[Marxism] China Irks U.S. as It Uses Trade To Embellish Newfound Clout (WSJ)

Walter Lippmann walterlx at earthlink.net
Mon Oct 3 07:03:40 MDT 2005

"China's own economy still remains relatively closed. It doesn't allow
a free flow of capital, restricts foreign stakes in key sectors, 
such as autos, telecommunications and banking, and restrains its
population's movements. But in the narrower sphere of international
trade, its alacrity in signing trade deals is making the U.S. appear
"Ironically, now our teachers are getting worried because we, 
the students, followed your advice so faithfully and became so
successful," said Long Yongtu, a former deputy trade minister who 
led China into the World Trade Organization, in a May speech to the
Institute for International Economics in Washington, D.C. "As the
students, we believe that our teachers should not be worried about

Washington's fear of China's expanding role isn't limited to its
close and friendly ties with Cuba and Venezuela, which get scant
mention here. In fact, China's international role indicates clearly
that Washington isn't interested in capitalism, as advocates of the
so-called "free enterprise" system teach its doctrines in colleges
and in newspaper columns. They're not motivated by any other thing 
than private property and raw power. Resentment against China for
the help which its practice of free trade is powerful testimony to
the progressive role China plays internationally where it has no
armies of conquest and occupation anywhere. Anyone who purchases
domestic consumer products at a store like TARGET in the United
States will find high-quality products at prices which many can

The widespread claim that capitalism can provide a better standard
of living for people is belied by the fear Washington expresses
toward China for its practice of capitalist trade principles all
over the world. Some on the political left argue that capitalism
has been restored in China. Despite all the interpenetration of
the economies of the US and China, Washington isn't happy with
China and would prefer China turn its entire economy over to the
vagaries of international capitalism. This Wall Street Journal
report makes it clear that the Chinese have hardly given away
the store, and it doesn't look like they're likely to do so
anytime in the foreeable future. No wonder as Washington finds
itself bogged down more and more deeply in Iraq and elewhere
the search for a scapegoat on whom to blame US failures will
escalate. Protectionist anti-China sentiment is being stoked
for exactly that reason. They can't blame the "godless inter-
national Communist conspiracy" for their own failures today.

Cuba's role in all this is small, but symbolic. From a strictly
economic point of view, Cuba's weight in production for the 
international market is modest: tobacco, rum, biotechnology and
nickel play a modest role compared to steel mills, automobile
production and petroleum production. Cuba's economic decisions
aren't ones which can affect the world economy on their own.
Getting rid of the U.S. dollar didn't harm Cuba in any manner

And furthermore, the weak and unreliable dollar, the trouble
Cuba had in using it to pay its international bills, etc. made 
it more of a liability than an asset for Cubans. Beyond that,
there were certain political problems inherent in using Cuba's
principal problem-maker's currency as the one most valued by
Cubans living in one the island. The US dollar has been totally
eliminated from the normal daily life of the Cuban people, and
their lives continue as they always have, vicissitudes and all. 

Cuba has plenty of problems of its own, of course. Included in
the list are a run-down infrastructure, housing stock suffering
from deferred maintenance and transportation problems as well.
Washington's troubles don't make life better for anyone in Cuba,
but they do make it more difficult for Washington to impose its
will on the truculent little island. With a little bit of luck,
with an active economic relationship between Cuba, China and
with petroleum from Venezuela, there's good reason to hope that
Cuba's situation can see even more progress than it has lately.

What irks Washington so much is that Cuba is like the one that
got away. It's the "ripe fruit syndrome" which has motivated
US policy makers long before Fidel Castro's FATHER was born.
Indeed, if you google the phrase "ripe fruit syndrome" you'll
find an essay which will help you to understand why, despite 
all of the advice of libertarian-types that ending the U.S.
blockade of Cuba will be the best way to sink the Revolution,
Washington finds it do hard to actually attempt such a thing.

