We have to admit an unexpected and strong admiration for the strategy and tactics of the Chinese government’s commitment to raising the country, and its 1.4 billion people, out of poverty. Our admiration for the effort is strongly influenced by our belief that, as with King John and the Magna Carta, the development plan sows the seeds of the end of the CCP’s power.

Many of the things that China has done should be textbook from now on: focus on technical education at home and abroad; insist on only the latest technology in imported factories; peg the yuan to the world’s reserve currency; build up huge foreign currency reserves; spread money to the provinces for local control of projects; unleash the power of personal wealth and entrepreneurship; use state-controlled banks as Venture Capital investors disguised as lenders.

We are not blind to the downside of hyper-development at 9% growth a year for two decades: displacement of people regardless of their legal rights; environmental poisoning at the borders of rural land and elsewhere; huge investment speculations and excesses; endemic corruption in the regional governments and banks; and every bully-boy tactic imaginable.

We watch as the Chinese conduct expert negotiations with the US and EU, for example, as they put forward concessions and withdraw them in the textile dispute. Probably our folks are just as clever (though you wouldn’t know it from the implausible Schumer-Graham legislation) but we’re focusing on China here.

In this context we note a WSJ article on the Defense Department and China:

On the military front, previous Pentagon reports have focused largely on China’s military ambitions with regard to Taiwan. This year’s document is likely to look at how China may use its military to project power in the region beyond Taiwan, said U.S. officials who have seen drafts.

The report is important, say officials who have reviewed it, because it marks the beginning of a debate on China’s military influence that is likely to be carried over into a quadrennial review of Pentagon spending that is slated to wrap up in January.

Over the past few weeks, the drafting of the report has intensified divisions among policy makers over how to approach China. Pentagon officials initially wanted a section to focus on potential “conflict scenarios” with Beijing. But officials at the State Department and the National Security Council objected, saying that scenarios in such a widely distributed document would unnecessarily inflame Beijing. In response to those concerns, the section on potential areas of conflict was scaled back.

The proper scenario for evaluating China is not particularly Taiwan, and it is good that the Defense Department has shifted from this narrow focus. The proper scenario for evaluating China is that it views itself as the largest country on the planet, with the best people and the most focused government in support of the goal of being number one.

Taiwan could of course be an issue, as the US government suggests, though the Chinese government has shown considerable finesse in its diplomacy with Taiwan’s opposition political parties to date. But China has bigger fish to fry. China’s mission is to be the US of the next hundred years and beyond, and US policy which focuses on the small things rather than this big goal of China, is likely to be wrong.

Our view is that China will face a crossroads in not too many years, between the CCP and a middle class that will be over 100 million — loss of the Party’s control, or curtailment of the enterpreneurship and economic freedom that have been critical to the success of China’s economy. Military adventurism would appear to be entirely possible to create a nationalistic rallying point to forestall the CCP’s loss of power. However, the invasion of Taiwan would look pretty awful to the billion Chinese getting the pictures on TV, the internet, cell phones, or otherwise; that would not serve the interests of the CCP in trying to retain power.

UPDATE

We note that folly has an honored place at humanity’s table. FT:

This week it emerged that the Chinese authorities had arrested Ching Cheong, the Hong Kong-based correspondent of the Singapore Straits Times, as well as two Chinese academics. Beijing accused Mr Ching – without producing any evidence – of spying for an overseas power. Zhao Yan, a researcher for the New York Times, has been held since last year, also on spying charges, and this week the government added an equally improbable accusation of fraud in order to prolong his detention without trial.

China’s current rulers are particularly anxious not to allow their citizens to hear about Zhao Ziyang, a Communist leader who died this year having spent the latter part of his life under house arrest for sympathising with the Tiananmen demonstrators and opposing the crackdown. Mr Ching, it seems, was detained after seeking to obtain a document airing Zhao’s criticisms…..

It is inconceivable that tens of millions of well-educated and increasingly prosperous people will allow themselves to be kept in the dark much longer. The contrast between a modern, open economy and a Stalinist political system is too extreme, and something has to yield. The chances are it will be Communist politics that crumbles, not capitalist economics.

For the record, we share the FT’s sense of the likely outcome in China; alas, nothing can be ruled out with certainty, however.

This entry was posted on Thursday, June 2nd, 2005 at 9:37 pm and is filed under China, General, War, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.