New Boy on the Block

It would seem the world's future is tied to China; the overall economic recovery, sanctions on Iran, nuclear disarmament in North Korea, climate change, the green economy, our deficit situation, the economy of half of sub-Sahara Africa. This is not a reassuring position to be in given China's penchant for treating its international relationships whether they be economic or geo-political as a zero sum game. Their behavior at the Copenhagen climate conference is a good example of their attitude.


Likewise, the PRCs remarkable increase in military spending, its activities in space, the string of pearls in SE Asia and construction of blue water ships including aircraft carriers doesn't make me sleep easier at night. Overall, despite protestations about it's peaceful rise to great power status China is behaving like the new boy on the block. At some point the rest of the world will have to treat China accordingly.



In the economics sphere, China's growth has been astounding. It may now be the world's largest auto market and it's largest exporter. This growth is for the most part driven by state companies that receive very favorable finance from state owned banks. Yes, consumers are no doubt better off than they have been but the real winners have been the state corporations... where do you think the cash from the enormous trade surplus is residing? It is in corporate savings destined for reinvestment. However, a substantial component of the surplus is due to the currency imbalance; the renimbi is seriously undervalued and the government is unlikely to do any thing much about it for some time. So much for global cooperation by a world player. This is a mercantilist actor on the world stage. Look at their behavior in Africa, their squabbles with Australia. How do they behave on intellectual property? Check out what they did to Mongolia's cashmere industry? What about their cyber spying/warfare activities -commercial as well as political.

Politically, see how they interface on Iran, Afghanistan? Human rights? And oh my aren't they sensitive to criticism, even of the mildest sort?

China is important and will become increasingly more important. But are they part of the solution to the world's problem or an increasingly large part of the problem? I am afraid they are the new boy on the block. In which case treat them that way ... as a competitor for technology, e.g. for rare earth materials for the fabled green economy products [electric motor magnets], as an obstacle in the globalization of financial services, legal services and as a competitor for world opinion.

As for China's behavior on climate change, it is ludricrous to consider their building some renewable energy facilities as an example of proactive leadership role in green energy. The bulk of their new electricity generating facilities are known to be coal fired conventional technology. The astounding economic growth of the past 20 years has come at the expense of their environment. The air in the bigger cities has been polluted for years, the hillsides are denuded, the rivers silted and flood prone. Just Google "environmental disasters and China" for a long list. I know and I have only been to Beijing and along the SE coast a handful of times. China's smiley face diplomatic posture is just that.

We need to consider them as a competitor accross the board; they are likely to cooperate only when it clearly to their advantage to do so. They are the new boy on the block. The sooner we realise that the better. It will not get any easier as they get stronger.