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Panda Huggers On Alert
Kin-Ming Liu, The New York Sun
2/5/2006

Panda huggers, I must confess, are correct on one thing: China is not the Soviet Union. Yes, there's a major difference between the former communist empire and the current communist giant. The Soviet Union was bankrupted to death, both ideologically and financially. China, on the other hand, is being enriched by the world.

Let me bore you, first, with some newly released statistics that are staggering: China's trade surplus with the rest of the world tripled to $102 billion in 2005 from $32 billion in 2004. Its exports rose 28% to $762 billion from 2004. Total foreign trade in 2005 topped $1.4 trillion, making China, after America and Germany, but ahead of Japan, the world's third-largest foreign trading country. A decade ago, the value of China's foreign trade was only $289 billion. China's foreign currency reserve, close to $800 billion, is second only to Japan's $828 billion. This has been China's real Great Leap Forward.

Adding oil to fire, Beijing last month announced that its gross domestic product figure was underreported by $280 billion, meaning the Chinese economy might have grown as much as 10% annually in the past few years.

There's no give and take in U.S.-China trading relations. Americans are the only givers. America's trade deficit with China is expected to jump over $200 billion from $162 billion in 2004. The annual deficit of $20 billion, when President Clinton took office, is now surpassed almost in a month.

"China is the Frankenstein created by American businessmen," Rep. Dana Rohrabacher, a Republican of Calif., said at a hearing last year. I find this shockingly true. Moscow, even in its wildest fantasy, could never have dreamed of enjoying the privilege of Fortune 500 lobbying for them. Beijing, with its growing economic clout, has become the sexiest darling of Wall Street.

What the former chief executive of American International Group, Maurice ("Hank") Greenberg, says about China is particularly telling. Considered a "truly good friend to China" by Chinese officials, Mr. Greenberg, writing in the latest issue of The National Interest, argues that despite significant differences between America and China, "It is important that we never allow our trading and economic relations to become hostage to these differences." Reason? "Overcoming legacies of mistrust and hostility is another benefit that can emerge from closer economic and trading ties."

This must come as news to the Japanese. China's third largest trading partner, Japan, is under attack in the official Chinese press almost on a daily basis. Japan's prime minister, Junichiro Koizumi, is deem almost as evil as Hideki Tojo, Japan's prime minister during World War II. In fact, the Chinese have a phrase to describe the relation of the two nations: "cold politics; hot economics."

Or try to tell it to the Taiwanese, whose enterprises have invested at least $50 billion in China. Well, in addition to deploying 784 ballistic missiles targeting the island democracy, China also passed the "Anti-Secession Law" last March, hoping to provide a legal basis for invading Taiwan.

Mr. Greenberg reminds us that "China's 1.3 billion people represent an enormous and still untapped market for U.S. products and services." Consequently, America "should never let differences on individual issues, as important as they may be, distort or detract from the overall relationship." However, Mr. Greenberg doesn't seem to be bothered by the fact that America's China policy has been hijacked by one aspect of the bilateral relations, namely trade.

"Freer trade with China alone saves U.S. households $600 each year," claimed by Senator Max Baucus, a Democrat of Montana, in Beijing last week. Mr. Greenberg also asserts that "a significant number of high-wage U.S. jobs are dependent on high-technology exports to China?" Are these economic gains, as desirable as they may be, more important than national security? Unfortunately, the seduction of the vast China market does overrun common sense.

One important issue is always conveniently ignored by China apologists. You can't even find the word "Taiwan" in Mr. Greenberg's article. This is no accident. Once the Taiwan Straits - a flashpoint where GIs getting killed by the People's Liberation Army remains a real possibility - is introduced into the discussion, it would make all the rosy talks on China sound hollow. Yes, Mr. Greenberg, this issue would and should affect the overall relationship.

While American businessmen may choose not to look at the downside of an economic-dominant China, the people in Taiwan can't afford to turn a blind eye. In his New Year's address, President Chen Shui-bian said that more than 40% of manufactured goods orders placed in Taiwan are filled overseas and about 90% of which is concentrated in China. He proposed to shift the principle of cross-Strait economic and trade policies from "proactive liberalization and effective management" to "proactive management and effective liberalization" - the government "proactively" taking on the responsibility of "management" in order to "effectively" reduce the risks of "liberalization."

"The overarching objective has always been to safeguard Taiwan's overall national interests, and it subscribes to neither China's pressure nor individual interests of enterprises," Mr. Chen said. He added "Although we cannot turn a blind eye to China's market, we should not view the China market as the only or the last market. Globalization is not tantamount to 'China-lization.' While Taiwan would never close itself off to the world, we shall also not 'lock in' our economic lifeline and all our bargaining chips in China."

In light of Washington's hands being increasingly tied by Beijing's rising power, what Mr. Chen proposed makes a lot of sense. As long as China doesn't rule out the use of force against what Beijing considers the "renegade province," Taiwan is wise to remain cautious in doing any business with China. There might well be a billion customers in China. However, they can easily turn out to be a billion enemies if America keeps pumping up an
undemocratic China.

Mr. Liu is a former Washington-based columnist of Hong Kong's Apple Daily.

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