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Sol Sanders Archive
Tuesday, January 25, 2011     INTELLIGENCE BRIEFING

Mysterious East and more mysterious West: U.S.-China love affair, cont'd

For those whose worldview arises from beyond the Capital Beltway, two questions evolve out of President Hu Jintao’s Washington sojourn:

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Yes, the state dinner and trappings — including that incredibly bungled DeGaulle-style press conference — were for the folks. After all, with Beijing’s new found love for Confucuius, “rites” are everything! But beyond heavily censored Chinese public presentations, Hu had the job of bringing home the duck. So what reaction at the Zhongnanhai Party headquarters? On that hangs Mr. Hu’s role in next year’s transfer to the Fifth Generation leadership. Hu, like his boorish Shanghailander but relatively successful predecessor, Chairman Jiang Zemin, hopes to keep his seat in those important organs, the Central Military Commissions [Party and State]. More than ever, with Beijing’s rapidly expanding military, as old Mao Tsetung said, power comes out of the barrel of a gun.

As always it’s hard to know the comrades’ thinking. For [our second question] the Obama Administration’s China policymaking is in the realm of the mysterious West. Why, one has to ask, did the U.S.President — given his “normal”, constant abnegation and apologies for American power — take such a tough line? In the press conference lead-in, he indicted Beijing in a fashion a far more hawkish foreign policy ensemble would have relished.

True, Mr. Obama had just come from having his ears burned by American businessmen losing tens of billions annually to Chinese government companies. He clamped his lips, for example, over “theft of intellectual property” — not “security” or “protection,” the usual euphemistic counter to Beijing blackmail of Western businesses in their mad rush for Chinese markets. [Just a few months ago, a General Electric spokesman, now the administration’s darling, publicly bitterly complained of Chinese practices.]

Where then, in this White House team revolving before a new presidential campaign, does this — again, by this administration’s standards — hard line on China originate? Secretary of State Hillary Clinton recently reflected sharp changes: reconfirming the U.S.-Japan Mutual Defense Treaty umbrella for contested areas, and denouncing Beijing’s outrageous claims over the South China Sea. But despite her omnipresent pantsuit jetsetting, her “twofer” Clinton administration credentials are limited to a crashed health care initiative. And no one ever accused her State Department, so fixed on “modalities,” of taking a hard line on any issue.

Then there’s the interview with Adm. Gary Roughead, U.S. chief of naval operations, part, again, of an uncharacteristically, well organized Obama Administration ambush for Mr. Hu’s party. There were the telltale “panda-hugging” pleas, characteristic of Pearl Harbor’s Pacific command, calling on his Chinese naval colleagues to adhere to traditional nautical rituals. But the good admiral nevertheless projected strategies for maintaining U.S. Western Pacific naval dominance. How did that go over with the young, headstrong Chinese naval officers Adm. Roughead said he had found in China, contemptously ignoring their Party minders?

On these unanswered questions hangs the immediate future of U.S.-China relations. For, truth be told, we are in a new act of that continuing American-Chinese saga. Since the beginnings of The Republic — Capt. Elihu Yale mythically endowed Yale University with a cargo of opium bound from his Madras [India] company for China — American and Chinese interests have been inseparable. More than other foreign relationships, U.S.-China intercourse has waffled violently — whether using coolies to build transcontinental railroads and then “excluding” them, or the World War II saga of Miami bobbysoxers mobbing Mme. Soong Mei-ling, with Washington only months later turning its back on her defeated husband, Generalissimo Chiang Kai-shek, only to retrieve his Taiwan in the Cold War as “a permanent aicraft carrier,” the 136 meetings during two decades of “non-recognition” of the Communists, etc., etc.

Most of the media blather about economic relations is only another in the long series of misapprehensions. Yes, in a fashion, the Chinese are spendthrift America’s banker. But as John Maynard Milord Keynes said so simply and eloquently all those years ago: “If I owe the bank £100, I have a problem. If I owe the bank £100,000, the bank has a problem.”

With Beijing rapidly approaching $3 trillion reserves, mostly in dollars, the understatement of the century is to label its economy “uncharted territory.” Only so much American debt can be used to invest abroad. Meanwhile, they lead to inflation, the destroyer of so many Chinese dynasties. It’s already hitting food, virtually most of the 1.3 billion Chinese only consumption, despite the Communist elite’s Gucci culture and a privileged coastal urban population. The still-Communist half-hearted command economy subsidizes exports not only by manipulating currency but with exports built on high-cost imported components, rising labor costs and increasingly expensive energy imports. Infrastructure has been overbuilt, much of it unsustainable. The 2008 Olympic showplaces are virtually unused, a housing bubble matches the U.S., and many of Shanghai’s dramatic skyscrapers in Pudong’s financial center across the river remain, as they have been for a decade, empty. As regional and class disparities grow, social friction is rising.

The bubble will burst — when, the tripwire, its outcome, is part of the mysterious East.

But in the mysterious West, predictably, another act in America’s love affair with China will begin.


Sol W. Sanders, (solsanders@cox.net), writes the 'Follow the Money' column for The Washington Times . He is also a contributing editor for WorldTribune.com and EAST-ASIA-INTEL.com. An Asian specialist, Mr. Sanders is a former correspondent for Business Week, U.S. News & World Report and United Press International.

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