July 19, 2005

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Why We Need A Strong China

Thanks Simon for that very kind introduction. Now my own blog largely concerns the past, but over the next few weeks I'll stick to current events.

For my first entry I'd like to share a recent piece written by my very first boss, Dr. William Overholt, today director of RAND's Center for Asia-Pacific Policy, on why China's rise is good for the world. Entitled "China and Globalization", he explains in a very pithy, cogent report why the world needs a strong China, and why a weak, unstable China was much worse. As the testimony was for a Congressional hearing, he put it in very simple language that American politicans could understand. He states:

Before reform, China was the world's most important opponent of globalization. It had an autarkic economy. It opposed the global economic order. It opposed the global political order and the major global institutions such as the IMF and the World Bank. It believed that global disorder was a good thing, and under Mao Zedong it actively promoted disorder throughout the world, including promotion of insurgencies in most of China's neighbors, in Africa and Latin America, and even in our universities.
He uses historical perspective to diffuse our fears of China. He continues:
Had China been prosperous and unified throughout the twentieth century, we would have had European War II rather than World War II and World War I would have been quite different. China would have been able to deter or defeat Japanese aggression. The cost of those conflicts to the US would have been radically smaller because Pearl Harbor and much else would not have happened. We and the world, not to speak of a billion Chinese citizens, have paid a horrible price, over more than a century, for China's weakness. The world needs a healthy China.
Keeping China's globalization in perspective of its history, Overholt argues that we should be rejoicing that it has joined the community of nations rather than fighting it. China's socioeconomic adjustments have also been far more radical than America's or anywhere else's over the past quarter century, with millions of manufacturing jobs lost. While intellectual property rights and human rights are significant problems that must be tackled, the growth opportunities created and the indirect poverty alleviation brought about by cheap consumer goods far outweigh those issues.

I have to agree with him. What do you think?

posted by HK Dave on 07.19.05 at 03:32 PM in the


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I assume the second quote is meant to read "China would have been able to deter or defeat Japanese aggression."

Naturally I agree and you can take these points further. It is not just on an economic plane where having an engaged China matters. Geopolitically, the closer China is bound to the rest of the world the lesser the chance of confrontation. China clearly has red lines (pardon the pun), especially over Taiwan. But if America and the rest of the world engages China as a strategic partner rather than a strategic rival, it will mean a more peaceful Asia/Pacific, a better chance of resolving the North Korea issue and continued improved living conditions for literally millions of Chinese. And these have knock-on effects onto regional neighbours and even the US.

As I've said before, China's only a threat if it is treated as such.

posted by: Simon on 07.19.05 at 04:06 PM [permalink]

what is your opinion, MAJ?

posted by: bingfeng on 07.19.05 at 04:24 PM [permalink]

I would like to echo the opinions of both HK Dave and Simon on this one - those countries that have been able to embrace globalisation are the very same countries whose living standards are rising, while countries like those of many Africa nations that have been unable to globalise have suffered the opposite fate - deteriorating living standards.

A close examination of the United States' policies towards China regarding the Taiwan issue reveals, I think, a general level of support for the mainland position, and that's because there is a real awareness that a strong, stable China is necessary for the long-term health of the global economy.

And I definitely agree with HK Dave's
argument that "the indirect poverty alleviation brought about by cheap consumer goods far outweigh" the more sensitive issues of human rights. Most Chinese will certainly agree with that. The CCP, for all of its undeniable faults, has played a significant role in helping to bring about the stability and the necessary environment to have enabled this economic transformation to take place, and so their legacy, while mixed, remains, overall, a positive one I think.

Mark Anthony Jones

posted by: Mark Anthony Jones on 07.19.05 at 04:29 PM [permalink]

Glad to hear a chorus of agreement! I think the Americans that want an immediate revaluation of the yuan and immediate democratization of China must realize the huge structural (and personal) pain and sacrifice China has gone through to reach this point in its history, and how it is actually naturally positioned to be an ally or at least a benign force in many of the issues central to America.

