Beltway types are fretting about the comment dropped earlier this week by Admiral Robert Willard, the US commander in the Pacific, about a new ballistic missile developed by the Chinese that could blow American ships out of the water. The missile, which has been in the works for some time, has now reached "initial operational capability," according to comments made by the Admiral to a Japanese newspaper. The news was fuel for defense analysts and foreign policy hawks who have long worried about China's military build-up and what it means for the balance of power in Asia, and the world.
Their hand-wringing, which comes quickly with of any sign of China's rise on the world stage, put me in mind of a giant interactive map I'd seen at Pacific Command in Honolulu in 2009, showing short, medium, and long-term conflict hot spots globally. While most of the immediate problems were terror or ethnic oriented skirmishes in the Middle East, Afghanistan and Pakistan, the long-term lights were blinking all over the South China Seas, signifying a rash of expected resource and territorial battles between the Middle Kingdom and its Asian neighbors, along with the U.S.
Certainly, there's reason to pay attention to China's more assertive stance in global affairs. Growing prosperity and confidence has led Beijing to challenge the West's hegemony on everything from trade to technology to currency to security. Certainly, the rise of an affluent young Chinese middle class has led to more nationalism across the board. A recent best-selling book called "The China Dream" argues for a Chinese military build up in preparation for a coming conflict with the U.S.
Yet all the posturing on both sides has obscured a few key facts. First and foremost, China worries a lot more about internal stability than external muscle. Beijing spends much, much more on maintaining domestic obedience (in the form of police, censors, etc) than it does on its military. Deng Xiaoping's wisdom about China having plenty to do at home before it tackles the world at large still holds, perhaps more than ever.
Secondly, the idea of resource related conflict underscores a more important point: China's foreign policy is still by and large an economic policy, driven by its constant need for growth to ensure the stability of the regime. There's no Beijing Consensus. China's movements on the world stage be they military, human-rights related, financial or otherwise are all crafted around what will play well at home.
What's more, despite all the talk in Washington, Brussels and elsewhere about the need to contain China's resource nationalism and mercantilist approach, Beijing's policies have so far benefited other countries as much or more than China itself. As merchant banker Ken Miller, the director of the U.S. pavilion at the Shanghai World Expo and a member of the U.S. State Department's Advisory Committee on international economic affairs recently pointed out in an article in Foreign Affairs, with the exception of China's "support for regimes that the U.S. government doesn't much like, Washington should not worry much about Beijing's financial foreign policy."
Because, really, what's not to like? The Chinese hold nearly a trillion dollars in American T-bills and they aren't selling them, even as the dollar has depreciated, because it would be far too disruptive to their own economy. This continued lending allows us breathing room to get our own economic house in order (here's hoping we do, but that's another column). Chinese foreign direct investment (FDI), which is growing very rapidly, fueled the world's capital markets when the U.S. and Europe stopped lending in the wake of the 2008 financial crisis. Developing countries in particular have cashed in; the U.S. and Europe could too if they would get over their (overblown) worries about the political and security implications of allowing more Chinese investment in their home markets.
And what of the petro-politics that so worries the West? Yes, Beijing is pouring aid money into Africa in particular, in exchange for natural resources, but the effect of this has been overplayed in the press. U.S. aid and FDI into Africa still eclipses China's. And while China's trade with regions like Africa and Latin America is growing fast, it's still outpaced by America's (and this despite the fact that sub-Saharan Africa represents only 2% of America's global trade). What's more, there's no guarantee that China's investments will guarantee them a secure energy supply as we all know, resource rich nations are perennial sources of conflict, and wars and regime change will continue to threaten everyone's access, including China's.
Even in Asia, where China is now the largest economic and political power, the U.S. has less to worry about than you might think. For starters, China's financial muscle in the region is mostly in low value goods, whereas the U.S. dominants the higher end trade. What's more, China's Asian neighbors have a love-hate relationship with their big brother. They are happy to prosper economically from the Middle Kingdom's rise, but they still look to the U.S. to prove a check on Chinese power witness the way Obama has been greeted in India and many parts of Southeast Asia. Experts like the Council on Foreign Relation's director of Asian studies Elizabeth Economy believe that the rise of China will actually deepen America's political, economic and security ties in the region.
Bottom line the U.S. simply doesn't have as much to worry about from China's stance in the world as we might think. Forget about partially operational weapons and battleships. China's real power is still in currency and that's increasingly flowing from East to West.