Oct 27th 2008

Biden doctrine: Let's start with China

by Sol Sanders

Sol W. Sanders, (solsanders@cox.net), is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International. He writes weekly for World Tribune.com and East-Asia-Intel.com.

In a world of unexpected crises and unanticipated consequences, the new president of the United States is as likely as his predecessors in the past to face almost immediate and overwhelming crisis or crises come January.

According to the Biden Doctrine [that's the one outlining the geopolitical problem not the other domestic political problem of the senator from Delaware's endemic lapsus calami], if Sen. Barrack Obama is elected president, he will within six months face a deliberate attempt to test his abilities. Rightly, Biden referred to the young President John F. Kennedy's May 1961 encounter at Vienna with Soviet Dictator Nikita Khrushchev. But he left out the sequel: the generally accepted belief that it was JFK's self-acknowledged failure to stand up to burly Nikita Sergeyevich's tongue-lashing which fed Khrushchev's audacity in creating the basis of the Cuban Missile Crisis and a near Armageddon for the civilized world a year and a half later.

It is more than likely that Sen. John McCain, too, were he to be the president would have to meet that kind of crisis as leader of the most powerful country in the world, held responsible by its friends and enemies for much of what happens in this disordered universe.

Many predictable possibilities for trouble lies in the nature of the vast array of problems around the globe. But like so much political punditry that goes on today, prediction is largely hindsight. In fact, world crises have a way of developing incrementally and imperceptibly for those in power, that is in a drip, drip, drip fashion until the total becomes an unavoidable problem that has to be dealt with immediately. Nothing is so characteristic of that kind of long series of events over a number of presidencies than what finally led up to the 9/11 attack. That process also applies to the inevitable tortured American response. However many twists and turns it has taken, and however much President George W. Bush's pursuit of it has been criticized by some of his contemporaries before historians later have their say, it has been an extended and complicated process with many unanticipated jerks and detours.

But in any systematic attempt to examine the possible areas where the new president will encounter a provocation, one must turn to the general problem of Washington's relations with China.

It could be argued that historically for over 150 years, no bilateral relationship has presented more difficulties in reaching a steadily evolving pattern of normalcy than with China. Americans have rarely been able to see its relations with the Chinese in less than apocalyptical extremes - whether the greedy merchant salivating over the supposed millions of Chinese customers or the missionary plate being passed among pious believers for conversion of "the heathen Chinee". On the Chinese side, of course, chaos has marked much of that period, an unspoken cloud of recognition that hangs all Chinese policymakers and the elite.

Despite some preliminary boasting to the contrary by the Chinese media - including quotes from academics and economists who should have known better - it was always clear that the ripples of the Wall Street mortgage market disaster would reach China. And it was equally clear they would be considerable if not all known.

In fact, the Chinese were already engaged in a bitter internal Chinese Communist Party economic policy debate when the impact of the worldwide financial crisis hit full blast. That debate revolved around a stark dilemma:

The political rationale for the regime has increasingly depended on the gains through rapid economic growth for an expanding elite - if small in relative terms - generated by the partial liberalization of the economy during the past three decades. This ethos ["to get rich is glorious" according to paramount Leader Deng Xiaoping] has replaced in all but name the ideology of the Marxist-Leninist-Maoist orientation and the traditional Communist goals for such a regime.

At the same time, the rapid growth and demand for goods and services plus external pressures including rising commodity import prices which, ironically, the Chinese themselves had been spiking, had produced a growing threat of runaway inflation. The record breaking food prices - the principal expenditure and concern of most of the population - due to failure of supply has complicated the problem.

The fantastic growth of the economy as a whole by any standard has been disproportionately - again, acknowledged by some of the regime's loyal economists - dependent on its exports. These have been, in no small part, an assembly of higher cost component imports from its more sophisticated Asian neighbors, Japan, Taiwan and South Korea. These exports and their permutations in the Chinese economy are estimated to constitute as much as a third of the growth in the gross national product, the sum total of all Chinese production and services..

The growing disparities of wealth between the urban and rural areas, between a high living elite and the mass, exemplified even in the booming coastal cities where there is a growing population of poor, itinerant workers, has been seen as a threat to stability - perhaps even a threat to the regime. This problem was reinforced by some of the population harking back to a mythical egalitarianism under Mao.

There was also the problem of the growth of systemic corruption and vast pollution of the environment, both of which have taken on economic significance as well as becoming a major political problem for the regime. It is significant that these phenomena have had to be acknowledged in the tightly controlled popular media.

With the onset of the Wall Street crisis in September and October 2008, the argument inside the Chinese Communist establishment between a policy to continue unrestricted growth and efforts to curb inflation and limit corruption and pollution had not been resolved. There was talk of expanding the domestic market, even of rural reform through another one of the Chinese Communists' endless attempts to control land tenure but get agricultural production. But that, as the Chinese have long ago discovered along with other backward economies, is a long and difficult road.

