http://www.opinionjournal.com/editorial/feature.html?id=110008262The hue and cry over America's trade deficit with China is a distraction that masks this broad and beneficial economic relationship. It's also misleading. China runs a trade surplus with America, but it also has a deficit with the rest of Asia. That's because Asian companies that once exported goods directly to the U.S. now send them to Chinese factories for assembly and export. More than half of all Chinese "exports" aren't really "Chinese" at all. And here's a trade statistic you won't hear much about: China's relative share of the U.S. trade deficit is shrinking as wages rise on the mainland and American businesses source cheaper goods from other countries.snip
That's all news to Capitol Hill, where China bashing is as fashionable as Japan-phobia was 20 years ago. The favorite canard is to claim that China artificially depresses its currency to boost exports. But the truth is that China has merely pegged its exchange rate to the dollar, thus subcontracting its monetary policy out to the Federal Reserve. The real problem is China's retrograde financial system, which is still dominated by political controls.
The security challenge posed by China's rise is a more difficult matter. The Pentagon estimates that Beijing spends $75 billion to $100 billion annually on defense. This wouldn't be worrying if China was a democracy without larger global ambitions. But Chinese leaders are taking a larger role on the world stage, and not always responsibly. This includes their refusal to join U.S. efforts to pressure North Korea to give up its nuclear ambitions, and only last week blocking sanctions against Sudan's leadership for supporting genocide in Darfur.
Yet here, too, there's positive, incremental change. China's central bank announced last week that it would begin easing capital controls. In the long run, freer flows of money should give Chinese consumers and companies more foreign buying power, and help rebalance U.S.-Chinese trade....
Naturally, Clinton has to be attacked and Bush supported: ( :wtf: )
The Clinton Administration did too little to resist these impulses, and it once had to resort to sending a carrier through the Taiwan Strait as China tried to see how far it could really go. The Bush Administration has pushed back harder and more consistently, in particular imposing sanctions on Chinese companies that violate proliferation rules and calling for more transparency on defense spending (even while seeking more useful military-to-military contacts). The U.S. has also been strengthening its alliances with Japan, Australia, and most recently India, as strategic counterweights should Chinese nationalism come to a boil.Basically doing with other countries what we did to China in the first place. What happens when Japan, Australia, and India turn against us? That's where I'm confused.
And, finally:
The larger strategic bet here is that sooner or later China's economic progress will create the internal conditions for a more democratic regime that will be more stable and less of a potential global rival. This may take many more years, but the seeds of political change are already evident. Rural protests numbered more than 87,000 last year, journalists are staging walkouts to protest censorship and more ordinary Chinese citizens are demanding that the Communist Party uphold their legal rights and respect their right to worship.
Mr. Bush can help that process by prodding Mr. Hu to improve China's disgraceful human rights record. But the changes aren't taking place because the U.S. demands it. China's burgeoning middle class, created and buoyed by economic growth, will drive internal change. A
bet? So it's all a gamble?
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