Too bad for all those US companies who lose business because of
the influence of those reactionary Cubans in Miami, as well as
those for whom the Ripe Fruit Symdrome is a matter of religious
faith. Here are a few examples of what they are missing out on:

Fidel Castro on the 50th anniversary of the Chinese Revolution:

Walter Lippmann, CubaNews

October 3, 2005

Lowering the Wall
China Irks U.S. as It Uses Trade
To Embellish Newfound Clout
Beijing Makes Numerous Deals
In Search for Influence;
Some Unsavory Alliances
President Hu's Warm Welcome
By PETER WONACOTT in Beijing and NEIL KING JR. in Washington
October 3, 2005; Page A1

China has a new calling card: champion of free trade.

Since March, Beijing has opened free-trade talks with South Korea,
Pakistan, Australia and Iceland. In November, it inked deals with
Thailand, Malaysia and eight other Southeast Asian countries. Even
though China's government still controls large swaths of the
country's economy, it has sealed or is seeking free-trade pacts with
25 countries -- up from zero two years ago.

China's pursuit of trade deals, combined with a flurry of big-ticket
bids for energy and other assets, underscores its desire to don the
uniform of a great power. Having created a credible army and a
booming economy, China is positioning itself as a leader of global
trade and investment, rivaling the U.S. in one of its traditional
spheres of influence. As a result, China's market clout is making it
a rallying point for countries looking for a counterweight to the
world's lone superpower.

All this is raising alarms within the Bush administration, whose own
trade agenda has lost momentum amid rising protectionism in Congress.
A U.S. trade deal with five Central American countries squeaked
through Congress by two votes this summer after months of Republican
arm twisting. In particular, Washington is fretting over China's
courting of countries on the outs with the U.S., including Venezuela,
Cuba, Sudan and Uzbekistan.

"China's involvement with troublesome states indicates at best a
blindness to consequences and at worst something more ominous," U.S.
Deputy Secretary of State Robert Zoellick said in a speech in New
York last month. He said China's new prominence has stirred "a
cauldron of anxiety."

Chinese officials say they are not trying to rival the U.S. or stir
trouble. Beijing's trade and investment agenda, they say, is designed
to support an economy dependant on exports that also has a thirst for
energy and raw materials. In addition, for decades, U.S. presidents
have urged China to join the international economy and to take its
rightful place on the diplomatic stage.

"Ironically, now our teachers are getting worried because we, the
students, followed your advice so faithfully and became so
successful," said Long Yongtu, a former deputy trade minister who led
China into the World Trade Organization, in a May speech to the
Institute for International Economics in Washington, D.C. "As the
students, we believe that our teachers should not be worried about

China's own economy still remains relatively closed. It doesn't allow
a free flow of capital, restricts foreign stakes in key sectors, such
as autos, telecommunications and banking, and restrains its
population's movements. But in the narrower sphere of international
trade, its alacrity in signing trade deals is making the U.S. appear

China took just two years to strike a pact with 10 Southeast Asian
countries. The agreement whittles import tariffs on commodities such
as fruits and vegetables to zero by 2010. During the same period, in
the Asian arena, Washington inked one 1,200-page deal with Singapore.
Talks with Thailand have been halting and likely won't wrap up until
2006 at the earliest. Efforts to get negotiations under way with
South Korea continue to falter amid misgivings in Seoul.

One reason for the slowdown, say trade experts, is that U.S.
negotiators are forced to load up agreements with environmental and
labor conditions to help them pass through Congress. They also have
to try to protect sensitive U.S. markets by maintaining tariffs or
quotas. China generally eschews such niceties.

"The U.S. is losing the competition for influence in Southeast Asia,"
said Singapore's ambassador at large, Tommy Koh, in remarks late last
year that echoed around the region. "The winner, at least for the
time being, is the People's Republic of China." Mr. Koh, speaking at
a forum sponsored by the San Francisco-based Asia Foundation, offered
the Bush administration a pointed bit of advice: "Resist new
protectionist measures" and stand firm by America's "longstanding
policy of free trade and open investment."

