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The Honolulu Advertiser
Posted on: Sunday, July 31, 2005

American China-bashers contradict free-trade policy

By Robert Scheer

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"China will never make it economically."

That's what I was told four decades ago, during my days as a graduate fellow at the University of California-Berkeley's Center for Chinese Studies. That widely shared pessimistic view was based on the notion that the Chinese economy, plagued by scarce resources and massive overpopulation, would never take off, no matter what ideology dominated.

Everyone knows those experts were wrong. China, despite having almost a billion more mouths to feed now than it did 40 years ago, and being far more dependent on foreign resources, is frightening not because of the prospect of its economic failure but because of its success. You could smell panic over China's offer to buy Unocal.

Sadly, the prospect of hundreds of millions of people being lifted from abject poverty seems to alarm even leading Democrats in Congress, who claim to be driven by a standard of social justice. And many Republicans, who tend to trumpet the virtues of free trade when it involves the domination of world markets by U.S. businesses, also are raising the protectionist flag against the prospect of Chinese ownership of a single midsize U.S.-based oil company.

The signals we send to China have always been bizarrely mixed: Play in the capitalist ballpark, but not so well that you become one of the big stars. It is a message that, as with the Japan-bashing of the 1980s, is at best paranoid and at worst racist. We in the West can be trusted with enormous economic power, but not the children of a lesser god.

The contradictions in U.S. policy were on full display last week when China untied its currency from the dollar, a move long demanded by American China-bashers. The upward valuation of the yuan was welcomed by those concerned about the U.S.-China trade imbalance; it also caused shivers of fear that China might not continue to lavishly invest in U.S. Treasury securities.

Of course, if you believe the protectionists, the trade imbalance with China is a reflection not of the hard work of the Chinese people but rather trickery on the part of China's leaders. Such irrationality is finding broad bipartisan congressional support. The House voted, 398 to 15, to condemn a sale of Unocal to the Chinese, alleging it would "threaten to impair the national security of the United States."

"Trade should be mutually beneficial, and it is certainly not with China," Sen. Byron L. Dorgan, D-N.D., said.

Tell that to the American consumers storming Costco and Wal-Mart to buy affordable Chinese-made goods, or the millions who have benefited from low-interest mortgages made possible by the Chinese subsidization of our huge budget deficits under President Bush.

And why isn't it a good thing that China is seeking access to Unocal's cleaner-burning natural gas as a substitute for coal, thereby lessening the danger of global warming?

The fear-mongering must be confusing to Asians, who've been hectored by the West for two centuries about the ineffable beauty of free trade. Americans, for instance, don't think that Asians should feel in the least bit threatened because of Unocal's ownership of natural gas fields on their continent. That's just the market in action.

Upon examination, the national-security argument against Chinese ownership is absurd. Access to oil is determined by the international market, and the only nation with the military power to implement or prevent a worldwide blockade of this or any other vital resource is the United States.

And consider the hypocrisy: The Senate that authorized the "pre-emptive" conquering of the nation with the second-largest oil reserves on the planet is now challenging China's right to use dollars it earned exporting legal products to buy a U.S.-based multinational company.

The Bush administration, led on this issue by Treasury Secretary John Snow, has managed to bring some reason to the congressional debate, and for the moment thwarted the wilder suggestions to dramatically increase tariffs on Chinese goods. But that hasn't silenced the protectionist demagogues lurking in the political shadows eager to once again scapegoat China as an alternative to facing our serious, but domestically rooted, economic problems.

The protectionists must be defeated, and U.S. policy should stay rooted in the wisdom of Richard M. Nixon — a prosperous China is good for us all.