- The Washington Times - Sunday, August 14, 2005

China has been in the news a lot lately, mostly due to its increasing role in the global free-market economy, but also because of its growing military power.

Most of the focus has been on China’s increasing energy needs to fuel its explosive economic growth, a demand that has, in part, sharply pushed up oil prices and higher costs for gasoline.

Despite concerns raised by Defense Secretary Donald Rumsfeld — namely China’s buildup of troops and military hardware when it faces no threats from its neighbors — the Bush administration has been emphasizing our trading partnership with China and its liberating open-market economy.

U.S.-Chinese relations have grown much stronger in recent years, both economically and geopolitically, especially in helping to bring North Korea to the negotiating table. A lot of positive things are happening. Among them:

Since China’s admission to the World Trade Organization, it has opened up its economy dramatically to U.S. and foreign businesses and investors.

American goods and services are becoming a growing part of China’s consumer economy, including movies, banking, automobiles, computers, fast foods and, of course, the ubiquitous Wal-Mart.

General Motors isn’t doing so well here nowadays, but a GM-led manufacturing partnership with the Chinese has been selling minivans at a brisk pace to China’s growing middle class.

Not too long ago, foreign investors were frozen out of China’s tightly-run banking industry, but it was reported last week that the Bank of China is negotiating with four foreign banks and capital investment firms — from Scotland, Switzerland, Singapore and Manila — for a major stake in its business.

Under the WTO agreement, foreign banks will have unlimited access to China’s business loan and consumer banking markets.

As a result of steady pressure from the Bush administration, which complained that China’s currency was undervalued, the Chinese government agreed to a revaluation of the yuan. Notably, the Chinese have agreed to let 130 foreign and domestic banks trade their currency on the open market.

When the Chinese oil company CNOOC Ltd. attempted to buy the U.S. oil company Unocal, it sparked a storm of protest in Congress, which feared it could undermine U.S. security. China backed away from the deal, deciding that it wasn’t worth angering the United States, which remains its biggest consumer market.

But a lesser-known fact is that Chinese firms have been buying many other U.S. businesses and vice versa. IBM sold its laptop business to them, and it was reported last week that Yahoo Inc. will buy a 35 percent stake in the Chinese Web company Alibaba.com Corp. for $1 billion in a move to break into China’s burgeoning Internet market.

Similarly, one of America’s most successful online marketing services, eBay Inc., has been getting into the Chinese market, cutting profitable deals with local Web portals in that country.

All of this suggests that China is being drawn deeply into the global free-market economy at a breathtaking pace that is opening up this once tightly-closed country to American-style capitalism, raising the pressures on its government to begin making political reforms as well.

Those reforms, I believe, will eventually come as the Chinese workers become more affluent and begin demanding political freedoms.

It’s not getting the attention it deserves in the global media, but the rash of protests across China has been growing significantly. American independence rose out small, sporadic protests, as it did throughout Eastern Europe.

In China’s case, there has been a dramatic increase in worker protests. It was reported last week that China’s Public Security Minister Zhou Yongkang said that 3.76 million Chinese took part in 74,000 protests last year — a number that is expected to be even higher this year.

Two high tech “weapons” — the cell phone and the Internet — are helping to spread China’s protest movement and making it difficult for its government to keep things quiet and suppress demonstrations.

The Washington Post’s Edward Cody, writing from Beijing, reports how a peasant protest leader “remarked matter-of-factly in a conversation last week that he became aware of other protests after surfing the Web.”

China remains a work in progress, but one where the free market is slowly but surely breaking down old, encrusted obstacles to reform. With the peasants sending text messages to one another on their cell phones about the next protest demonstration, can political freedom be far behind?

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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