The argument's resolution, either through policy decisions which don't seem to be forthcoming or by force majeure produced by a decelerating world economy, of course would affect China's relations with the rest of the world. It is as yet not clear how great the impact would be nor in what ways it would mold the attempt of "rising China" at exercising increasing influence as a member of the world community.

For the moment, Beijing has been talking cooperation with Washington and the Europeans in stabilizing the world economy. Conversations on the subject between Bush and Chinese President Hu Jintao have taken place but it seems doubtful that their character was more than window dressing.

But holding more than half a trillion dollars worth of U.S. Treasury securities and another 1.4 trillion in foreign exchange, much of it in dollars, means the Chinese have a stake not only in a world recovery but in U.S. economic stability. Yet one can only guess whether the dregs of their Communist intellectual inheritance, which for all the talk of Marxist dialectic materialism overwhelms the argument for economic advantage among a hackneyed and weak leadership. Bluntly: would the obvious success of the pragmatic switch to a limited market economy for the past three decades trump a desire to try to erode American influence and power in East Asia?

In any event, no decision on economic strategies may now be in the immediate offing for the Chinese. Under the most optimistic scenarios, most economists in America and Europe anticipate there will be a sharp downturn in the principal markets for Chinese products in the U.S. and the European Union. The Chinese economy will suffer. Already the official figures for the GDP dropped in the last quarter into single digits from the double digit figures that have been carried officially for the past several years. Some pessimists on the China scene estimate the drop would be precipitous. Should that be the case, China's major problem of finding employment for the increasing flow of rural poor into the urban economy could become perilous.

Given the general instability of a one-party regime and its enormous emphasis on a military buildup, the new American president could be facing the prospect of an unstable and unpredictable China. Recently Beijing has turned down its boisterous propaganda campaign against the Taiwan regime, encouraged by the defeat at the polls of the more "nationalistic" Taiwan Democratic Progressive Party, whose hard core base calls for formal independence of the Island. Beijing also made a 180 degree switch in what had been a provocative attitude toward Japan, constantly recalling the decades of Japanese militarist aggression and atrocities against China. That continues at least for the moment even in the face of a hawkish new Japanese prime minister, perhaps in recognition of the important role Japan has always played and performs today as a model and trading partner.

But atavistic xenophobia always lies just below the surface in China, and a rapidly deteriorating economy could produce an internal crisis in a Chinese Communist Party facing difficult if not insoluble domestic economic issues. Beijing already has lost much of its control over a corrupt and tyrannical local party structure. It would not be the first time that an authoritarian regime under domestic pressure turned to foreign policy adventurism as a solution to its problem of hanging on to power. After all, what has been the purpose of an essentially poor country with enormous problems spending vast sums on a military establishment against an unseen and unacknowledged enemy?

China's central role in an Asian scene with increasing economic problems is certainly on the coming agenda. That's why the Biden Doctrine bites hard when it comes to speculating on what might face the new president in East Asia.


Copyright: WorldTribune.com

If you wish to comment on this article, you can do so on-line.

Should you wish to publish your own article on the Facts & Arts website, please contact us at info@factsandarts.com. Please note that Facts & Arts shares its advertising revenue with those who have contributed material and have signed an agreement with us.

