By S.P. Seth
China couldn’t have wished for better times to project its international image. With the United States preoccupied with Iraq and terrorism, Beijing exudes an image of serenity and quiet confidence.
China’s new strategy is to create an aura of power. With all the talk of its miraculous economic growth and endless opportunities, it is seen as a potential global economic powerhouse. Very few analysts want to spoil a good story by pointing out that China’s banks are technically bankrupt.
Similarly, no one seriously questions its growth statistics. For instance, as Nicholas Lardy has pointed out, “On average, in 1990-98 annual additions to inventories in China absorbed 42 percent of incremental output” much of it reflecting “the continued production of low-quality goods for which there is little or no demand.” There is nothing to suggest that the situation has changed much, but such inconvenient facts are ignored.
Could it be that China’s whole economic edifice is built on sand? There are echoes of the Soviet system, which finally hollowed out due to misallocation of scarce financial resources into wasteful production. Look at billions being spent on diversion of water from the Yangtze to the Yellow River and Three Gorges Dam project. Some are grossly wasteful. China’s debt may already exceed its US$1-trillion gross domestic product. This is unsustainable.
The point is that there is a great gap between rhetoric and reality. A perception is growing that China is indeed the economic powerhouse to drive the regional, if not global, economy. Having encouraged this view, Beijing has come to believe in it, itself. This again is reminiscent of the glory days of the Soviet Union, until it collapsed like a house of cards.
China is also cultivating a new “responsible” image internationally. Instead of confronting the United States, it is taking a quieter approach. On terrorism, it has even won U.S. appreciation through limited cooperation.
In the process, it is escaping international scrutiny over human rights violations be it Uighur separatism or the Tibetan autonomy movement. With the United States straddling the international stage like a colossus, Beijing is aware that it will get short shrift if it seeks to take on George W. Bush.
In the Asia Pacific, China is quietly projecting itself as a new regional power center. It is managing to convince its neighbors that they have no alternative but to accept China on its own terms.
For instance, the proposed free-trade area with the Association of Southeast Asian Nations is being sold as a free ticket to the burgeoning Chinese market. The reality is, however, that China is a strong regional competitor for ASEAN both in terms of trade and investment.
With the U.S. economy sluggish and Washington otherwise preoccupied, China looms large in Asia. Take, for instance, the sovereignty issue over the Spratly Islands in the South China Sea. Discussion was quietly sidelined at the last ASEAN summit in Cambodia by signing a joint declaration of good behavior–a pious declaration of good intent in place of a precise code of conduct sought by ASEAN.
The sovereignty issue is, therefore, unresolved. China still maintains that all of the South China Sea and its islands belong to it–a claim rejected by most ASEAN countries.
Despite such underlying acrimony, Beijing seeks to create an impression of a benign China at the center of a benign region. Beijing is also encouraging its neighbors to believe that if the United States withdrew from the region and Japan behaved as an Asian country, the Asia Pacific would become an idyllic zone of peace and prosperity.
Some even hold the view that if the United States were to withdraw its troops from South Korea, China would be better placed to bring about peace and security on the Korean peninsula. Furthermore, if only Japan would toe the China line, things would be so much simpler under the new Middle Kingdom. By not siding with China, Japan is only courting trouble for itself as an Asian black sheep, the argument goes.
Japan aside, India is also troublesome for Beijing, not so much because of its intrinsic power but due to its emerging strategic relationship with the United States. To China’s great annoyance, it is also the preferred democratic alternative to China’s communist oligarchy. Beijing is taking care to create a ring of satellites under its patronage, including Pakistan, Burma and Bangladesh.
Considering that the United States has a more assertive presidency with no qualms about confronting China’s ambitions, Beijing has not done too badly. Its leadership sincerely hopes that the United States will overextend itself, leaving China to further consolidate and extend its power.
There is only one problem. In China, the communist oligarchy and the nation have become indistinguishable. Therefore, the nation is held hostage to the fortunes of its communist leadership.
With social unrest growing from a host of factors–regional and wealth disparities, growing unemployment, rural unrest, a corrupt party elite, an unresponsive and an arbitrary political system–it takes a brave person to vouchsafe the durability of communist rule.
S.P. Seth is a free-lance writer based in Sydney, Australia.