Overholt actually makes the case that cheap Chinese goods, far from hurting America, has made at least material well-being much more achievable for a large number of lower-income Americans. Too bad there's no PAC for them...

posted by: David on 07.19.05 at 05:34 PM [permalink]

Thanks for noting the rather huge mistake in the original post, Simon, I stand corrected (as has been the post itself).

posted by: David on 07.19.05 at 05:35 PM [permalink]

I think you are all a bunch of commie sympathizers who are out to destroy the West by empowering her enemies. No doubt your underwear is pink where it is not green from your own unadulterated greed at making a profit from slave labour. Klintoon's treasonous machinations have already spread far, but it is not too late to rally the allies of liberty (Britain, New Europe, India, and Japan) who share our values to demonstrate to the Chinese fascist autodidacts and their Islamiscist allies that the American way is the ONLY way!

God Bless.

posted by: Jing on 07.19.05 at 06:52 PM [permalink]

Sorry Simon - you can delete this as soon as you read it - I tried to post it in the other thread, but you have already closed it.

I really didn't realise that his surname was meant to be such a secret - afterall, it's mentioned by many, on numerous sites, including this one.

So if you don't want readers to discover Richard's surname "here" on this site, then you had better delete from your archives all instances where you have mentioned his surname. Eg. [edit]

Mark Anthony Jones

posted by: Mark Anthony Jones on 07.19.05 at 07:23 PM [permalink]

MAJ - I've deleted it from that previous post as well.

Now you've made your point, several times over. It's enough. Leave it alone.

posted by: Simon on 07.19.05 at 08:15 PM [permalink]

The 20th century could have been made much more peaceful by one wiser decision -- the British allowing the Germans to march through Belgium in 1914.

A strong China might be nice. But it is not "needed."

posted by: Dan on 07.19.05 at 09:47 PM [permalink]

ps that previous comment was made with my tongue firmly planted in cheek, just clearing it up so people don't get the wrong impression thats all.

posted by: Jing on 07.19.05 at 10:16 PM [permalink]

No worries Jing, if you consider libertarians like myself commie sympathizers then I'd hate to speculate on the color of your underpants!

Dan, perhaps the world might have been a better place if the Schlieffen Plan had worked and we hadn't had a crackpot Austrian like Hitler take over Germany.

But I very much think that FDR and yes, even Churchill would have preferred a strong, stable China to a civil-war ridden basket case that could not effectively defend itself from the Japanese. And today I think (as Overholt argues) we'd likely in the midst of a major global recession if it were not for China's new spending power (particularly Japan), and its new capacity to produce cheap consumer goods for the world. Not to mention becoming the banker to an increasingly indebted United States...

posted by: David on 07.19.05 at 10:29 PM [permalink]

No wonder your blog is so great, Dave. Your boss William H. Overholt is a real American patriot. Coincidently I put his congress testimony on last Tuesday. His reading is really inspiring:

Today China is the country that sends missions throughout the world seeking best practice. It adapts not just foreign technology and foreign corporate management techniques but also a wide variety of foreign institutions and practices: international accounting standards; British, U.S. and Hong Kong securities laws; French military acquisition systems; a central bank structure modeled on the U.S. Federal Reserve Bank; Taiwan-style regulations for foreign portfolio investment; an economic development strategy adapted from South Korea, Singapore and Taiwan; and many others. Among the most important of these changes are the decision to adopt the Western concept of rule of law; adoption of competition as a centrally important economic practice; and adoption of English language as virtually a second language for the educated Chinese population.

