May
05 , 2006
China’s
Charm Offensive
The four-day
(April 17-20/06) visit of the Chinese President,
Hu Jintao, to the US may be summed up as China’s
charm offense but as unproductive as President Bush’s
visit to China six months back in mid-November 2005.
The American President pressed the visiting Chinese
top man to open up markets, expand freedom, increase
the exchange rate of his country’s currency
to provide a level field for bilateral trade, abstain
from locking up the new world oil resources, take
stringent measures against violators in his country
of intellectual property rights, and increase efforts
to curb nuclear programs of Iran and North Korea.
President Hu, on the other hand, appeared showing
a smiling face to the US public and to be assuring
them: ‘We like you very much and desire nothing
but friendly relations.” On the specific issues
raised by Mr. Bush, he talked in platitudes and
made no commitment. Nor was there a joint communiqué
at the end of the talks like the conspicuous absence
of at least a joint press conference at the end
of President Bush’s visit to Beijing last
November.
Interaction between the two great powers continues
to hold just a symbolic significance without any
breakthrough on substantive issues. This was the
sixth time that the two heads of state were meeting
over the past three years since the ascension of
Hu Jintao to the top post in China. Hu’s visit
to America was the first of a Chinese President
in nine years, yet the Bush administration did not
accede to the Chinese desire to treat it as a state
visit.
The weight of history hangs heavily over the Sino-American
relationship. During the first period of interaction,
from 1841 (Opium War) to 1900, China viewed the
US with as much envy as fear. Its humiliating defeat
in the Opium War shook it out of its narcissist
stupor and disdainful indifference to the outside
world. The British East India Co., which had won
the war, flooded the Chinese markets with opium
and thus sent that proud nation for decades into
a soporific state of inaction. The century or so
that was spent in this pathetic state was but a
blip in the long history of China as a great world
power which even Napoleon avoided, referring to
it as a sleeping lion.
Coming out of the stupor, China discovered the technological
prowess of America. Its adulation of the American
technological advance was tempered by its fear of
American imperialist tendencies. China’s view
of the US has since kept swinging between strong
admiration and a sneaking fear of its hegemonic
designs. Till the Communist takeover in Oct. 1949,
most of China’s elite officials, scholars
and scientists were US trained.
During the entire Mao rule in China, US administrations
regarded that country in the Soviet camp therefore
an adversary in the cold war. Henry Kissinger and
Richard Nixon reversed the process and opened a
window to that country in 1972. A few years later,
Mao’s successor, Deng Zao Peng, introduced
market- economy measures without ditching Communist
structure of the society altogether. The fall of
the Soviet Union in early 1990s weakened the Soviet
hold on Chinese policies further and led to the
emergence of the US as the sole super power, and
a new world economic order called Globalism. With
the admittance of China to the World Trade Organization,
it became a full player in the new world order.
US corporate sector entered into deals with Chinese
companies for the manufacture of consumer goods.
This healthy trend for mutual benefit kept expanding
till China emerged as the manufacturing floor of
the world. It has recorded the highest growth rate,
almost 10 percent per year, for over two decades
and its gross domestic product (GDP) is fast reaching
the level of Japan, the second biggest world economy.
China is forecast to reach the level of the US in
another quarter of a century.
But, to reach that stage China needs peace and no
hurdles in its march at the current pace. It also
needs uninterrupted access to raw materials and
energy resources, particularly oil and gas, at competitive
rates. This explains the peace offensive of China
towards its neighbors and the charm offensive towards
the US.
Energy resources lie at the root of the conflict
of interests between America, the world’s
top energy guzzler, and China with the world’s
fastest growing energy thirst. The other issues
mentioned at the outset of this column are of lesser
significance.
In 2004 China used some 6.5 million barrels of oil
a day and overtook Japan as world’s second
largest user of petroleum products. The largest,
the US, consumes about 20 million barrels a day.
The US National Security Strategy made public a
month back, that is in March, 06, with the approval
of President Bush, had this to say on China’s
energy thirst: The Chinese leaders are “expanding
trade, but acting as if they can somehow ‘lock
up’ energy supplies around the world or seek
to direct markets rather than opening them up, as
if they can follow a mercantilism borrowed from
a discredited era.”
China is buying long-term supplies wherever they
find them, even from countries regarded as “unsavory”
by America, such as Sudan, Iran and Burma. It signed
a $70 billion deal with Iran in Nov. 2004 to develop
the Yadavaran oil field. Hence, its reluctance to
denounce Iran on the nuclear issue.
China imports at present only 12 percent of energy
but by 2025 its demand will more than double and
it will have to import some 60 percent of it. The
fears of China locking up resources are well grounded.
Yet, the policies of containment, balance of power
and slapping heavy tariffs on Chinese imports are
unlikely to work, particularly as the Chinese are
financing the American borrowing habit. The US is
running the highest trade deficit, 7 % of its GDP,
a large part of it is being financed by China through
purchases of US treasury bonds. In 2005, China had
a trade surplus of $202 billion.
American economic advisors will have to take a deeper
look and reevaluate current policies and postures
so that the conflict of interest on energy resources
is resolved amicably on the basis of give and take.
Chinese perceptions of the US continue to be deeply
ambivalent. They mix resentment with admiration,
jealousy with the desire to emulate, and fear with
respect. Such a schizophrenic attitude needs delicate
handling and certainly not through the arrogance
of power. The days of gunboat diplomacy are gone.
The wars in Afghanistan and in Iraq have mainly
added to the pile of US national debt without rendering
much benefit despite the assurances of Mr. Bush
to the contrary. This is the first instance in the
US history that it has clearly given up its historical
stance of staying away from world conflicts. American
penchant for excellence and innovation is being
undermined by a 30 % high school dropout rate and
almost 50 % of college seats being taken up by Asians
led by the Chinese. Policy-makers need must concentrate
on removing these distortions so that the country
retains its competitive edge.
The challenge of China cannot be dealt with like
that of Iraq. Even in Iraq it has not been a success.
And the Chinese dragon has nuclear teeth too.
arifhussaini@hotmail.com
