Monday, January 28, 2008

The Changing China

In an earlier post, I mentioned China briefly and would like to open that can of worms just a little bit further today. When I was in college, I wrote a paper which detailed why I believed China would continue to integrate itself into the world economy and power structure in a peaceful manner. I argued this in light of China's emerging economy, its liberalizing labor laws, and China's changing attitudes toward trading on a global scale. In many ways, I still stand by this assessment, but it is also disturbing to note that China is becoming a dichotomous country in terms of its outlook on the world around it.

One, China's economy needs outside sources for technology and outside markets. Chinese companies are beginning to invest in other countries in the region and the world, trying to integrate themselves into an already strong Occidental market. With China's manufacturing ability and immense manpower, production is not a problem. What is a problem is the lack of the technological base possessed by the West, specifically the educational and scientific advantages in the United States. China can buy the technology it needs, but this can be costly. They can also reverse engineer or steal the technology they need, but this can be dangerous. Just because they know how we make something does not mean that they can replicate it. Yes, they can follow the plans but they may not have the high quality equipment to make it correctly, leading to low quality copies, almost like a dirty Xerox copier where you can see what its supposed to be, but you can't use it nearly as well. Also, as part of China's search for a market for its goods, they will sell to anyone who can buy, including states which have a historically strained relationship with China, such as North Korea, and states with a strained relationship with the United States, such as Iran.

G. John Ikenberry points out that China can grow into the current world structure, or can grow in opposition to it. He uses several examples, first that the United States grow into the world structure around the turn of the 20th century, and subsequently changed the world power structure peacefully and without damaging the countries in Europe where the power had formerly resided. Second, he points out that Germany in the same time frame grew its economy and military at a high rate, and then challenged the rest of Europe. I think that China can learn from this history lesson, because, even though Germany had a much larger and better trained military as well as a larger economic base, the old guard still defeated them resoundingly. Unfortunately that defeat led to Germany's rise in the 1930's and Hitler's attempt to lead the country into its former glory. It would be to China's advantage to grow within the current world economy, as it already has a large stake in it. To disrupt that trade and anger those sources of income would unnecessarily hamper economic growth.

However, no matter what China's new economic policies are, we must remember that it is a socialist state and does not always do what we as capitalists would consider is in its best interest. As a developing country, the largest portion of its economy is still agriculture, however the policies which drive economic growth also mirror socialist Russia's environmental degradation. In order to become a major world player, China is destroying itself. Accordingly, the good of the country is to the detriment of the people. The aggressive state lead growth has lead to other aspects falling by the wayside, something that in a truly capitalist economy is much less likely to happen due to consumer and workforce pressures.

I think that this is all for now. I will continue in a later post with a, hopefully, more structured analysis.

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