Why America and China will clash

January 2010, Update February 2010      

Gideon Rachman has written very good piece today, Why America and China will clash, which I wanted to draw attention to. The article follows this week's dramatic news that hackers, in an attack of unprecedented sophistication which is being linked to the Chinese Government,  penetrated human rights email accounts and, more importantly, the corporate networks of several large American companies. The idea that Chinese computer engineers working for the Chinese Government managed to find a previously unknown flaw in all versions of Microsoft's Internet Explorer, can sidestep all known anti virus products and firewalls, and consequently hack into most of the world's computers is pretty emotive stuff (See Operation “Aurora” Hit Google, Others - Mcaffe and Sophisticated attacks against Google and other corporate networks - Microsoft Security Blog). Even switching to Firefox may not be enough, the hackers may have exploited holes in the '.pdf' format as well. The CIA must be very jealous!

Gideon Rachman's article runs:

Until recently, the US accepted, even welcomed, China's emergence as a giant economic power because American policymakers convinced themselves that economic opening would lead to political liberalisation in China. This has been the conventional wisdom among America's most influential pundits. Eg, Tom Friedman, New York Times columnist and author of best-selling books on globalisation, once proclaimed bluntly: "China's going to have a free press. Globalisation will drive it." Robert Wright, one of Mr Clinton's favourite thinkers, argued that if China chose to block free access to the internet, "the price would be dismal economic failure".

Now that this assumption is changing, American policy towards China could change with it. Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America's only plausible geopolitical rival, is a different proposition. Combine this political disillusionment with double-digit unemployment in the US that is widely blamed on Chinese currency manipulation, and you have the formula for an anti-China backlash.

Google's decision to confront the Chinese government is an early sign that the Americans are getting fed up with dealing with Chinese authoritarianism. But the biggest pressures are likely to come from politicians rather than businessmen. Google is an unusual company in an unusually politicised industry. If the Googlers do indeed head for the exits in China, they are unlikely to be crushed by a stampede of other multinationals rushing to follow them. To most big companies the country's market is too large and tempting to ignore. Despite Google, US business is likely to remain the lobby that argues hardest for continuing engagement with China.

The pressures for disengagement will come from labour activists, security hawks and politicians - particularly in Congress. To date, the Obama administration has based its policy firmly on the assumptions that have governed America's approach to China for a generation. The president's recent set-piece speech on Asia was a classic statement of the case for US engagement with China - complete with the ritualistic assertion that America welcomes China's rise. But, after being censored by Chinese television in Shanghai and harangued by a junior Chinese official at the Copenhagen climate talks, Barack Obama may be feeling less warm towards Beijing. An early sign that the White House is hardening its policy could come in the next few months, with an official decision to label China a "currency manipulator".

A trade war between America and China is hardly to be welcomed. It could tip the world back into recession and inject dangerous new cold war style tensions into international politics.

Update Feb 2010

Just a few days later we have the news that China is threatening sanctions over US missile sales to Twain: Aerospace sector fears China sanctions , China flexes its diplomatic muscle.

I think what we have here is the beginning of a realisation that Deng Xiaoping's softy softy international relations policy has become unsustainable as China's profile has grown. Just as the sense of America's decline is palatable, so is the sense of China ascendancy. It's the famous proclamation "The King is Dead, Long Live The King" ringing across world opinion.

Given the inevitable ratcheting up of tensions, this is a smart Chinese move to take the initiative, and hit back hard at the silly US decision to finally approve a $6.4bn arms sales to Twain. The arms deal dates back to a 2001 pledge made by George Bush in a very different world. The US have to understand they are no longer the top man on the block, and they need to start behaving much more subserviently. As well deflecting attention from the hacking story, the move has put the US on the back foot by demonstrating China's importance. Notice it accomplishes this by stoking precisely the corporate interests identified, by Rachman, as the key China supporters in the article above.

Yet it is unlikely to succeed in putting to the US into its place. Perhaps the Chinese now believe that a new, rather chilly, political chapter in the history of the world is inevitable. How can the new King possibly avoid alienating the old order? If conflict is inevitable, much better to take an assertive posture. Where is this inevitability coming from? From the political pressure exerted by an increasingly sour electorate in the democratic West. Yet conflict is still not in China's interest.

Can China avoid conflict by smoothing the ruffled feathers in the dying Western Democracies? Getting very speculative, I have a three suggestions: (a) A big climate change policy announcement that impresses the masses in the West and emphasises China's importance as a force for good. (b) At the height of the Roman Empire, surrounding states used to surrender and declare themselves part of the Empire on economic grounds, and without so much as a sword being unsheathed. How about Burma? Couldn't those Generals be bribed into declaring union with China for the good of their people? That would be a great PR coup. (c) The best way to defeat an opponent is not aggression, rather you destroy his confidence, preferably by ridicule. Make fun of America's Presidents and her hopeless political failings. Get the message out into the world of Chinese blog, get the people laughing about democracy, the message will spread West. I hope the Chinese leadership appreciate my Lord Haw-Haw like writings!

Update - Feb 17 2010

I came across an article in the FT today, The year China showed its claws, about the more aggressive stance China seems to be taking on a wide range of issues, which inspired me to write this afterthought:

“The King is dead. Long Live the King” proclaimed the herald. Yet in this case, not only is the old Western King not quite dead, he still commands the world’s most powerful army. Nor is he the type of great statesman who can take his declining fortunes on the chin, for he ruled by the hungry mob who blame their empty stomachs on their Eastern rivals.

The King in the East reads the Western news – “The year he showed his claws” – and sighs. Conflict serves him no purpose. "Is war inevitable?" he thinks, or can he sooth the ruffled feathers of the self indulgent Western masses who blame him for their troubles, and whose incompetent representatives constantly needle him.

That is the question, he thinks, that will define how historians come to record the beginning of the new era.