In the Chinese zodiac this is the Year of the Tiger. The previous
years of the same appellation are said to have been fraught with
controversy and even conflict. Tradition says calm and balance is
certainly not to be expected.
Contrary to earlier reports, China remained ahead of Japan
in holdings of U.S. Treasury securities at the end of 2009. The
exact figure (not including private purchases through
intermediaries) was $894.8 billion for China and $765.7 billion
for Japan of a total amount of international holdings of $3,689
billion. The more important figure, though, is the considerable
drop in the Chinese position in Treasury paper of $63.5 billion
since June ‘09. The Chinese government bankers may have been
trying to lower their exposure to the falling dollar.
The state of the Chinese currency, the renminbi, however,
is a source of consternation for foreign observers. Pressure from
the West, especially the United States, for an official
readjustment of the value of the renminbi has been vigorously
countered by Beijing. China’s financial authorities took
particular umbrage at an estimate by the Peterson Institute of
International Economics that the Chinese economy was undervalued
by 41%. Beijing’s obvious aim in keeping its currency undervalued
is to make the price of its exports attractive. Doing so also
reduces the potential of competitive Chinese imports of Western
products.
While the instinct is to view the undervaluing of the
renminbi as strictly a financial matter, it obscures the speed
and extent with which China is approaching its cherished aim of
eventual economic and even military equality with the United
States. Published Chinese official figures showing investment in
civilian and military budgets and specific programs are
concomitantly undervalued. Adding forty percent on the top of all
official statistics gives a better idea of China’s current global
status and places it ahead of Japan’s economy in dollar
terms.
Of course Beijing’s rulers are well aware of this reality
and what it means when it comes to competition with the United
States on the world scene. The Chinese have been particularly
adept at using their wealth for combined political and economic
purposes globally. Nowhere has this leverage been used more
effectively than in Africa. Chinese investment in extractive
industries is buttressed by aid in infrastructure development.
The end result is not only good business but increasing regional
political influence.
One of the best examples of the growing power of the
Chinese “brand” is the Egyptian government’s active effort to
lure investment by a major development instrument in China to
apply its successful model in Tianjin to the planned Suez
Economic Zone, which is to be located on the southern end of the
Suez Canal. The Chinese development corporation, TEDA, would
provide 49% of the financing of what Cairo hopes will be a major
new manufacturing and trading region in exchange for Chinese
access to numerous preferential trade agreements with
Egypt.
With such projects focusing on the developing world,
China’s political power among the poorer nations grows
exponentially, even among even traditionally pro-Western
governments. In international conferences the Chinese delegations
are now treated like rock stars — or rather the premier Asian
tiger that China now is. This is a situation that President Obama
ran into at the Copenhagen climate conference. There, according
to the journalist
Geoff Dyer, “a senior Chinese official wagged his finger and
shouted at Mr. Obama” when the U.S. president decided to
intervene uninvited in a meeting among Chinese and Third World
nations.
Beijing has consistently refused to respond to Washington’s
criticism of Chinese human rights issues and actions. China has
countered Washington’s latest efforts to bring human rights
matters to Beijing’s attention by vociferously attacking U.S.
approval of $64 billion in arms sales to Taiwan. The Chinese
insist the Americans are purposely endangering peace in Asia.
This “apples and oranges” exchange redounded to China’s
propaganda advantage, especially as Beijing ignored its own
announcement of a 50% in rate of growth of its defense budget for
this year.
Meanwhile Google continues to threaten to pull out of its
highly publicized participation in the Chinese Internet. Unlike
the kowtowing manner of many of the other Western companies in
China, Google has stood up against Chinese official and
unofficial attacks in cyberspace and print.
Beijing’s intransigence regarding American and European
desires for tougher United Nations sanctions on Iran over its
nuclear weapons development is perhaps the most strategically
crucial issue currently extant between the U.S. and China. While
the philosophical aspect of China’s policy is not much discussed,
its Communist leadership has been consistent over the years in
holding the line against UN interference in the internal affairs
of member governments.
Beijing does not fear Iran’s growth as a nuclear power.
China can play its political intellectual card on Iran even
though its real worry is potential blockage of its oil imports
from the Middle East. Unlike Washington, which seemingly becomes
flustered by complicated foreign policy issues, China’s leaders
appear to be at the top of their game in that environment. And
this Year of the Tiger seems made for the Chinese style of
international politics.
