[lbo-talk] US bourgeosie uncertain whether rise of China will result in accomodation or confrontation

Marvin Gandall marvgandall at rogers.com
Mon Jun 27 17:54:10 PDT 2005


An article in today's Wall Street Journal describes the uncertainty in the US ruling class about China's spectacular economic growth and prospects. The latest trigger is the $18 billion takeover bid for Unocal by the China National Offshore Oil Company (CNOOC). The issue is whether China should be viewed as a looming threat to US global hegemony, or as a vast new market and low-cost supplier of essential goods and services which will offer historic new opportunities for the expansion of US capitalism. (The answer, which the article neglects, is both, and explains the ongoing contradictory nature of Sino-US relations and the splits this has engendered within the American bourgeoisie.)

CNOOC's offer to Unocal has stoked predictable anxiety within Congress and the defence and security establishment. But the Chinese oil company, headed by Southern Cal engineering grad Fu Chengyu, also has some powerful allies on its side, previously reported in the Journal. It's engaged an array of top American banking and lobbying firms, notably lead bankers J.P. Morgan Chase and Goldman Sachs, the law firm Akin Gump, and the lobbyist Public Strategies - the latter two companies based in Texas with close ties to the Bush administration. There is also widespread business concern, especially within the finance and technology sectors, that rejection by the US government of a successful CNOOC bid will impede American corporate efforts to penetrate the Chinese market. And there are foreign policy concerns that a rebuff would dissuade the Chinese from pressuring the North Koreans on the US's behalf.

As the article notes, the optimists like to cite Britain's accomodation to rising American power at the turn of the last century as the template which will govern future Chinese-US relations. But others point to the the rise of Germany and Japan, and the threat they represented to the British Empire and American overseas ambitions, as a more accurate foreshadowing of the conflict which lies ahead.

MG ----------------------------------- Is China's Rapid Economic Development Good for U.S.?

By GREG IP and NEIL KING JR. Staff Reporters of THE WALL STREET JOURNAL June 27, 2005; Page B1

Chinese oil company Cnooc Ltd.'s takeover bid for Unocal Corp. has brought into sharp relief two opposing American views on China's rapid economic development.

Many in Congress and the Pentagon think it may hasten an inevitable clash between the U.S. and China for economic and political leadership in the world. Many businessmen and academics, however, think China's growing wealth and international economic ties will make it more democratic and a force for global stability. Both have history on their side.

Brad DeLong, an economic historian at the University of California at Berkeley, sees a useful parallel in Britain's policy toward the emerging industrial colossus of the United States in the 19th century.

As late as the 1840s, he notes, the U.S. and Britain -- then the world's sole superpower -- came close to war over territorial disputes in the Pacific Northwest and the lucrative fur trade there. But in subsequent decades Britain chose to accommodate, rather than suppress, the U.S. By 1900, the notion of conflict was widely regarded "as silly, simply because the trade and economic connections were so tight and the political systems so compatible," Mr. DeLong said.

Similarly, he argues the world will be safer if the Chinese in time see the U.S. as having aided, rather than hampered, their economic development.

History, though, also offers counterexamples. Germany was catching up to Britain at the same time as was the U.S. but that relationship ended in war. Similarly, Japan was more open to imports and foreign investment before World War II than after, yet its rapid industrialization, especially later under a nationalist military government, ultimately made it a more formidable adversary of the U.S.

"There is no deterministic relation" between economic advance and war or peace, said Charles Maier, a Harvard University historian. Katherine Barbieri, a political scientist at the University of South Carolina, has found that countries that trade more with each other are actually more likely to fight, in part because deeper relationships generate more things to fight about. "Trade generates wealth but...certain countries may take that wealth and direct it to military purposes," she said. "We're giving China the power to build a very strong military."

China isn't easy to categorize. It has pursued market-based economic liberalization, foreign trade and foreign investment to lift its mostly poor, rural population out of poverty. It has a growing business elite, many with U.S. educations. Yet it remains a one-party state with a host of strategic friction points with the U.S.

