A new great game, but this time the rulebook is in Chinese

[ajtr]

A new great game, but this time the rulebook is in Chinese | David Rothkopf​

I'm no China basher. In fact, back in the day, fresh out of the Clinton Commerce Department and working with Henry Kissinger, I was once listed somewhere as a "friend of Red China." I expected a call from the House of Un-American Activities Committee at any moment.

I am also not one of those folks who suffers -- as many Americans and even more commentators do -- from a Sino-centric view of the world. Some of these are Sinophiles. Some are Sinophobes. But both sets think with their adrenal glands. (I believe adrenaline ... like testosterone ... acts as a solvent for brain tissue, melting it away with ease.)

However, that said, it is clear that China is profoundly important and that the U.S.-China relationship is one of the most important in the world. That both sides understand so little of one another and that there are so few really first-class specialists on either side in either government explains why we so easily slip into clichés, hysteria, dread, irrational optimism, and so many other kinds of reaction that don't require (or stand up to) rational analysis.

What that analysis would produce...does produce...is a clearer sense that the relationship is every bit as complex as it is important. We are vital partners. And we are also increasingly rivals. While it is a relationship worthy of volumes (and I mean many more volumes than have already been written), today, I would like for a moment to deal with just one dimension of the rivalry side. There are many, of course, and on prior occasions I have focused on others, most recently on the fact that while China wants the benefits of being respected as an international leader, she has been unwilling to assume the responsibilities that go with such leadership in terms of combating global threats. Quite the contrary, she has contributed to some, including notably the threat of the proliferation of weapons of mass destruction in ways that may be calculated but are also grossly irresponsible.

One such area where the Chinese have manifested this irresponsibility in the past has been in the transfer of missile and other technologies to the Pakistanis. Now the Chinese don't much trust the Pakistanis and they are among the first to tell us that should there be an issue with loose nukes in Pakistan they'll work with us to put a lid on it. But they also helped create the problem because they were playing regional politics and sought a way to counter-balance India and build a strategic partnership at a key juncture between the Middle East and South Asia.

Over the weekend, China's Prime Minister Wen Jiabao, visited Pakistan. During the trip he announced a $35 billion package of deals as part of what the Financial Times calls "a plan to commercially integrate the nation with China's western region." Well, even in the China-lovin' corners of my mercantilist heart that sets off alarm bells. As noted in a companion piece to the story in the FT, "When China's prime minister opened the gleaming white latticed China-Pakistan friendship center in Islamabad at the weekend, the gesture of friendship might easily have been mistaken for naked ambition." (That's British for saying it was definitely naked ambition.)

The FT analysis piece notes that this time around however, not only has China built ties with Pakistan but it has recently done a $16 billion package with India. And that these packages are part of a global program of largesse that can only be seen as a global diplomatic "friendship" grab that not too long ago also included a $20 billion package of deals with France and may soon include the purchase of Portuguese bonds as part of an effort to help prop up that Iberian economic sick man. No doubt, there will be deals announced when China's president visit the United States too next month ... but that should be no cause for relaxation.

China is using its new economic heft and resources in a calculated global effort to remake its relationships worldwide and thus, by extension if not by explicit plan, to remake the power structure of the world. On the commercial and investment side alone, China is doing this in several ways:

Commercial Diplomacy: It's signing deals both because it's good business but also because it is a way to gain leverage politically worldwide. We do it. Everyone does. But no one is doing it more aggressively or effectively than the Chinese right now. In part, it should be noted, this is because they are making very few political demands in return on the front end. It's more in the vein of that classic diplomatic approach which goes something like: "Someday, and that day may never come, I'll call upon you to do a service for me. But until that day -- accept this justice package of deals as a gift on my daughter's wedding day on the occasion of this meeting between the leaders of our two countries."
Resource Grabs: Same general approach as above but with the added objective of tying up precious, scarce resources worldwide and thus gaining both secure supplies and a strategic advantage. See the Wikileaks entry on how the Chinese are using investments in Africa to buy influence. They're doing in Latin America, the Middle East, Central Asia and elsewhere as well.
Competition Policies: China is intent on tipping the global economic playing field in the direction of Chinese companies as aggressively as possible. They do so through subsidies channeled through state entities that own or control major companies, they do it through promoting policies that give Chinese companies a special edge in getting deals in China, they do it through demanding tech transfer and/or not enforcing intellectual property laws. It's not that they are "new" to the world economy or because they are a "developing" country. It's because they do whatever they can to gain advantage. This is only going to get worse before it gets better. If most of the major infrastructure investments in the world in the next 20 years will be made in Asia and most of those in China and the Chinese give Chinese companies a special shot at the roads, factories, powerplants, grids, airports, etc., then in 20 years who do you think will be the world's leading suppliers in these areas? That's the plan and if I were GE or Siemens, I would be darned uncomfortable. (And in fact, look at the recent statements of their CEOs and you will see that they are.)
China, like all countries, is self-interested. The difference is that they have no philosophical inhibitions about pursuing that self-interest aggressively, there is no lingering sense that "laissez faire" is a virtue. What's more, while these policies may be seen as disconnected and distant from one another, of course they are not. China is pursuing the shortest path to the most economic power they can muster. It is not that they have imperial ambitions. They don't. They simply want to assure their own security and the stability of their nation and if that means cornering the market on key resources and creating counter-balances to the power of rivals, they will do it.

They are doing it. And right now, what we're doing, mostly, is watching and wondering what it is we are seeing. Hint: In the case of Pakistan, which is important on its own and instructive in terms of its implications, it's a new great game and this time a substantial portion of the rulebook is being written in Chinese.