Well, it seems like I can't swing a dead cat without hitting five people who think China is the next superpower (trust me, I tried). Here comes a meganation of 1.3 billion supergeniuses, who all work for cheap and do what they're told. Their government is unburdened by the inefficiencies of democracy. The world is on their side. In a few years, they'll have bigger GDP, a stronger military, and more allies than us.
Count me among the China skeptics.
This week, Chinese president Hu Jintao is visiting the U.S. to talk (mostly about trade). Although some American commentators - oddly, on the conservative side! - are trying to make China's human rights abuses into an issue, the main focus is trade, trade, trade.
The problem is China's $200 billion dollar trade surplus with America. They make all the stuff, we buy it - on credit, with equity from our housing bubble, and with government debt. Lots of American producers are saying that this competition is putting them out of business. They want our government to force China to let its currency strengthen, so it'll be harder for Americans to buy all that cheap "Made in China" stuff.
I agree that the trade deficit is unhealthy for our economy, but it doesn't matter that we're buying cheap stuff from China specifically. The problem is that we're spending more than we have - if those clothes, toys, and electronics were made in Vietnam, would that make us any better off? Also, the savings from using all that cheap Chinese labor mostly goes to American (and other non-Chinese) companies, since these are the companies that own most of the factories that make those "Made in China" goods. The Chinese currency peg distorts our economy, but doesn't really hurt it that much. China's failure to protect ntellectual property rights is more significant.
But what's far more important is China's "rise". Although China has been very careful not to directly challenge America's military hegemony - Hu's slogan is "peaceful rise" - they do support a lot of really nasty rogue regimes. China may be peaceful (this year), but Sudan, Iran, Burma, North Korea, and Zimbabwe don't exactly fit that description.
More broadly, China is a negative force in the world because it lures poor countries into bad policies. Back in the 1990s, when America really did sit on top of the world, we dispensed all kinds of advice to Latin America, Africa, and the Middle East about how to grow their economies. More importantly, we told them that democracy and openness was the key to economic success.
China undermines that effort. Now that there's a new economic superpower in town, all those poor countries are starting to get the notion that they, like China, can have wealth without freedom. Naturally, the Arab world is eager to sign on to this idea, but China is also making big inroads in Latin America. That's bad news for democracy.
It's also bad news for those countries' economies. China is growing because it started out so poor, with its economy in shambles from Mao's madness. Most of China's growth so far has come from low-end manufacturing. Foreign companies set up shop, pay Chinese workers tiny wages, and then take all the profit. Millions of Chinese farmers move to the cities and work in the factories, so the economy grows. But China's going to have a huge problem moving past that low-wage labor level. For Chinese people to be as rich as Japanese or French or American people, China has to develop its own competitive companies. But because China is authoritarian, the government has to keep party hacks happy by giving them control of all the domestic companies. This means China is growing not because it's efficient, but because it's huge and it started out poor. China hasn't yet hit the wall where a country needs democracy and openness to get richer - but it will someday. And I haven't even mentioned China's risks of environmental collapse, popular unrest, and premature aging. The new colossus has feet of clay.
A China-style authoritarian-capitalist model won't work for Brazil or Egypt. But as long as they keep reading about those 9% growth rates and that huge total GDP (now 2/3 of the US), third world potentates are going to be able to convince themselves that they don't need to give their people freedom after all. As a result, they may dig themselves into a hole that it would be difficult to climb out of even after they see the light.
We have to moderate China's rise, not to save our own economy from cheap toys, but to save the third world from following a bad example. The best way to do this - and to help the bazillions of poor downtrodden Chinese - is to take our labor rights movement and export it to China. The labor movement spent decades fighting against worker exploitation - but now most of the exploitation is happening in China. Fighting for the rights of Chinese workers would provide a good example to poor countries; it would improve conditions in China itself and move that society toward democracy; it would reinvigorate the labor movement, which is currently reeling.
And it might even do something about that trade deficit...
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