Monday, September 5, 2011

China imbalances world trade

Over the Horizon
Is worrying about war with China a self-fulfilling prophecy?

Is it possible that, a decade after 9/11, America has become too preoccupied with the threat from "nonstate actors" and too complacent about the more classic dangers posed by powerful and self-aggrandizing states? Or, put more succinctly, how afraid of China should the United States be?

We know, of course, that China owns $1.5 trillion worth of U.S. Treasury bills and thus has the U.S. economy by the short hairs; that China refuses to significantly revalue the renminbi and thus retains its colossal imbalance in trade with the United States; and that China has begun to buy American real estate and other assets (including, perhaps, the Los Angeles Dodgers). But should Americans regard China as a national security threat and not merely an economic one?

The authors of "Asian Alliances in the 21st Century," a report published by the Project 2049 Institute, a conservative think tank that focuses on East Asia, insist that we must. (The lead author is American Enterprise Institute scholar Dan Blumenthal of Foreign Policy's Shadow Government blog.) The report concludes that "China's military ambitions threaten America's Asian allies, raise questions about the credibility of U.S. alliance pledges, and imperil the U.S. military strategy that underpins its global primacy."

This is startling news to those of us who think of China as a "status quo" power, a view that until recently was widely shared in the academic and policy community. In Power Shift: China and Asia's New Dynamics, published in 2006, David Shambaugh, a leading China scholar, concludes that "China is increasingly seen as a good neighbor, constructive partner, and careful listener." Shambaugh and others wrote then that China had emerged from a long era of suspicion and insularity and had begun to join regional organizations, send peacekeepers to U.N. missions, and improve bilateral relations in the neighborhood. Yes, China's military was rapidly modernizing in ways that gave the Taiwanese a fright, but such signs of belligerence had been offset, Shambaugh concluded, by "bilateral and multilateral confidence-building measures."
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Let the US duke it out with China, while we focus on our own growth and infra-structure development!

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