In the next few decades the USofA will learn a few sharp and important lessons
That is, there's more than one way to be a capitalist, and that all those ways wield the full power of capitalism to change things.
China, I think, has been watching carefully what happens to those nations that uncritically jump headlong from their traditions into the "New World Order." From page 7 of Poverty in an Age of Globalization, a PDF file I found via the World Bank Group's Globalization site:
Role of Globalization. While trade integration does not appear to increase vulnerability, and foreign direct investment flows have been remarkably stable, integration with financial markets can increase the propensity to develop crises (figure 7). The increased susceptibility to and costs of crises are due to inadequacies in the domestic policy and institutional framework and larger and more volatile private capital flows. Although the increased prevalence of financial crises has not raised GDP volatility (with the exception of East Asia), it can have a large detrimental impact on the poor both through output declines and the socialization of large resolution costs (see figure 8). Beyond these aggregate effects, globalization can increase insecurity of particular groups, especially workers, in a more footloose and fast changing world.
China has seen what happened to the Russian economy. It's fared no better under European-style capitalism than it did under the previous imposed-from-above economic system, communism. Even Japan, the model for such head transplants, is dealing with the social, political and economic repercussions of flipping its economic model after World War II.
The pattern typically goes like this:
- Huge direct foreign investment in third world country focuses economic activity into areas deemed most efficient by investors
- Importation of foreign goods to suck the investment back out of the country
- Third world country gets money-drunk
- The inequalities between the nouveau rich local traders, the old school local leaders and the left out local citizens play hell with the society
- Third world nation's economy is declared unstable
- Direct foreign investment pulls back
- Third world nation, now dependant of foreign trade, must make deep social and political changes which acknowledge the primacy of the European-American-Global Economy and Organization over their own
- WE 0WN UR AZZ
It seems, in the process of watching all this, China has made an interesting discovery: the nature of the game makes China a part of it. It seems to me they've been dealing with the West at arms length, rebuffing requests to speed the opening of their markets yet continuing at their own pace to open the markets of their own selection, learning the ropes and landscape. China has realized that, at least now in its formative stages, the "New World Order" needs China's economic activity to be in the mix more than it needs to 0wn it. This makes China a player rather than a piece.
And local to Southeast Asia, the USofA is like this big, strong, well armed guy that comes around every couple of weeks for his cut, while China is like this wiry guy with a baseball bat that lives down the block.
Anyway…
China Trades Its Way to Power
By JASON T. SHAPLEN and JAMES LANEY
North Korea was high on the agenda for the national security adviser, Condoleezza Rice, during her trip to China, South Korea and Japan last week. But while the North's nuclear weapons program presents a difficult test, it masks a broader and far greater challenge for the Bush administration, one with significant implications for the United States, the region and the world.
At its heart, the challenge reflects China's emergence as a power broker in the region. The Bush administration can couch Beijing's new role in whatever politically advantageous language it wishes, but, ultimately, it comes down to this: China's influence is rapidly rising and America's is rapidly declining. While this realization may be unpleasant for Washington, the sooner administration officials accept this reality the faster they can deal with it. Unfortunately, they have virtually ignored East Asia, preoccupied as they are with Afghanistan and Iraq.
Trade numbers help explain the transformation in Asia. Within six years, China's economy will be double that of Germany's, now the world's third largest. By 2020, it is expected to surpass Japan as the world's second-largest economy. Japan already imports more from China than it does from the United States. And China has become the largest trading partner of South Korea, the world's 12th-largest economy. Clearly, the juggernaut has already begun.
Why are these statistics important? Because while Mao once claimed that power grows out of the barrel of a gun, today's leaders in China know it also grows from trade. Tokyo and Seoul know this, too. Aware that China is now vital to their economic well-being, they are no longer as willing as they once were to position themselves opposite Beijing, even if this means going against Washington. Put another way, while the Bush administration still thinks of the United States as the sole superpower in a unipolar world, Tokyo and Seoul do not share this view. To them, the United States and China are both powers to be reckoned with in a bipolar Asia.
