Friedman's China Observations

Over at the NYT (registration required), Friedman's latest column is about China.

A few days back, I was at the LAT-UCLA book festival and blogged on the session on China. With Iraq and other Middle East flashpoints in the news, China has receded into the background of political discussion but looking at the numbers Friedman cites, it should be getting more attention. Excerpts:

The most striking thing about being in Asia today is hearing how much more important China's growth engine has become for companies all across the region ? and well beyond it. When Chinese authorities told banks last week to cut back their wild lending, commodity prices and stock markets tumbled all over the world. News that China is having regular blackouts because it can't buy enough crude oil is helping push up gasoline prices the world over.
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And considering the huge amounts of foreign investment that have flowed into China in such a short time, "it's very hard to think that they could have invested that much money efficiently," remarked Robert Feldman, managing director in Tokyo for Morgan Stanley. "So the senior leadership is scared, because if they have a hard landing from bad loans you have a regime problem. [But] when they tried to slow the economy, they got real push back from the regions, who said, `You in Beijing have all that infrastructure. Why shouldn't we have a new bridge or road?' "

Given how opaque China's decision-making is, it's hard to predict how Chinese leaders will balance their obligation to behave in a way that promotes global equilibrium with their need to create millions of jobs each year in order to stay in power.

One can only say three things: 1. They've done a pretty good job so far. 2. The job gets harder every day. 3. No one will be immune to the fallout. The relationship of the world to China right now reminds me of that old banker's rule: If a client owes you $1,000, that's his problem. If a client owes you $1 million, that's your problem. China's stability is our problem.

Heavenly Father . . .

Back at the book festival, there was some discussion about how until 9/11, China was on the road to replacing the old USSR as the opponents in a bipolar geopolitical world. I don't know to what degree the CCP has expansionist designs and aims to spread an ideology that touts political totalitarianism and economic free markets.

What has been clear in recent years it they clearly have an aggressive drive for economic progress. Does that by definition automatically diminish military ambitions?

In the case of Japan post-World War II, the anti-military aspect of life was enshrined in Constitutional limits to the size of the military and what it can be allowed to do. China has no such official constraints. However, as China has become a huge importer and exporter and thus has ties to some many places, perhaps those ties that bind it to other nations also bind any military expansionist ambitions?