Thursday, September 8, 2011

The Diverging Trajectories of China and America Since 9-11

Before September 11, 2001, China looked at the U.S. with a bit of awe, envy, admiration and even affection that was rooted from the days of being comrade-in-arms against the Japanese Imperial Army. Some of the positive vibes could be traced even further back to the 19th century when the western powers were carving up China and the Americans were the least rapacious.

After 9-11, China’s attitude gradually turned skeptical tinged with condescension as China along with the rest of the world saw America embark on a path of self-destruction.

Immediately after the tragic implosion of the twin towers, China’s then president Jiang Zemin called the White House to express his concern and sympathy. Then China watched with amazement as the U.S. used the tragedy of 9-11 to launch a war against Iraq.

As if reasserting American values over Al-Qaeda were sufficient pretext, the Bush Administration became obsessed with the so-called liberation of Iraq. The search for fictitious weapons of destruction became the excuse to hunt for Saddam’s head.

Sadly, America’s subsequent fumble at nation building in Iraq was for the world to see. The gross incompetence, waste, and corruption severely eroded the U.S. prestige and credibility. Mao used to call the U.S. a paper tiger; many in China began to think he may have had a valid point.

Even so, the lesson for China was to witness the American war machine in action. American advanced weapons, especially the missiles and drones remotely controlled by former video game jockeys safely ensconced in bunkers thousands of miles away, were not to be trifled with.

Confrontation with the U.S. was never in China’s national interest; after 9-11, staying out of the way of the American ire definitely was. Rather than casting the veto at the Security Council over issues where they disagreed such as Iran or North Korea, China was more likely to abstain than openly disagree with the U.S.

By surprising an American flotilla surrounding the Kitty Hawk with a quiet running submarine and shooting down one of its own satellites, China demonstrated enough military capability to send an occasional signal to the U.S. that the cost of any arms conflict would be too dear to contemplate.

China also began to actively practice soft power around the world, making investments in Africa, Asia, Australia and Latin America. Those investments not only made economic sense but also benefitted the local economy and made friends with the people. There were no strings attached such as imposition of moral values or insistence on what constituted acceptable forms of government.

The day that truly jolted China was September 15, 2008, the day Lehman Brothers collapsed. Suddenly the prospect of holding onto trillions of dollars of questionable value confronted China’s central bankers.

Treasury Secretary Hank Paulson in the waning days of the Bush Administration had to fly to Beijing to reassure the Chinese leaders that the value of the dollar would be protected. Secretary of State Hilary Clinton and Treasury Secretary Timothy Geithner at the beginning of Obama administration had to do the same.

Most recently, Vice President Joe Biden had to make the pilgrimage to Beijing to once again reassure the Chinese that their dollars will continue to have value even after Congress nearly put the U.S. in default of its sovereign debt.

Of course both sides understood that the grand gesture of reassurance while necessary for appearances sake was an empty one. Until the U.S. economy recovers and the government can generate a budget surplus, the only way the federal government can repay its debt obligations is by printing more money. Printing more money will cheapen the value of the dollar. There is no way to defy this law of fiscal gravity.

The manner in which the U.S. federal government handled the debt crisis offered no assurances to China that the U.S. will find a way out of their financial quagmire. What China has seen was the incredible pettiness of Congress and the inability of the Obama administration to accomplish anything.

Ironically the only time in recent memory that the U.S. Congress unanimously rallied in support of the president (except for one dissenting vote) was to go to war in Iraq. All the other times, politics and paralysis ruled.

Since that fateful 9-11, the value of the dollar has fallen by nearly 20%. The aftermath of the home mortgage induced financial collapse and the flirting of U.S. default have not evoked confidence that a done-little, changed nothing President can find a way to work with the do-nothing Congress and turn the American economy around.

When China began its economic reform more than 30 years ago, the U.S. was the gold standard to aspire to. In the decade since 9-11, the U.S. by any measure has found itself on a downward spiral with no prospect of reversal in sight.

China, on the other hand, has found its own way up. During the recent decade, China has surpassed Germany to be the leading export nation and its economy has surpassed Japan to be the second largest in the world.

China built the Qing-Zang Railway at an elevation that experienced Swiss engineers said couldn’t be done. Then China built the largest network of high speed rail in the world and is now offering their technical expertise to the world.

In face of budget cuts, the U.S. has discontinued its space exploration program. China is just beginning theirs. Perhaps this is an apt metaphor for the future of the two nations.
See edited version in New America Media and China-US Focus and People's Daily online.

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