Browse articles by author

More Current Affairs

May 29th 2023
EXTRACT: "In his 2018 book Destined For War, political scientist Graham Allison observes that the US and China are headed toward what he called the “Thucydides’ Trap,” a reference to the ancient Greek historian’s account of Sparta’s efforts to suppress the rise of Athens, which ultimately culminated in the Peloponnesian War. A better analogy, however, is the message sent by the Athenians to the inhabitants of the besieged island of Melos before executing the men and enslaving the women and children: “The strong do what they can and the weak suffer what they must." ---- Allowing China and other authoritarian countries to shape the rules would result in a world order based solely on this “realist” principle. It is a nightmare scenario that the G7 countries and other liberal democracies must strive to prevent. ---- China’s assertions about the decline of the West reveal an underlying anxiety. After all, if liberal democracy is failing, why do Chinese officials consistently express their fear of it? The fact that leaders of the Communist Party of China have instructed rank-and-file members to engage in an “intense struggle” against liberal-democratic values indicates that they view open societies as an existential threat."
May 28th 2023
EXTRACTS: "Cyberspace Administration of China (CAC) decreed that generative AI content must “embody core socialist values and must not contain any content that subverts state power, advocates the overthrow of the socialist system, incites splitting the country or undermines national unity.' ” .... "This implies that the harder the CAC tries to control ChatGPT content, the smaller the resulting output of chatbot-generated Chinese intelligence will be – yet another constraint on the AI intellectual revolution in China. Unsurprisingly, the early returns on China’s generative-AI efforts have been disappointing."
May 20th 2023
EXTRACTS: "Cognitive dissonance occurs when one’s beliefs and actions conflict with each other." .... "This conflict might constrain people from acquiring new information that will increase the existing dissonance" .... "if someone commits wholeheartedly to Trump, they may well experience dissonance as they watch the news from that Manhattan courthouse. But they don’t necessarily stop supporting him. Instead, they might seek yet more information about the “deep state” and how it is persecuting Trump, or preach more about his positive attributes and the witch hunt against him." .... " If so, we can expect to see more conspiracy theories and more proselytising from the hardcore supporters going into 2024 and beyond. Donald Trump may not be finished just yet."
May 11th 2023
EXTRACT: "....the US possesses advantages in developing large language models (LLMs). It benefits from close business-university collaboration, lubricated by a deep-pocketed venture-capital industry. It is no coincidence that ChatGPT came out of the US, and out of Greater Silicon Valley in particular." .... "Developing countries would seem to be at a significant disadvantage in this AI arms race and are at risk of losing their competitive advantage: abundant low-cost labor. Yet AI also holds out the promise of benefits for these countries." .... " however, economic development depends on human development – that is, on the accumulation of human capital. Where developing countries lack the resources, financial and otherwise, to increase significantly their spending on traditional modes of education, AI holds out hope for providing what is missing."
May 2nd 2023
EXTRACT: "The past decade has not been kind to neoliberalism. With 40 years of deregulation, financialization, and globalization having failed to deliver prosperity for anyone but the rich, the United States and other Western liberal democracies have seemingly moved on from the neoliberal experiment and re-embraced industrial policy. But the economic paradigm that underpinned Thatcherism, Reaganomics, and the Washington Consensus is alive and well in at least one place: the pages of the Economist."
Apr 25th 2023
EXTRACT: "Yet there is an important twist for the US: a chronic shortfall of domestic saving casts the economic consequences of conflict with China in a very different light. In 2022, net US saving – the depreciation-adjusted saving of households, businesses, and the government sector – fell to just 1.6% of national income, far below the longer-term 5.8% average from 1960 to 2020. Lacking in saving and wanting to invest and grow, the US takes full advantage of the dollar’s “exorbitant privilege” as the world’s dominant reserve currency and freely imports surplus saving from abroad, running a massive current-account and multilateral trade deficit to attract foreign capital."
Mar 31st 2023
EXTRACT: "Although the EU will have gained more internal stability, its basic character will have changed. Security will be a central concern for the foreseeable future. The EU will have to start thinking of itself as a geopolitical power and as a defense community working closely with NATO. Its identity will no longer be defined mainly by its economic community, its common market, or its customs union. The bloc has already accepted Ukraine as a candidate for future membership, and that decision was driven almost entirely by geopolitical considerations (as was also the case, previously, with Turkey and the West Balkan states)."
Mar 30th 2023
EXTRACT: "As I have long warned, central banks ..... will likely wimp out (by curtailing monetary-policy normalization) to avoid a self-reinforcing economic and financial meltdown, .... "
Mar 30th 2023
EXTRACT: "Netanyahu is simply unfit to be prime minister of Israel. He is a liar, a schemer and a fraud. If he has an ounce of integrity left in him, he should resign and save the country instead of stopping short of nothing, however evil, to save his skin."
Mar 29th 2023