Since President Nixon led the U.S. opening to China in the early 1970s, every administration has wavered between seeing Beijing as clear friend or potential foe. Some Asia specialists within the Bush administration now worry that the U.S. trade deficit with China, which topped $160 billion last year, cannot be sustained without political repercussions. There is also growing alarm, even within the more accommodating State Department, that China's pursuit of energy resources is propping up unsavory governments in places like Burma and Venezuela.

Some of the more alarming views of China's intentions will be laid out in a Pentagon assessment of China's military, which is expected to come out next week after a long delay and heated internal debate. Defense officials indicate that the report hasn't been notably toned down through the interagency vetting process, and will still contain a list of potential conflict scenarios that some in the White House and the State Department had hoped to strip out.

The widely differing views of China were vividly evident in 2001 when military and Wall Street officials came together at the World Trade Center in New York to share thoughts on the impact of China's economic and military rise. The organizer, Thomas Barnett, then a teacher at the U.S. Naval War College, hoped to bring the two constituencies closer together. Instead, their opposing views were reinforced.

Mr. Barnett, now a writer and consultant, says the Wall Street participants concluded, "'When I think of the security issues I realize how a strategic partnership with China is all the more imperative,' and the military guys would say, 'Wow, realizing all the economic competition, war with China is that much more inevitable.'"

Americans in general are likewise ambivalent. In an annual exercise, the Chicago Council on Foreign Relations last year conducted a poll asking the public to rate their degree of warmth or chilliness toward several countries on a scale from zero to 100. China earned an average score of 44 degrees, 10 degrees cooler than Mexico but just three degrees cooler than France and seven degrees warmer than Saudi Arabia.

Even "within China, there are people who think of China's expansionist prospects and military modernization, and see the country as being something like Japan or Germany pre-World War II," said Charles Wolf, an Asia scholar at the Rand Corp., a think tank in California. "Then there are others who put huge emphasis on the peaceful rise of China."

Mr. Barnett argues that most of Asia's economic success stories had, in effect, one-party government as China does today: Singapore, South Korea, Japan, Taiwan. Today, all are important trading partners and pro-U.S. Meantime, North Korea, which cut itself off from the world, is mired in poverty and one of the U.S.'s chief antagonists.

History suggests that while economic engagement helps prevent conflict between countries, by itself it isn't enough. During the 1920s, Japan had low import tariffs and its democratic, civilian government encouraged domestic alliances with European and American companies to hasten Japan's technological catch-up, said Hideaki Miyajima, a Japanese economic historian at Waseda University in Tokyo and a visiting scholar at Harvard. General Motors Corp. and Ford Motor Co. operated Japan's only major automobile assembly plants. The heads of Japan's "zaibatsu" -- urban industrial conglomerates -- were pro-Western. Many sent their children to U.S. universities.

But these pro-Western elites were too weak to resist the forces of militarism and imperial expansion. Mr. Miyajima said the Depression fell disproportionately on Japan's large agricultural population, which was the military's power base. It increased economic inequality and fueled resentment of the traditional business elite.

In 1932, military-backed right-wing nationalists assassinated both Japan's prime minister and one of its leading business figures, Takuma Dan, the Massachusetts Institute of Technology-educated manager of the Mitsui Group zaibatsu. In 1936-37, the military completed its takeover and began to limit imports and foreign investment in militarily strategic industries, such as steel, automobiles and machinery. GM and Ford were forced to leave; Toyota Motor Corp. and Nissan Motor Co. took their place.

Germany's rivalry with Britain is similarly complex. In 1910, Norman Angell, a British economist, wrote in "The Great Illusion" that Europe's great powers had become so economically interdependent that war was unthinkable. Harvard's Mr. Maier says the hypothesis was plausible. Britain's old-line industrial elites saw Germany as a threat, while its emerging financial elites saw it as an opportunity. Within Germany, Ruhr-based heavy industry favored the army buildup and were more willing to risk conflict with Britain, while Hamburg-based trading interests were more pro-British, though supportive of the German fleet buildup.

British-Germany naval rivalry didn't lead to war itself, says Mr. Maier; rather, entangling alliances between Germany and Austria-Hungary on one hand and Britain and Russia on the other, were a more proximate cause.



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