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Schizophrenia over China

by Patrick J. Buchanan
June 29, 2005

George Bush's free-trade ideology appears to be colliding more and more not only with his political interests, but also with U.S. national interests.

Nothing has brought this into sharper focus than China's $18.5 billion bid to snatch the U.S. oil company Unocal away from Chevron.

In making the offer, Beijing is playing by the rules of the game as the Bush Republicans have written them. Why, then, should we object?

To the evangelists of the Global Economy, U.S. interests and world peace are both advanced by the unimpeded flow of investments, jobs, goods, technology and people across national frontiers. It does not matter who produces the goods or who controls the factors of production. Trade deficits do not matter. They are the concern only of protectionists who do not understand the brave new world of Davos.

The Chinese, however, are Hamiltonians resolute and ruthless economic nationalists. They look out and see the same world our forefathers saw, a world of nation-states where the struggle for power and pre-eminence is eternal, where trade is not a game, but an arena of battle, where industrial and technological primacy eventually yield military and strategic supremacy, where those who sacrifice today rule the world tomorrow.

They see the world as it is. We see the world as we would like it to be.

The Chinese do not waste time reading 19th-century utopians like Ricardo, Cobden, Bastiat and Mill. If they read an economist, it is Friedrich List, who put production ahead of consumption. To the Chinese, it is acceptable that we should consume most of the apples today if, tomorrow, they control the orchard.

For a quarter century, U.S. policy has been rooted in the belief that trade between nations means peace between nations, that by giving China unrestricted access to U.S. markets, we will moderate that regime and create a Chinese middle class that will democratize the country.

China has seized the offer. In 1994, Beijing tied its currency, the renminbi, to the dollar at eight to one and held it there as the dollar fell. By keeping its currency cheap and wages low, and by offering global companies lax regulations, low taxes and an inexhaustible supply of cheap but competent labor, China has converted herself into a manufacturing marvel where economic growth has averaged 9 percent a year for a decade.

Last year, China ran a trade surplus with us of $162 billion, the largest in history. Almost half of that amount was attributable to China's surplus in trade in electrical equipment and computers. Since June 1995, the cumulative U.S. trade deficit with China is nearly $900 billion.

What has China done with the hoard? Bought T-bills to give her a claim on all future interest payments on the U.S. debt, begun to buy up companies like Unocal, Maytag and IBM's PC business, and bought weapons from Israel and Russia to prepare for the ultimate showdown with the United States.

China is behaving as we did in the 19th century. We used tariffs to protect U.S. markets and give our manufacturers a huge advantage over foreign producers. China does the same through currency control. Where Hamilton encouraged British textile makers to steal their secrets and come to America to set up shop, China is saturating this country with spies and thieving intellectual property from U.S.-built factories.

We pushed French, British, Mexicans, Spanish and Indians out of our way and imposed a Monroe Doctrine on our hemisphere. China intends to establish its own Monroe Doctrine in Asia: no U.S. bases, no U.S. allies, the Americans go back to Guam.

As Washington saw his young nation surrounded with the Spanish controlling Florida, the Gulf Coast and Louisiana, and the British occupying the Ohio Valley, the Great Lakes and Canada, and dominating the Caribbean and Atlantic so China sees us today.

Though the Cold War ended 15 years ago, America maintains its alliances with Japan, South Korea, Australia and the Philippines. We are committed to defend a Taiwan we concede is a province of China. We are re-establishing a presence in Vietnam, strengthening our ties to India and Pakistan, and building bases in Afghanistan and the former Soviet republics of Central Asia.

Bush must make up his mind. If free trade is the path to peace, as Woodrow Wilson believed, and China is a trade partner with whom our relations have rarely been warmer, let them buy Unocal and anything else.

But if China sees herself as a 21st-century superpower whose present antagonist and future enemy is the United States, then our free-traders had best wake up. Whither China? That is the great question. We had better get the answer right.

2005 Creators Syndicate, Inc.

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