An edited version of this commentary first appeared in Asia Times and later reposted on SupChina.
“What goes around, comes around,” can be a critics comment
on the blowback at the perpetrator whose action had misfired. The late Chalmers
Johnson devoted an entire book criticizing American foreign policy based on
“blowback.”
However, once in a while, what comes around could be a good
thing. One example, remarkably enough, involves China and Japan. The story came
from a speech by Daisuke Kotegawa given at the international conference
organized by the Schiller Institute, held in June 2016 in Berlin. Mr. Kotegawa
was a retired career bureaucrat from Japan’s Ministry of Finance.
He noted that after Fukushima in 2011, hotels in Tokyo had
vacancy rates of 90%. But in recent years, tourists from China are filling the
hotels. When the cherry blossoms are in bloom, Chinese tourists are overfilling
the hotels.
In 2015, 5 million visitors came to Japan, double from just
two years earlier. With average spending of about $3000 per person, that was a
$15 billion injection into Japan’s economy.
“So thanks to those foreign tourists, our economy is now
very good,” said Kotegawa. He went on to say that he was part of the team that
agreed to provide economic assistance to China in 1989 to the tune of more than
$10 billion per year for six years in the form of loans at 0.5% interest.
These loans were made to build airports in Beijing, Shanghai
and Guangzhou, along with seven each of ports, railroads, fertilizer factories,
dams and power plants. The telephone networks in Shanghai and Beijing were
financed by these loans as well as the subway system in Beijing.
Thanks to the infrastructure put in place with Japan’s
assistance, the Chinese people got wealthy and as Kotegawa-san observed, “Now
we are actually getting the fruits in the form of huge numbers of Chinese
tourists.”
This story has a couple of lessons for the Trump
Administration. One is that a well-oiled economy needs a first rate
infrastructure. The American Society of Civil Engineers just released their
quadrennial “Infrastructure Report Card” on sixteen sectors of America’s
infrastructure such as roads, rail, dams, drinking water and so on.
Most sectors earned a rating of D, which means the
infrastructure is “in poor to fair condition and mostly below standard, with
many elements approaching the end of their service life. A large portion of the
system exhibits significant deterioration. Condition and capacity are of serious
concern with strong risk of failure.”
Even though the category of bridges earned a C+, one of the
higher grades from ASCE; nevertheless, 56,000 bridges in America are
“structurally deficient”—in other words, potential catastrophes waiting to
happen.
President Trump campaigned on fixing the infrastructure and
members of Congress have known for years that the nation’s infrastructure is
old and worn. But either Congress lack the intelligence to figure out where the
funding can come from or lack the courage to propose taxes that would pay for
the improvements. Kicking the can down to next election is what they do best.
According to ASCE, it will take a couple of trillion dollars
to bring America’s infrastructure up to snuff; mind you, not at grade A state
of the art but at least up to grade B enabling the American economy to start
humming again. But if Congress can’t come up with the funding, how will Trump
deliver on his promise?
This is where China comes in. They have gone from being a
recipient of soft loans and foreign assistance to becoming the world’s largest
investor, partner and builder of infrastructure projects. They have taken their
Silk Road initiative around the world and countries are eager to work with
China because China has developed the reputation for producing quality results
on schedule and at low cost, and additionally with attractive financing terms.
All Trump Administration needs to do is to be willing to
take a different approach to the bilateral relations with China, a new look
based on what’s in national interest for America. How will sailing naval fleets
on South China Sea benefit our national interest? How will launching a trade
war with China benefit America? In other words, how will confrontation benefit
America? Not much.
On the other hand, if Trump can invite the Chinese companies
to help build and finance the infrastructure projects; that clearly would be in
America’s interest. Trump can even stipulate that for every winning bid by a
Chinese company, it would have to take on a joint venture partner drawn from
the list of local American construction outfits. Since it’s been many years
that American companies have undertaken large infrastructure projects, these JV
projects will help bring them up to speed again.
By making sure that what comes around will benefit America,
the Trump Administration will be well on the way to developing a winning
relationship with China. Just keep in mind that the people of America and China
have everything to gain by collaboration and nothing by confrontation.
