China’s Pacific Asian Influence

China's Pacific Asian influence

China's economic success has had a more subtle effect on the morale, sense of identity and direction of the overseas Chinese communities in Singapore, Malaysia, Indonesia, Thailand and elsewhere. There is a widespread sense of exhilaration here, a feeling that after centuries of weakness China is once again on the path of greatness. This unwritten pleasure is seldom expressed to non-Chinese, but it exists and it is having a palpable impact as the business leaders of the overseas Chinese communities visit their ancient home villages, invest there, build schools, temples and hospitals, and provide advice to local authorities.

China reserves of foreign exchange 1991. (Source: IMF, Hong KOng and Taiwan Government statistics)

                      US $ Billions

China              159

Japan               72

USA                  67

Germany          63

Britain              42

China and Central Asia

Prior of Soviet dominance, Central Asia was one of the great trade, cultural and political crossroads of the world. Along with Afghanistan and Pakistan, Central Asia includes the ex-soviet states of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, impoverished, ethnically fragmented, politically unstable societies with all the problems of post-Soviet Russia and little of its education and industrialization. Some of them still possess major weapons stores, armaments factories, nuclear facilities and even nuclear weapons. They are, in short, important, desperate and greatly in need of stability.

Although the Russian economy has collapsed, the country retains enormous military power. If the civilian democratic authorities continue to fail to revive the economy, the prestige and power of the Russian military could return.

China is hampered by being largely non-Muslim and having restive Muslim minority groups, particularly in the Turkic area of the Xinjiang Uyghur Autonomous Region.

So great has been the rush of impoverished Russians to China that the Chinese authorities find themselves in a dilemma over how to cope with the social and health problems caused by the large number of Russian women who have migrated into Chinese cities to become prostitutes.

In the near future China's influence in Central Asia seems likely to increase more rapidly than that of any other power. The battle for influence will be a classic game of "Scissors, Paper, Stone". China will have the money. Russia will have the weapons. Iran will have the disruptive populist ideology.

China and South Asia

India has long seen itself as a major competitor of China for the future of Asia. India has long pursued a much more expansive policy than China, with thrusts towards Pakistan , Sri Lanka, and Bangladesh that have no counterpart in contemporary Chinese policy. India has had a navy more configured for overseas power projection whereas China has been more configured for coastal defense.

China does have one strategic submarine for which India has no counterpart, since China had a potential nuclear problem with both superpowers, whereas India did not.

Most important of all, India is a Soviet-style economy, much more organized around support for national military ambitions than China's has been. India was not only trade-dependent on the Soviet Union, but organized with the same priority for military related heavy industry and electronics that was the key to Soviet industrial management.

India has only been saved from bankruptcy and even worse impoverishment by its market-oriented agriculture and by a more rapid breakdown of state controls over light and medium industry that occurred in Soviet Union.

While China's understated official GNP statistics mask its superiority even today, in reality it is outstripping India in the same way that South Korea outstripped North Korea, and for much the same reasons. India's relative failure brought it to the brink of bankruptcy in the second quarter of 1991. The level of political violence and bloodshed is so much higher in India than in China that they cannot be compared on the same scale.

India and China, Trade and foreign reserve expressed in US$ billions.

Source: IMF: International Financial Statistics, December 1992.

                                   India                      China

Trade                          36.9                      132.7

Foreign reserve            3.6                        44.5

About the USA as the regional arbiter.

The loss of the Philippine bases (Clark Air Base to a volcano, Subic Naval Base to then-Vice President Quayle's diplomacy) has put in doubt US ability to support a conventional defense of South Korea even if the US defense budget were not declining. This leaves the American defense of South Korea completely dependent on Chinese goodwill in not supporting North Korea.

The USA and China

Major Chinese-American issues.

Military issues.

China is selling Pakistan, Iran Syria and Algeria vital elements of the ability to build nuclear weapons and to deliver them, as well as high-technology conventional weapons that Washington fears might destabilize certain key balances in the Middle East and South Asia.

Since the Indian nuclear detonation of 1974, the US government has worked hard and successfully to limit the spread of nuclear arms, as well as biological and chemical arms. China has Washington's non-proliferation policy to thank for ending the fast-moving Taiwan and South Korean nuclear weapon programmes in the 1970s.

The Chinese People's Liberation Army (PLA) had a great burst of sales in the 1980s due to the Iran-Iraq hostilities, but today sales are a tiny fraction of what they once were. The 1991 Gulf war showed that most Chinese technology were obsolete.

