Wednesday, September 09, 2009

A Criticism to a “Peaceful Rise” of China

Some innocent believers in the global economy welcome a “peaceful rise” of China. Such naïve people in America and Europe insist that China will contribute to global economic growth, and they are happy to accept China as a “responsible stake holder”. In addition, the incoming Japanese Prime Minister Yukio Hatoyama remarked that Japan work closely with China to found the East Asian Community, in his controversial article to the New York Times, “A Path for New Japan” on August 27.

However, as I have been arguing on this blog, China, along with Russia, poses a critical challenge to the liberal order of global political economy founded by the West. Quite importantly, the market economy has developed side by side with democracy in Eastern Europe, while it has given rise to cult nationalism in China and Russia, which is more dangerous than communism. Actually, the ambition of Chinese leaders is not so “peaceful” as they say. They are exploring to make their reminbi an alternative reserve currency to US dollar, and ultimately, destroy the Bretton Woods System, as I mentioned in the post on the Yekaterinburg summit this year. The Chinese authority shows increasingly pushy attitude to the West.

Charles Grant, Director at the Centre for European Reform, has released an insightful briefing note, entitled “Liberalism Retreats in China” in July this year. Although China has introduced the market economy, the Communist Party still holds a tight grip on politics, and the party imposes ideological constraints on the citizens. Let me review his commentary on China’s economic nationalism and assertive behavior to the West.

Economic nationalism in China has been accentuated dramatically after the global economic crisis. The government restricts foreign direct investment in strategic sectors such as heavy chemical, energy, aerospace, and high-tech industries, and place them under a rigid state control. In trade, China keeps the exchange rate of the renminbi artificially low against the dollar to make Chinese exports competitive in the global market. I would like to stress that China free rides Western-led liberal economy, while violating the global code of conduct.

More problematic issue is an increasingly assertive foreign policy. China sponsors repressive regimes in Burma, Sudan, and North Korea. The Beijing authority demonstrates military might around the South China and the East China seas. The clash on human rights, such as Tibet, Tiananmen, and Xinjiang, is a critical issue between China and the West. Quite interestingly, China is tougher to Europe than to the United States. This is because the United States is the superpower, capable of imposing substantial damages on China, but Europe is not. Moreover, Chinese media are reluctant to report American leaders criticize China, while willing to bash such comments by Europeans.

For example, when Secretary of State Hillary Rodham Clinton blamed bloodshed at the 20th anniversary of the Tiananmen Square massacre this year, the Chinese government decided not to report this speech. Chinese people are unaware of bitter attitude by American leaders. On the other hand, when European leaders denounced Chinese brutalism in Tibet, Chinese media magnified it.

This is an important lesson for Japan. When the counterpart is strong, China acts modestly. On the other hand, when the counterpart is weak, China shows no hesitation to confront. Beware of it, Mr. Hatoyama! It is no interest for Japanese people to live in a “Common Asian House” with the Beijing regime.

Although the Chinese authority manipulates nationalist sentiments among the public as shown in the case of Japanese embassy attack (“Youth Attack Japan's Embassy in China” Washington Post; April 10, 2005), grassroots emotions often drives the government to challenge the West as witnessed in the case of Tibet and Uighur. Martin Jacques, Visiting Fellow at the London School of Economics, points out that the Chinese public regards Western support for such minorities as a plot to dissemble China, in his latest book, “When China rules the world: the rise of the Middle Kingdom and the end of the Western world”. Growing state control on the economy, particularly after the global economic crisis, will be a hurdle to develop business with the West, and this will damage long term relations between China and the rest of the world.

Grant mentions some optimistic aspects as well, such as common interests in nuclear non-proliferation and economic partnership. However, politics and the economy in China are becoming less and less liberal. Its foreign policy is driven by cult nationalism, whether led by the government or provoked by the grassroots. Its economy is becoming increasingly state-controlled. The clash between China and the West will evolve more and more serious. Mr. Hatoyama, keep this in mind when you assume prime ministership on September 16.