China: The Immovable Object

China: The Immovable Object
By Robert Robb

Managing the U.S.-China relationship requires two qualities for which American foreign policy is not usually known: circumspection and patience.

Right now, the United States is irritated with China on many fronts.

We are worried about how much U.S. debt the Chinese own, but also that they will not want to buy any more. We believe that China undervalues its currency to cheat in trade.

The United States is alarmed at China's increased military capability and the threat it poses to U.S. supremacy in the Pacific. We find China's territorial claims provocative.

The U.S. believes that China is not doing enough to restrain the nuclear ambitions of Iran and, particularly, North Korea.

Some of this irritation comes from a lack of perspective. China's trade with the rest of the world is roughly in balance, it imports about as much as it exports. The trade surplus with the United States is not due to currency differences. China loosely pegs its currency to the U.S. dollar, which is the opposite of manipulation.

In fact, China has a much more valid currency complaint than does the United States. Extraordinarily loose U.S. monetary policy is devaluing China's dollar reserves.

China's large dollar reserves are insurance against its own immature banking and finance system, not a calculated effort to gain leverage over the United States. As a percentage of GDP, China actually owns less U.S. government debt than does Britain or Switzerland.

Some of the concern about China is real. China is clearly seeking to neutralize U.S. military supremacy in the Pacific. And it will succeed. That is a reality to which other regional powers - Japan, South Korea, Taiwan - will have to adjust.

Mostly, however, U.S. irritation with China results from the difficulty the United States is having in adjusting to a diminished role in the world. The United States just isn't used to a country that really doesn't seem to care what we think or do, as China generally does not.

For the United States, China is the immoveable object. Blandishments don't work. Importuning doesn't work. Threats don't work. And as the Obama administration will learn, holding state visits and dinners don't work either.

China does what it perceives to be in its best interests, irrespective of what the United States thinks about it.

There is deep anxiety in the United States that we will be eclipsed by China. This is another area in which perspective is missing.

China does seek to reduce U.S. geo-political influence in its part of the world. But economically, China wishes us no harm. At the state visit, President Obama told China President Hu that, "We want to sell you all kinds of stuff." The Chinese want to do the same to us.

The Chinese believe they have built an economic model that serves as an alternative to America's democratic capitalism. Many in the United States fear that they have.

But they haven't. China is still very much a developing country. China's approach of using state-favored large commercial enterprises to expand exports is hardly new among developing countries. It's been done before.

An export sector can be developed that way. But domestic production and trade cannot be centrally controlled. There are too many moving parts.

China is headed for big problems. It has an aging population without a social welfare net. As Richard McGregor's book, "The Party," documents, everything in China, including its large commercial firms, still owes first loyalty to the Communist Party. Maintaining authoritarian control over 1.3 billion people is not easy. China is constantly rife with small-scale protests.

Sometime over the next decade or two, China's state-directed export economic model will begin to stagnate. What will happen next is impossible to foresee. But a steady continuation of China's rise as it is currently configured isn't going to happen. Simply put, China has neither a political nor an economic system compatible with a generally prosperous people.

China will do what China will do. There's not much the United States can do about it except watch and cope.
Robert Robb is a columnist for the Arizona Republic and a RealClearPolitics contributor. Reach him at robert.robb@arizonarepublic.com. Read more of his work at robertrobb.com.