Symbiosis Between China and America Contributes to the War on Terror

Economically the United States and China have developed symbiotic relationship:

Santa Claus, were Christianity to disappear, would live on in China as a minor prosperity god. The Chinese love to shop and have naturalized the American symbol of Yuletide acquisitiveness. America's contribution to Chinese prosperity goes beyond symbols, though. The United States gave China precisely what it lacked, namely an open market for goods, access to financial markets, and a store of value for savings, among other things. Providing a global reserve currency has been America's decisive contribution to Chinese success. The result will be a Sino-US duopoly rather than a unipolar world.

The 19th century Polish militarist theorist, Clausewitz, is the author of the theory of creative destruction.

The Sino-US power duopoly constitutes the most disruptive force in world economic life since cheap British textiles crushed India's weaving industry at the outset of the 19th century. An impossibly high threshold confronts any other part of the world seeking economic success. Not in their wildest imaginings could American planners have invented a more effective way of projecting US power and suppressing prospective challengers.

Is China a force to be feared as some American neo-conservatives alleged? According to Spengler of the AsiaTimesonline, they are not.

Nonsense. It is China's success that is inconceivable without US world dominance. If US financial markets were to break up, China would go into a tailspin.

Spengler alleges that the Chinese political system “cannot be mistaken for Anglo-Saxon democracy,” their economic success does depend upon US financial markets, which cannot exist without Anglo-Saxon laws. And on top of that, the Chinese, the world’s most “cautious core savers” that salt away half their earnings, keep their savings safe in America!

China's half-trillion dollars of foreign-exchange reserves, according to the same critics, display China's strength and the United States' weakness. On the contrary: the reserves are there because the government of China knows that the Chinese trust US banks rather than Chinese ones, and wisely keep a hoard of rainy-day savings in US funds. China cannot invest its savings at home until such time as Chinese laws, regulations, and politics give rise to a banking system as strong as America's, that is, until China's legal system looks a lot more Anglo-Saxon.

Why do the Chinese do this and what are the consequences for America?

War and revolution have destroyed the savings of generation after generation and the Chinese are willing to take the risk in order to know that their children will never face poverty.

Americans, on the other hand,

…are willing to take the risk of letting foreigners break the rice-bowl of its own citizens. Chinese imports have wiped out entire industries in the United States, notably electronics, toys and textiles. The US has imposed upon its own citizens the risk of finding alternative employment. It allows foreign students to compete for places in its top universities on equal terms with natives, and protects foreign businessmen under the same laws.

America and China have much in common: agreement about North Korea and a common interest in suppressing radical Islam. Interestingly enough, China backed the re-election of George W. Bush.

With Bush's re-election, China is assured of continuity in US policies, especially those concerning Taiwan ... China, therefore, has reason to welcome this second Bush term ... Islamist terrorists are active in the southern Philippines and Indonesia ... Only when al-Qaeda and its Arab affiliates are seen to fail will their disciples in Asia lose heart.

No one could have envisioned such cooperation when Nixon and Kissenger went to China in 1971.

America’s cooperation with China has unintended consequences.

The birth of the economic superpower, China, has shut the door to prospective challengers: the more populous Muslim countries – Indonesia, Pakistan, Egypt, Iran. Only Turkey has had the export growth within an order of magnitude of China’s. (see graph)

A similar situation occurred in the 17th century during the Industrial Revolution that depressed the weavers of Bengal in favor of British cotton-cloth manufacturing. “Indian farmers resorted to growing opium for sale to China, to the detriment of both countries but the enrichment of the British East India Company.”

Now it’s China’s turn to disrupt the world. Spanish workers burned warehouses full of Chinese shoes, a something parallel to the burning of the East India Company opium in 1838.

Europe needs to worry about its shrinking labor force. Chinese manufacturing will shut out countries with young and growing populations that need light manufacturing to absorb migrants from the countryside. India should be worried. The Middle East and North Africa have “missed the boat.”