- The Washington Times - Sunday, January 23, 2011

ANALYSIS/OPINION:

For those whose worldview arises from beyond the Capital Beltway, two questions arise out of Chinese President Hu Jintao’s Washington sojourn:

Yes, the state dinner and trappings — including that incredibly bungled DeGaulle-style press conference — were for the folks. After all, with Beijing’s newfound love for Confucius, “rites” are everything! But beyond heavily censored Chinese public presentations, Mr. Hu had the job of bringing home the duck. So what was the reaction at Communist Party headquarters? On that hangs Mr. Hu’s role in next year’s transfer to the “Fifth Generation” leadership. Mr. Hu, like his boorish but relatively successful predecessor, Jiang Zemin, hopes to keep his seat in those important organs, the state and party Central Military Commissions. With Beijing’s rapidly expanding military, power, as Mao Zedong famously said, comes out of the barrel of a gun. As always, it’s hard to know the comrades’ thinking.

The second question deals with the Obama administration’s own China policymaking, in its own way equally mysterious. Why, one has to ask, did the president — given his trademark constant abnegation of and apologies for American power — take such a tough line? In the press conference lead-in, he indicted Beijing in a fashion that would have delighted a far more hawkish foreign policy clique.

True, President Obama had just come from having his ears burned by American businessmen losing tens of billions of dollars annually to Chinese government companies. He complained explicitly, for example, of “theft of intellectual property” — not “security” or “protection,” the usual euphemistic counters to Beijing blackmail of Western businesses in their mad rush for Chinese markets. Just a few months ago, a spokesman for General Electric Co., now the administration’s darling, bitterly complained of Chinese practices.

Where then, in this White House team reshuffling before a new presidential campaign, does this hard line — again, by Obama standards — on China originate? Secretary of State Hillary Rodham Clinton recently seconded the sharp change, reconfirming the U.S.-Japan Mutual Defense Treaty umbrella for contested areas and denouncing Beijing’s outrageous claims over the South China Sea. Despite her omnipresent pantsuit jet-setting, no one had ever previously accused her State Department, so fixed on “modalities,” of taking a hard line on any issue.

Then there was the interview with Adm. Gary Roughead, U.S. chief of naval operations, yet another part of an uncharacteristically well-organized Obama administration ambush for Mr. Hu’s party. There were the telltale “panda-hugging” pleas, characteristic of Pearl Harbor’s Pacific command, calling on Adm. Roughead’s Chinese naval colleagues to adhere to traditional nautical rituals. But the good admiral nevertheless projected strategies for maintaining U.S. Western Pacific naval dominance. How did that go over with the headstrong young Chinese naval officers Adm. Roughead said he had found in China, contemptuously ignoring their party minders?

On these unanswered questions hangs the immediate future of U.S.-China relations. For truth be told, we are in a new act of a long-running American-Chinese saga. Since the beginnings of the republic — Capt. Elihu Yale endowed his fledgling college with a cargo of China-bound opium — American and Chinese interests have been inseparable. More than any other foreign relationship, America’s intercourse with China has waffled violently — whether using Chinese coolies to build transcontinental railroads and then “excluding” them, or the World War II saga of Miami bobby-soxers mobbing Mme. Soong Mei-ling followed only months later by Washington turning its back on her defeated husband, Gen. Chiang Kai-shek, followed by the long diplomatic back and forth over the status of Taiwan.

Most of the media blather about economic relations is only another in the long series of misapprehensions. Yes, in a fashion, the Chinese are spendthrift America’s banker. But as Keynes observed all those years ago: “If I owe the bank 100, I have a problem. If I owe the bank 100,000, the bank has a problem.”

With Beijing rapidly approaching $3 trillion in reserves, mostly in dollars, the understatement of the century is to label its economy “uncharted territory.” Only so much American debt can be used to invest abroad. Meanwhile, the massive reserves lead to inflation, the destroyer of so many Chinese dynasties. It’s already hitting food, a burden especially hard on most of the 1.3 billion Chinese people, despite the Communist elite’s Gucci culture and a privileged coastal urban population. The halfhearted command economy subsidizes exports not only by manipulating currency but also with exports built on high-cost imported components, rising labor costs and increasingly expensive energy imports. Infrastructure has been overbuilt, much of it unsustainable. The 2008 Olympic showplaces are virtually unused, there is a housing bubble that matches the U.S. market, and many of Shanghai’s dramatic skyscrapers in Pudong’s financial center have been empty for a decade. As regional and class disparities grow, social friction is rising.

The bubble will burst, but what event will be the cause is part of the mysterious East.

But in the equally mysterious West, predictably, another act in America’s love affair with China will begin.

Sol Sanders, veteran foreign correspondent and analyst, writes weekly on the convergence of international politics, business and economics. He can be reached at solsanders@cox.net.

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