In June 1950 North Korea, armed and incited by the Soviet Union, launched an overwhelmingly successful surprise attack on South Korea. Next we had the US sequestering of Taiwan and China launched a massive attack in Korea and restored roughly the original division of the peninsula. The ensuing warfare cost America fifty-thousand lives and China hundreds of thousands. In Korea, the North Korean regime is financially, politically, and diplomatically bankrupt. North Korea has not been able to pay its international debts since 1974. But North Korea retains one of the world's most powerful militaries. It could destroy Seoul very quickly, which would cripple South Korea for the indefinite future, even though North Korea might well be destroyed as a nation in the ensuing war.

China and Tibet

China's sporadic rule over Tibet has a long history, dating back to the Yuan Dynasty in the thirteenth century. China subdued Tibet again in the eighteen century -- not too different in time from the period of greatest conflict between settlers and American Indians in what became the United States. For China, Tibet is a strategic buffer of grate importance, and the high mountains on the far borders of Tibet provide China with a natural boundary that is easily defensible.

During China's period of weakness,Tibet developed substantial independence. After the revolution of 1949, it was reincorporated into China with a promise of autonomy under central leadership. Tibetan revolted. The ensuing suppression has been harsh, and in addition Tibet has shared with the rest of China the horrors of the Great Leap Forward and the Cultural Revolution. The Tibetan's plight is similar in some ways to that of American Indians. To the Chinese, Tibetan society is inferior and feudal. Tibetans' use of human skulls for a variety of purposes, their poor hygiene, feudal rule by the monks and much else struck the Chinese as requiring reform.

Since the current economic reform began in 1978, China's treatment of minorities has improved substantially, but Tibetans continue to protest and Beijing continues to suppress  Tibetans resistance ruthlessly. Recently, China has moved substantial number of Han-Chinese into the vast, underpopulated area of Tibet to ensure future control. There are about 4 million Tibetans, of whom about 2 million live in Tibet. Chances of achieving independence are poorer than the chances of any major American Indian tribe. Advocacy of the hopless cause of independence can only bring greater suppression and suffering--as would happen if someone egged the Apaches into a bid for independence from the United States.

Economic issues

In recent years, China has run a huge trade surplus with the United States--in facts the second largest surplus of any country--and it arose right after Tiananmens Square and during the 1991-1992 recession. The surplus stems for several factors.

One is unfair trade practices. China has sought liberal access to others' markets, while restricting access to its own. It has done this by restricting the availability of foreign exchange for imports, subsidizing exports, using secret rules to manage imports, and so on. China has also made free use of foreign intellectual property without paying for it.

A second factor is US policies. The USA has kept economic sanctions on China far longer than any other country. This naturally depress US exports. Because American companyies must hedge against the risk of such sanctions, many have limited their business with China. Third, many Chinese exports are from US companies making things cheaply in China and exporting them to other places, including the USA. This helps American companies compete successfully on a global basis, but it leads to an initial surge of exports from China back into the USA. Forth, and this is the main factor, Hong Kong and Taiwan have exported their labour-intensive industries to China proper to take advantage of the lower land and labour costs there. In doing so, they have exported their surplus to the mainland.

China's trade troubles with the USA are broadly similar to those of Japan, South Korea and Taiwan. These countries too encouraged exports and inhibited imports, undervalued their currencies, and pirated US books, computer programs and trademarks. But the USA is pushing ASEAN countries. It is insisting that China solve intellectual property issues in a single year that Thailand, Indonesia, Singapore and Malaysia, proportionately much worse offenders, have refused to resolve for decades. In China's eyes, Americans are disguising a political dispute as a trade dispute and are bringing unfair trade pressure to bear in order to undermine China's political system.

Chinese companies duplicate US computer software on a very large scale without paying royalties, infringe trademarks, copy and distribute chemicals and pharmaceuticals without paying for them, exploit access to US trade secrets, and copy and export legally protected hardware of many kinds, in some cases nearly driving small US firms into bankruptcy.

The vast majority of capitalist third world countries take the position that patents on pharmaceuticals, and the resulting high prices for drugs, are not acceptable, and even a close Western ally like Thailand has refused for many years to protect computer software.

In January 1994, China already had a revised trademarks law scheduled for enactment in late 1992. This makes China one of the leaders in the third world in acknowledging the West's version of intellectual property. Taiwan still refuses to accept such a sweeping agreement. On 10 October 1992 China and the USA announced an agreement on market access. The Chinese promised to publish most of their rules rather than keeping them secret, to remove many quotas and import controls, to reduce tariffs, to publish market information, to remove import substitution measures, and to eliminate safety and health restrictions that were not justified by scientific evidence.

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