Tuesday, April 21, 2015

China Exerts Soft Power with Hard Cash

This piece first appeared in online Asia Times.

The rapid closing of ranks in the formation of the Asian Infrastructure Investment Bank inevitably directed the world’s attention to China’s Silk Road Initiatives as proposed by President Xi Jinping, companion pieces to creating the bank.

The initiatives, popularly abbreviated as one belt and one road, consist of developing a string of ports and harbors from the coast of China around South China Sea and Indian Ocean to Africa through the Suez Canal and end in Athens Greece, thus replicating and expanding the ancient maritime shipping lanes.

The envisioned road would be a high-speed rail from China across Central Asia to Istanbul then north to Moscow and then across Western Europe terminating in Holland. The initial buy-in is $40 billion.

No one can accuse of China of thinking small. But then this is a country that built a 3,000 mile Great Wall and 1,000 mile Grand Canal in ancient days on the backs of manual labor and the high altitude rail across the Tibetan plains (one that Swiss engineers did not think was possible) and the Three Gorges Dam in modern days with modern technology.

Therefore when China proposes these ambitious projects, other countries are quick to express interest. Whether China is a friend or possible foe becomes immaterial, they understand being a stop on the new Silk Road means the opportunity to participate in booming international commerce and share in the prosperity to come.

China is not going around offering handouts or free rides but the opportunity to partner with China.  Since the financial crisis of 2008, China has shown that they can take on mammoth infrastructure projects and get them done on time and within budget.  Since then, China has taken the experience and expertise to Africa and Latin America to put up railroads, highways and hospitals and schools.

In fact, the origin for the bank and the Silk Road initiatives can be traced to the financial crisis of 2008. The near collapse of the economy caught the world including China by surprise. While the crisis dragged down the western European and Japan’s economy, China managed to build a seawall to shelter from the financial tsunami by investing heavily in domestic infrastructure projects. Now they are ready to apply what they learned to help others.

The financial crisis also shocked Beijing and shook their faith in the American leadership and Washington’s ability to manage the American economy responsibly and guard the value of the dollar from the rapacity of Wall Street. Beijing began to look for safer harbors and reduce China’s exposure to holding onto the dollar.

Thus getting a decent return for the roughly $4 trillion in their reserve became a reason for the infrastructure bank and Silk Road initiatives. At the end of the day, upon completion of the belt and road, China will become one end of an integrated world economy that runs across the globe. In the meantime, China will be putting their money and their construction workforce to work.

As the project move forward, China will be working with as many as 65 countries touched by either the belt or the road. They will have to sort through a host of political, economic, cultural, social and environmental issues. They will have to negotiate and conclude joint development agreements and plans motivated by common interests and shared returns. These will be formidable challenges.

If the plans proceed as envisioned by President Xi, it will become a constant reminder of China’s soft power and enhanced stature as a world leader and responsible stakeholder. China won’t have a ring of 1000 military bases around the world garrisoned by American troops but will have the din of jackhammers to remind the local people of the economic benefits to come.

China Daily ran a supplement in the Wall Street Journal explaining the one belt and one road initiative. The full-page infomercial contained a map of the world showing the high-speed rail and the seafaring routes westward to Europe.

Intriguingly, the map also showed a conceptual line that ran from China through Siberia across the Bering Strait down Alaska and Canada all the way to the United States. Such a high-speed rail can take people from one side to the other side of the Pacific in under two days.       

Technical experts inside China have expressed the confidence that China has the technology and expertise to build such a high speed, trans-Pacific railroad. “All” it takes is the mutual political goodwill among four countries: Canada, China, Russia and the United States.

That’s one big Chinese dream to share with the world.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Friday, April 17, 2015

Book Review: Fateful Ties by Gordon H. Chang

This book is a comprehensive review and valiant attempt to explain the unusual love-hate relationship between China and the United States. Given the funny season that is about to descend on us, as candidates race for the U.S. presidency, this book could not come at a better time. Readers will find the book an antidote to the inevitable anti-China polemic venom to come from candidates looking for slightest edge.

Written by a Stanford history professor—no, not the other Gordon Chang that runs around cackling that the sky is falling in China—this is the scholarly one that writes with elegance and eloquence about the ups and downs of a relationship between the most powerful nation and the most populous one.

The author points out that China’s relationship began with America even before there was an America. All the tea dumped in the Boston Harbor came from China—the Brits have not yet smuggled the tea saplings to India—and it was the desire to buy tea direct from China and save on the taxes being imposed by the British crown that led to the American Revolution. (My “aha” moment: All of a sudden I realized where the expression came from, “I wouldn’t do such and such for all the tea in China.”)

The author goes on to suggest that visions of trading for the wealth that was China led Jefferson to the Louisiana Purchase and sending Lewis and Clark west to find the passage to China, as Columbus attempted centuries before.

Such notable historical characters as Anson Burlingame, John and Alice Dewey, Pearl Buck and Henry Luce furthered America’s fascination with China. Burlingame went to China as the American ambassador and came back as the envoy from China. The Deweys went to Japan for a vacation, decided to visit China on a whim and stayed for two years. Buck and Luce wrote and published bountifully about China.

These people spent a significant part of their lives in China and were all enthralled by the Chinese people and culture. They became positive influences in America’s perception of China. On the other hand, xenophobes such as Denis Kearney that spewed racist hatred across the American society had never been to China and know nothing about China. Sounds familiar in today’s context?

China suffered from the ravages of the Opium War and the unequal treaties imposed on the country by the western imperialists. Burlingame attempted to help China rectify the injustices. The Treaty of 1868 named after him entered between China and the U.S. actually paved the way for the first batch of Chinese boys to be educated in New England.

While the U.S. participated in the quelling of the Boxer Rebellion, it was the only western power to return most of the indemnity fund back to China in the form of scholarships for advance studies in America. Studying in the United States became the gold standard for every aspiring student in China and continues to this day.

The writings of many others such as John Dewey and Pearl Buck created a level of understanding about China that formed the foundation of popular American sympathy and support for China and sentiment against Japan during the eve of World War II.

This book is a pleasure to read for entertainment and for those wishing to become better informed individuals. It should be required reading for all current and aspiring politicians. Given all the loose talk about the impending conflict between a rising power and reigning power, it is crucial that our leaders understand China and get the relationship right.