Bush officials argue that U.S. trade deals are much trickier
propositions to negotiate than those sought by China. In the Thai
negotiations, for example, U.S. companies want access to Thailand's
telecom and banking sectors even though American sugar growers and
truck makers are reluctant to reciprocate with their own concessions.
China's objectives, on the other hand, meshed neatly with those of
South Asia's countries: lower barriers on farm and manufactured goods
with few strings attached.

Beijing can now claim an unusual roster of friendly countries: North
and South Korea, Iran and Iraq, Pakistan and India. It is also
getting closer to traditional American allies such as Australia and
Canada. Canada and China have held months of discussions about
Chinese participation in developing the vast oil sands of Alberta and
other energy-related projects.

Standing Ovation

Talking trade, and little else, has assured Chinese President Hu
Jintao a warm welcome around the world. Beijing began negotiating a
free-trade agreement with Australia in May and Australia's usually
prickly parliament gave Mr. Hu a standing ovation in late 2003. 
"We are ready to be your long-term and stable cooperation partner,
dedicated to closer cooperation based on equality and mutual
benefit," the Chinese president told legislators. President George 
W. Bush was heckled the day before addressing the same body with a
speech largely focused on terrorism and the war in Iraq.

Chen Yonglin, a recent defector from the Chinese consulate in Sydney,
Australia, told a congressional panel in July that China sees trade
as a way to drive a wedge between Australia and the U.S. He said
China also wants Australian help to marginalize local chapters of
Falun Gong, a religious group outlawed in China.

Beijing agreed to buy Australian liquid-natural gas "to obtain both
Australia's natural resources and its political compromises," said
Mr. Chen.

U.S. officials, meanwhile, tick off a lengthening list of examples
where China has wooed tainted leaders for commercial gain. For
example, Uzbek President Islam Karimov received a red-carpet welcome
in Beijing in late May, just 12 days after his troops killed hundreds
of protestors in a town square in eastern Uzbekistan. The Uzbek
government contends that Islamic militants sparked the unrest and
that 187 people were killed, including government security forces.
The U.S. and its North Atlantic Treaty Organization allies called for
an international inquiry, but Chinese leaders greeted the Uzbek
leader as a "reliable friend."

During his visit, Mr. Karimov inked a $600 million deal giving China
National Petroleum Corp., a state-owned giant, access to 23 Uzbek oil

Mr. Zoellick, the U.S. deputy secretary of state, says in an
interview he quizzed China's top diplomats on this issue when he was
in Beijing in August, asking them: "What advantage do you really gain
over time if you are associated with genocide and guys who are
running their countries into the ground?"

Mr. Zoellick says the U.S. welcomes China's participation in
international markets, as long as it isn't to the exclusion of the
U.S. Another message he says he delivered: If China hoped to use its
trade leverage "to push the U.S. out, they would get a counter

Throughout history, China has veered between embracing and rejecting
international trade. In the early-to-mid 19th century, Britain and
other imperial powers pried open the country's doors in a struggle
that culminated in the Opium Wars. The Communists who took power in
1949 strived for self-sufficiency and turned the country's gaze
inward. Only in 1978 did Chinese leader Deng Xiaoping decide to open
the economy to foreign investment to fuel export growth. In the
1980s, China cultivated ties with Western countries through deals to
modernize telecommunications, energy production and auto
manufacturing. Trade has underpinned China's economic rise.

Even before China's re-emergence on the international scene, the
blending of economic and diplomatic interests was a tool of
statecraft. In 1972, for example, the year of President Richard
Nixon's historic visit to China, Beijing bought 10 Boeing 707s.

