- - Thursday, December 17, 2015


The modern culture of China sometimes resembles something less than a conventional nation-state, and with a billion and a half people it inevitably tries to move in different and sometimes conflicting directions. The United States must hope for the best but prepare for the worst. The worst could be a conflict over basic American interests, not least the freedom of the seas on which all maritime nations rest.

The Chinese are continuing to build military bases on a coral barrier across one of the most strategic commercial routes through the South China Sea. It may be years before the Chinese can project sufficient power from those reconstructed coral shoals to challenge the U.S. Navy, but the world moves ever more swiftly and reassurances that the United States, through visionary technology, is meeting the threat must be examined with a keen and skeptical eye.

China continues spending vast resources on these barrier bases and on the expansion of its seapower. China’s economy has drifted into slower rates of growth than the double-digit increases of the past three decades, and size of the actual drop, a matter of speculation because of China’s “creative accounting,” is less important than the speed at which the economy is slowing.

This has already had an impact on world commodity markets, and on those countries, including Russia, which have single-product exports. China’s galloping economic invasion of raw material producers, particularly in Africa where infrastructure projects are sold as a swap for raw materials, is in trouble. That’s telling in such countries, such as Angola, with the price of energy halving in no small measure because of the shale-oil revolution in the United States. The lower price of oil and a natural gas surplus has encouraged the old-time guardians of extortionate prices, such as Saudi Arabia and now Iran, to pump faster to keep market share. But in Southeast Asia, China continues to push enormous subsidized railroads and highways, and damn the costs.

These gambles have been matched by an unprecedented campaign against corruption by President Xi Jinping, as he attempts to create a new personality political culture matching that of Mao Zedong. Such campaigns in the past, based on evidence in a totally corrupt culture, were actually intended to eliminate opponents within the ruling one-party Communist state. More recently, President Xi has gone further than harassing high party officials, and named the billionaire oligarchs. This seems to be another economic gamble.

In fact, President Xi — despite criticism within and without the Communist Party that such a gamble is the greatest obstacle to economic progress — has enhanced the power of the government-owned combines with near monopolies. Whittling them down, along with their political hold on credit, for a move toward the tiny private sector and, most of all, increased consumption, was meant to be the order of the day. But it’s not happening.

The Obama administration is tip-toeing around these issues and that, to put it mildly, puzzles Asia and the rest of the world. Cutting the U.S. military strength at a time of aggressive Chinese rhetoric and movement is not exactly what the world needs. Minor tinkering with currency manipulation and export subsidies, which will probably expand given the Chinese slowdown, is not an answer to the loss of American manufacturing, now moving away from China toward lower-wage countries.

China policy has been a contentious ground for American policymakers for six decades. It’s looming ever larger and the next administration will face a considerable challenge in answering the yearning for hope and a change for something better, much better. Barack Obama will leave an unholy mess.

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