EXTRACTS: "Though Mao Zedong viewed himself as Joseph Stalin’s peer, leading the world’s peasant communists as Stalin led its proletarians, behind closed doors Stalin reportedly called Mao a “caveman Marxist” and a “talentless partisan.” " ----- "Stalin’s behavior enraged Mao." ---- "When ..... Khrushchev, took over as Soviet premier following Stalin’s death in 1953, Mao paid back for Stalin’s disdain – and then some. On his return from his trip to Beijing in 1958, Khrushchev talked incessantly about how unpleasant his experience had been." ---- "Even if Xi did not have the upper hand before Russian President Vladimir Putin launched his war of choice in Ukraine, he certainly has it now..." --- "So, when Xi arrived in Moscow ..... he carried himself with an air of superiority, whereas Putin’s expressions appeared strained."
Mar 27th 2023
EXTRACT: "The spectacular collapse of Silicon Valley Bank (SVB) – the second-largest bank failure in US history – has evoked memories of the 2008 collapse of Lehman Brothers, which sparked the worst economic crisis since the Great Depression. But the current situation is, at least for Germans and other Europeans, more reminiscent of the “founder’s crash” (Gründerkrach) of 1873. Then, as now, an era of cheap credit had fueled a tech boom and then triggered a banking crisis. In those days, the startups were in railroads, electronics, and chemistry, but there were also a large number of financial startups rising with the tide. In both cases, the crisis was rooted in bad accounting rules that turned the financial system into a playground for gamblers."
Mar 16th 2023
EXTRACT: "Putin is desperate for a ceasefire, but he does not want to admit it. Chinese President Xi Jinping is in the same boat. But US President Joe Biden is unlikely to jump at this seeming opportunity to negotiate a ceasefire, because he has pledged that the US will not negotiate behind Zelensky’s back. -- The countries of the former Soviet empire, eager to assert their independence, can hardly wait for the Russian army to be crushed in Ukraine. At that point, Putin’s dream of a renewed Russian empire will disintegrate and cease to pose a threat to Europe. -- The defeat of Russian imperialism will have far-reaching consequences for the rest of the world. It will bring huge relief to open societies and create tremendous problems for closed ones."
Mar 15th 2023
EXTRACT: "Fifty years ago, a war broke out in the Middle East which resulted in a global oil embargo.... " ---- " Many historical accounts suggest the decade of global inflation and recession that characterises the 1970s stemmed from this “oil shock”. But this narrative is misleading – and half a century later, in the midst of strikingly similar global conditions, needs revisiting." ----- "In early 2023, the global financial picture feels disconcertingly similar to 50 years ago. Inflation and the cost of living have both risen steeply, and a war and related energy supply problems have been widely labelled as a key reason for this pain." ---- "In their public statements, central bank leaders have blamed this on a long (and movable) list of factors – most prominently, Vladimir Putin’s decision to send Russian troops to fight against Ukrainian armed forces. Anything, indeed, but central bank policy." ---- "Yet as Figure 1 shows, inflation had already been increasing in the US and Europe long before Putin gave the order to move his troops across the border – indeed, as far back as 2020."
Mar 7th 2023
EXTRACT: "The United States is in the midst of a book-banning frenzy. According to PEN America, 1,648 books were prohibited in public schools across the country between July 2021 and June 2022. That number is expected to increase this year as conservative politicians and organizations step up efforts to censor works dealing with sexual and racial identity."
Feb 28th 2023
EXTRACT: "As was the case before World War I, it is tempting to minimize the risk of a major conflict. After all, today’s globalized, interconnected world has too much at stake to risk a seismic unraveling. That argument is painfully familiar. It is the same one made in the early twentieth century, when the first wave of globalization was at its peak. It seemed compelling to many right up to June 28, 1914."
Feb 19th 2023
EXTRACT: "Another front has opened in the global rise of populist authoritarianism. With their efforts to weaken Israel’s independent judiciary, Prime Minister Binyamin Netanyahu and his corrupt coalition of Messianic fascists and ultra-Orthodox allies are determined to translate their anti-democratic rhetoric into authoritarian policy."
Feb 17th 2023
EXTRACT: "One year on from the start of a military operation that Moscow was expected to win easily, there are increasing signs of anger, frustration and resistance from ordinary Russian soldiers. These are important reminders that these men are not mindless pawns who will do Putin’s bidding under any circumstances."
Feb 16th 2023
EXTRACT: "Over the past few days, more details have emerged about the alleged Russian plot in Moldova. Apparently, well-trained and well-equipped foreign agents were meant to infiltrate the ongoing protests, then instigate and carry out violent attacks against state institutions, take hostages and replace the current government. This may seem far-fetched, but is it? Yesterday, Moldova denied entry to Serbian soccer fans who had planned to support their team, FK Partizan Belgrade, in a Europa Conference League match against the Transnistrian side Sheriff Tiraspol. ---- " ..... there is a history of Serbian football hooligans being involved in paramilitary activities, including war crimes committed by the notorious Arkan Tigers during the war in Bosnia in the early 1990s. Moreover, Russia attempted to overthrow the Montenegrin government in October 2016, just ahead of the country’s Nato accession the following year, in a plot eerily prescient of what was allegedly planned recently in Moldova.
Feb 14th 2023
EXTRACT: "As the British novelist L.P. Hartley once wrote, the past is “a foreign country: they do things differently there.” Alas, this does not mean that we necessarily do things better now. But to understand that lesson, we have to follow Santayana’s advice, and study history very carefully.."
Feb 7th 2023
EXTRACT: "Others who have left Russia include tens of thousands of the country’s excellent computer scientists, whom the armament industry desperately needs. In fact, so many Russians have emigrated to neighboring countries that Armenia expects its 2022 GDP growth to come in at a whopping 13%. Unlike oil fields, this is capital that Putin cannot nationalize or seize."