But China's booming growth in the past few years has created a new
set of challenges. The nation's demand for oil, gas, iron ore, copper
and aluminum has strained domestic supplies and bid up global prices.
A middle class has developed a taste for foreign goods. Ambitious
Chinese companies have headed overseas and discovered receptive

As a result, Mr. Hu launched an "economic diplomacy" campaign soon
after he became China's leader in 2003. The idea, which had been
percolating in Beijing for several years, was to use China's economic
allure to cement friendships abroad. That would have the added
benefit of suggesting that China doesn't pose a long-term threat to
Asia's stability, despite, for example, its coveting of Taiwan.

In summer 2004, Mr. Hu met with China's ambassadors to determine how
the strategy should be applied to developing countries. During the
Cold War, China was a leader of the Nonaligned Movement, an
association of countries largely set up as an alternative to the U.S.
and Soviet blocs. China, which retained these ties, has seen its
clout among developing countries soar in recent years, especially
within bodies like the United Nations and the World Trade
Organization. Many see China as a potential bulwark against U.S.

'A Lot of Goodwill'

In South America, Venezuelan leader Hugo Chavez is touting his China
strategy, playing Beijing against Washington using his country's oil
riches as leverage. Likewise, Zimbabwe's embattled leader Robert
Mugabe has trumpeted his strong ties to Beijing as his "eastern

"There's a lot of goodwill for China," says Christopher Mutsvangwa,
Zimbabwe's ambassador in Beijing, who recalls firing Chinese-made
AK-47s as a guerrilla soldier in the 1970s.

A year ago, China's Ministry of Commerce issued new guidelines for
Chinese companies investing overseas. They included a list of 135
countries, mostly in Africa and Asia, where China's central
government doesn't need to approve new investments. Among the
exceptions: the U.S., Japan and the United Kingdom.

To smooth the way for trade and investment, China is dropping
barriers to its own market and pressing other countries to do the
same. Over the past 13 years, China has slashed average import
tariffs to 9.9% from 43.2% in 1992. That has spurred imports: 60% of
China's sales overseas are made from imported materials.

"Countries don't need to fear China's rise," argues Zhou Yongsheng, a
foreign-policy analyst in Beijing and the author of a book on Chinese
economic diplomacy. "Our rise benefits many, especially American

China critics in Congress and within U.S. industry accuse Beijing of
cheating the trade system. Chinese companies, for example, export
many knock-off versions of Western brand-name goods. In recent
months, U.S. officials have also taken aim at China's management of
its currency system, saying the Chinese yuan is pinned at a level
that allows the country to sell goods overseas at an artificially low
price. In July, China slightly widened the band in which its currency

Concern that the U.S. may be losing influence in Asia is now
widespread within the U.S. government. Late last year, China endorsed
holding a 13-country East Asia Summit that wouldn't include the U.S.
The proposal sparked a flurry of communiqués between the State
Department and embassies in Asia, although U.S. officials now
maintain that the forum isn't a big deal. The first such event, which
will include Australia and New Zealand, is set for December in

China has also been scoring diplomatic and economic victories in
Central Asia, a region rich in oil and home to several American
military bases. In addition to its recent deals in Uzbekistan, China
recently signed several oil-exploration deals with Kazakhstan, part
of a campaign to increase its access to oil. Beijing is also funding
construction of a $248 million port in the obscure Pakistani fishing
village of Gwadar, which opens onto the Arabian Sea and is positioned
to feed China with gas and oil from Central Asia and the Middle East.

Administration officials say they suspect that China, along with
Russia, would love to see the U.S. out of Central Asia. China has
worked hard in recent months to make the Shanghai Cooperation
Organization, a regional group founded in 2001 to combat terrorism in
Central Asia, a more aggressive outfit.

In July, the group demanded that the U.S. put down a timetable for
withdrawing from air bases in the area. Weeks later, amid a spat with
Washington over his recent military crackdown, Uzbekistan President
Mr. Karimov, gave the Pentagon an eviction notice for the Khanabad
air base. It's a key supply point for the U.S. military in

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