THE West cannot quite make up its mind about how it wants to deal with China. That
French philosopher-king, Jacques Chirac, sends poems each month to Chinas president,
Jiang Zemin, who responds with his own calligraphy. Yet defence planners in western
capitals play their games on the assumption that the next big war may be between
American-led forces and a rising China bent on trouble. In America, big business lobbies
Congress to treat China as a normal trading nation, while Congress urges the
administration to sell more weapons to Taiwan, as defence against Communist Chinese
threats. Golden economic prize or rising international menace? Is China one or the other?
Both or neither?
If China is not the golden economic prize it
is made out to be, then the world at the very least risks wasting a fabulous amount of
money. If it is not really the rising international menace that Senator Jesse Helms makes
it out to be, then treating it as such could, at worst, help turn it into one. At best,
the West would lose what influence it may have had in nudging China away from its many
dissatisfactions and down more democratic paths.
Foreign interest in Chinas commercial
promise typically follows a roller-coaster course that starts in hope and ends in despair.
Hopes are rising again, with the prospect that China may be a member of the World Trade
Organisation (WTO) by the end of this year. This has long been the
stuff of salesmens dreams: 2.6 billion armpits to deodorise. Added fervour comes
from the Internet craze, with foreigners falling over themselves to invest in Chinese
dot.comsno matter that government deems such investment illegal.
Time to clear up a misunderstanding. China
has never been the prize that foreign businessmen have imaginedforeigners earn an
average return on equity of just 3.3%and will not be for a long time to come. Much
of the place is still miserably poor: average income per person is less than $1,000 a
year. Indeed, China probably should not be buying many of the aircraft, power plants and
capital goods, not to mention the fighters, bombers and submarines, that outsiders are
selling it. Should the economy really take a tumbleafter an American economic
plunge, say, or a bout of self-inflicted regional instability over TaiwanChina would
have trouble repaying loans. Meanwhile, WTO membership will not
mean a surge of foreign imports.
Another misunderstanding, when the
roller-coaster heads for despair, is about the treatment of foreign companies in China.
They do not get a rawer deal than local ones. Rather, they are usually side-swiped by
restrictions that hit deserving domestic companies harder. Indeed, foreigners often have
investment privileges denied to locals. Yet it is these home-grown outfits that hold the
key to the future. The real significance of Chinas WTO
membership is not as a bonanza for foreigners, but as a rod for the forces of reform to
beat back a still stifling state and to build up the rule of law.
The Chinese state will no doubt continue to
resist. Chinas membership of the WTO will assuredly place
strains on that organisation, as the socialist legacy of protectionism clashes with
international trading rules. There are risks here for the West. But is the WTO
so weak an organisation that the clash will mortally harm it? Chinas trade with the
rest of the world is still smaller than the Netherlands. And, even realistically
imagined, the potential prize of admitting China is still worth having: a
continental-sized, more liberal economy that promotes regional stability where now it
What of China as a rising international
menace? As our article 1002 points out, Chinas armed forces, though capable of
regional mischief over Taiwan or disputed claims in the South China Sea, are still far
from being the fighting machine its generals seem to want outsiders to believe. In other
ways, China is slowly starting to conform to accepted international practices. It has
signed the Nuclear Non-Proliferation Treaty and the Comprehensive Test Ban Treaty. Under
American pressure, it has started to curb military and nuclear sales to unstable states,
such as Iran and Pakistan. And it takes part in regional talking clubs, albeit with a
determination to keep Taiwan either out or down.
The reason is that China wants its rightful
place at the top table of nations, and enjoys the back-slapping that comes with it. Its
leaders want economic prosperity too, since their rule rests upon it, and membership of
the WTO seems the only way to achieve it. China may rant about
American hegemony but, step by step, it is surrendering to an international
order that, while often American-led, enjoys broad support.