasing the phycological effect in people of being under control.

The simmering rivalry between the west and China isn't based on any intentions to claim the others territory. The rivalry is brought about by economic necessity - both short and long term. It's arguable that America would be less concerned with China were it not for the fact that China is emerging as the country to replace America in the long term, economically and militarily.

In the short term, that means stemming the flow of jobs and revenue being lost to China. In the long term, it means preventing China from controlling scarce economic resources. In a world where the future may hold wars over economic resources, limiting Chinese capacity to build an army that could threaten American dominance and claim scarce resources is a key long term strategy.