The China Dream

The 3rd session of the 11th National People’s Congress (NPC) ended on March 14. The annual meeting of the faux legislative branch of the People’s Republic of China dictatorship met for less than two weeks, having only opened on March 5. At the closing press conference, Premier Wen Jaibao stated, “Some say China has got more arrogant and tough. Some put forward the theory of China’s so-called ‘triumphalism’. My conscience is untainted despite slanders from outside.” He was referring to the increased public disagreements between China and the United States over a number of issues since the end of last year.

An issue Wen was particularly adamant about was one of long standing, the claim by officials, business leaders and economists in both America and Europe that the PRC has gained a trade advantage by setting a low exchange rate for its Yuan currency by government fiat. Despite the global downturn from the financial crisis and recession, China is expected to have a current account surplus of $450 billion this year. The U.S. trade deficit with China in 2009 in goods was $226.8 billion, and America has sent to the PRC over $1.7 trillion in deficits since 1999. China’s total international currency reserve from its surpluses is approaching $3 trillion.

Premier Wen denounced “finger pointing” in the currency manipulation controversy “A country’s exchange rate policy and its exchange rates should depend on its national economy and economic situation,” he said. Global Times, a publication of the ruling Chinese Communist Party, ran a commentary attacking the Western media. The paper argued,

“’It would be good for China,’ is a typical tone adopted to draw Chinese or international readers. But in reality, currency policy is so critical to China’s economy that a cautious approach must be taken. Any sharp appreciation will give rise to a series of negative chain reactions in employment, trade and many aspects of life.”

It is clear how China sees its situation. But when other countries react to Chinese policy, Beijing officials denounce them for adopting “protectionism” as if only China has a right to defend its economic interests and pursue job creation and growth.

The heightened sense of confrontation between Beijing and Washington does not, however, stem from trade problems which have been a sore point for a decade. A number of other issues of a direct, strategic nature have become more prominent since December.

The Chinese list of problems is much shorter than the U.S. list. Beijing has protested the sale of $6.4 billion in military equipment to Taiwan and the meeting between President Barak Obama and the Dalai Lama. These events focused attention on Beijing’s threats against democratic Taiwan and its human rights abuses in Tibet.

Beijing has reacted most strongly to the arms sale even though the U.S. pulled its punch on the deal. The Taiwan package is defensive in nature, consisting mainly of utility helicopters, air defense missiles, and mine clearing ships. The U.S. did not fulfill Taipei’s request for more F-16 fighter-bombers which the island needs to contest air superiority over the Taiwan Strait or attack a Chinese invasion fleet.

On the eve of the NPC, Deputy Secretary of State Jim Steinberg and National Security Council Senior Director for Asian Affairs Jeffrey Bader were sent to Beijing to smooth relations. Their mission failed. In reporting on the visit, state-owned China Daily ran the banner headline “U.S. urged to respect China’s core interests.”

That the United States sent envoys to make amends only confirmed Beijing’s wisdom in taking an assertive stance, confident that the Obama administration was looking for ways to appease Beijing. On March 7, three days after the American envoys left; Chinese Foreign Minister Yang Jiechi stated,

“The responsibility for the difficulties in China-U.S relations does not lie with China…. The United States should properly handle the relevant sensitive issues and work with the Chinese side to return China-US relationship to the track of stable development.”

China has not acknowledged its own confrontational actions since December. Beijing has backed Tehran’s rejection of President Obama’s “open hand.” Even Iranian President Mahmoud Ahmadinejad’s claim that Iran is now a “nuclear state” has not lessened Chinese support. Minister Yang repeated China’s line at the NPC, “We don’t think diplomatic efforts have been exhausted.” Negotiations have been held since 2003 without stopping the advance of Iran’s nuclear and long-range missile programs. Beijing understands the process very well, and is happy with the results. A stronger, anti-American Iran is a strategic asset to China.

In her January 29 Paris speech, Secretary of State Hillary Clinton said, “As we move away from the engagement track, which has not produced the result that some had hoped for, and move forward on the pressure and sanctions track, China will be under a lot of pressure to recognize the destabilizing impact that a nuclear-armed Iran would have.” Global Times replied in a Feb 10 editorial, “China has economic stakes in Iran, and China is determined to protect its interest through diplomacy….. Some voices have recently surfaced in the Western media asking for isolating China on the issue. These voices are extremely shallow and ludicrous.”

Another game changer was the December UN climate conference in Copenhagen. President Obama experienced Chinese intransigence personally. A year-long effort to cooperate with Beijing turned into a nasty confrontation with the fate of the world economy in the balance. Leading the BASIC bloc (Brazil, South Africa, India, and China), Beijing demanded crippling restrictions on the U.S. economy while proclaiming its own freedom to do as it pleases in pursuit of growth. President Obama rejected the demand, and has since taken a harder line on matters of trade and competition. The conflict over climate policy (which has never been about the weather) will continue, as another UN conference is scheduled in Bonn next month.

If the Steinberg-Bader mission signaled that some factions in the Obama administration wants to return to the earlier engagement policy. Beijing will see this as a U.S. retreat due to a lack of will, and will press its own agenda harder.

A March 4 commentary in Global Times, written by Rong Xiaoqing, a Chinese journalist based in New York City, was entitled “American softness bodes poorly in competitive era.” Rong wrote of spoiled Americans “who whine about so much that they will find it difficult to cope with a world where nations like China, India and Brazil are becoming rivals.”

A current best seller in China is the book The China Dream, by People’s Liberation Army Colonel Liu Mingfu, a professor at the National Defense University. He urges China to replace the America as the preeminent global power by building the world’s largest economy and using its wealth to expand military capabilities. “If China’s goal for military strength is not to pass the United States and Russia, then China is locking itself into being a third-rate military power,” he writes. A March 10 editorial in Global Times tells “the world to be prepared for China’s first aircraft carrier…. China has the legitimate right to build up its naval force.” The editorial goes on to talk of aircraft carriers in the plural and “other advanced weapons.”

From its aggressive trade policy to its military buildup, and from its bloc politics at the UN to its support of rogue regimes around the world, Beijing’s rise is generating confrontations with American interests than can no longer be ignored.