And nobody should forget his comments on nowaday's China's situation:
China today has huge advantages and huge problems. It is like a running man chased by a lion. If you focus on the man, he is running very fast. But if you focus on the lion, the man will likely be eaten by the big cat.
When I read this some days ago, I could just speak out one word: BRAVO!
However I am also interested in Peter Brookes right now and right wing's glove John J. Tkacik, Jr. from heritage foundation. I will try to put on their congress testimonies too. Wish to know your opinions about their comments as well, Dave. Most probably someone here even know Mr. John Tkacik himself because he was tied to Hong Kong due to his new "opium" business:)

posted by: lin on 07.20.05 at 05:20 AM [permalink]

I would be much happier about a strong China but for a few niggling points. A disproportionate percentage of China's GNP is devoted to building, as rapidly as possible, a military capability several times in excess of any conceivable threat. That capability is complemented by very agressive saber rattling. China continues to work to destabilize it's as yet unassimilated neighbors. I do not see how we can come to any conclusion other than that China is preparing for war, and that makes those who choose to see it very nervous. Nor do I see how the evidence can be ignored.

Furhter, the assumption has been that economic openess will lead to social and political openess. This has clearly not happened, nor is it in the offing. The Party retains undisputed control, and will not brook the slightest whisper of dissent.

Finally, the ointment of the economic miracle has two flies in it. Fist, China is not competing on the level playing field as it claims to be. As long as the vast majority of Chines enterprises are dummy corporations which are in fact wholly owned subsidiaries of the Chinese governemt market reforms can never truly penetrate their economic system. Secondly, the level of lying, cheating and corruption endemic to the Chinese cultural system cuts it off from reality based standards necessary to truly become a member of the World Economy. Nobody, and I do mean literally nobody, has a clue as to what is really happening to China's economy. As far as I can see, the whole of the Chinese economy is a titanic Ponzi scheme which will not only devastate China itself, but all those whose economies are linked with it.

A strong China would be a good thing, but China is not truly strong. It gives the illusion of strength by dint of self agrandizing propaganda, bolstering their claims with militaristic bluster and reams of falsified statistics. Were that China were strong, the world doesn't need another failed state, especially not one of such magnitude.

posted by: Tamquam Leo Rugiens on 07.20.05 at 06:18 AM [permalink]

This text is specious and naive.

Reading it makes me feel being back to the mid-nineties :
Globalization, globalization, globalization.
By the way, what is globalization? How to define country's strength? Then, in absolute terms or relative terms?

Another tiny thing but very illustrative of this essay's speciousness : The author claims malnutrition has disappeared from China. I read on this blog a few days ago a post entitled "The Fat (and the thin) Of The Land"...

posted by: Leo on 07.20.05 at 08:41 AM [permalink]

Thanks to Lin, Tanquam, and Leo for your comments.

Lin, totally agree with you in your admiration for Overholt's succinct prose and excellent analogies. I just want to clarify that Overholt *used* to be my boss - he gave me my first job as a research assistant at Bankers Trust in his department. A really fascinating man, with an incredibly interesting resume and experiences to back up his opinions. Didn't want to give the impression I work for RAND.

Tamquam Leo Regiens, interesting perspectives. But I think it may be a bit of an exaggeration to say China is a titanic Ponzi scheme - if it was I doubt so many foreign companies would go there to set up manufacturing operations if they were not genuinely profitable. There are many troubled companies and banks, it is true - hence why Lin's second quote from Overholt about the lion is so apt.

I think also having grown up in Hong Kong and Singapore, and seeing the examples of Taiwan and South Korea, one can appreciate how prosperity can bring about change in the social contract between the rulers and the ruled - it is just that change in success stories is generally gradual rather than through revolution.

As for the military build-up, RAND actually has done a study on the subject for the US military on the website I link to in this post. It's 200 pages, but you may want to check it out! I'll blog about it while Simon's away (I have to read it first!).

As for Leo, well, I think you'll need to give me more than 'specious' and 'naive' if you want real debate. I do bristle somewhat at the suggestion that Overholt is naive given his experience in China and in top US government and intelligence circles. He was also possibly the first, in 1970, to forecast the rise of the Asian Tigers in his Ph.D thesis at Yale. But if you'd like to discuss specific points I'd be happy to do so.

posted by: David on 07.20.05 at 02:38 PM [permalink]

Thanks, David. I'll look up that article you mention, and really try to read the whole thing. I remain concerned, and I've really not seen anything that allays that concern.

posted by: Tamquam Leo Rugiens on 07.21.05 at 03:56 AM [permalink]

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