Wednesday, January 19, 2011

Our view on China: U.S. must get its own house in order

With the first U.S.-China summit in 14 months underway in Washington, here's something to think about: As China rises, the United States' two-decade reign as the world's only superpower is slowly coming to an end.
That is not necessarily something to fear. But the form the transition takes will decide whether the two nations become peaceful competitors or, more ominously, opponents in a new Cold War.

Either way, the transition is inevitable. At current growth rates, China will overtake the United States as the world's largest economy sometime in the 2020s. What no one knows is whether the energetic upstart will evolve into a responsible world leader, or instead will continue the self-absorbed nationalism that has fueled its extraordinary growth.

Abandoning practices that have lifted millions out of poverty and vastly enhanced China's power is not exactly a natural thing to do, which helps explain the tensions President Obama and his Chinese counterpart, Hu Jintao, are discussing today.

Atop the list are China's self-serving economic practices. China artificially depresses its currency to make goods more competitive on world markets, throws up barriers to U.S. businesses seeking to operate there and tolerates — even encourages — theft of intellectual property. All three increase U.S. joblessness. But from the Chinese perspective, they lift living standards and add social stability.

What's needed is gradual rebalancing of the currencies, which is happening already because of Chinese inflation, coupled with measures to create a Chinese consumer economy open to foreign competition. That would benefit all but won't come naturally.

A mix of friction and common interest can be seen on other issues as well.

China resists U.S. pressure to crack down hard on its reckless neighbor, North Korea, because the two countries have a long-standing relationship, because it fears a flood of immigration, and because it is uncomfortable with the prospect of a reunified Korea. But it also can't be entirely comfortable with a belligerent, nuclear armed neighbor that can destabilize its region.

Similarly, China is reluctant to pressure Iran into abandoning its nuclear program because it wants Iran's natural resources, but it grudgingly agreed to limited sanctions after being convinced that a nuclear threat in the Middle East posed a national threat.

Disagreement over human rights has a sharper edge, which Secretary of State Hillary Clinton recently has been honing. Surely, the oddest contrast of the summit will be past Nobel Peace prize winner Obama standing beside Hu, who is imprisoning the most recent winner.

In human rights and other areas, the U.S. should prod China to fulfill its obligations. What it must not do is fall into the trap of making China an enemy.

The outlines of potential superpower conflict are already emerging. China's military is growing rapidly, and because it has its own funding sources, it's not necessarily under Hu's control. He appeared visibly surprised last week when the military tested a new stealth fighter while Secretary of Defense Robert Gates was visiting.
This will stir defense contractors and politicians hungry for an enemy to arm up in response. But U.S. military spending is still five times China's. What's needed, instead, is something else, and that "something" is fully under American control. To compete, the U.S. must get its own house in order.

Joint Chiefs of Staff Chairman Mike Mullen recently said that the greatest threat to the nation's security is its exploding national debt. Paying interest on the debt, which already costs $250 billion a year, drains money that will be need for other purposes. And we're paying much of that money to China, our biggest creditor.
China, meanwhile, is running a massive budget surplus, and with foresight that seems to utterly elude American policymakers, it is using the money to acquire the world's increasingly scarce national resources, develop an alternative energy industry and improve education. China's smart moves only highlight the foolishness of our own inaction.

Regardless of the summit's outcome, whether China's rise harms us or helps us is far more in our hands than in Beijing's.

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