January 21, 2007
Chinese missile test a wake-up call for radical free traders
I remember kvetching about a year ago when IBM sold one of its PC divisions to China. I also remember expressing concern when I read that Motorola, Microsoft, and other American technology companies have been completing strategically sensitive research in China----mostly because they can hire technical graduates more cheaply in Asia than they can in the United States.
And today we learn that the People’s Republic of China has completed a successful test of a missile designed to shoot down satellites. Last week the Chinese military shot down an old weather satellite orbiting some 500 miles above the earth.
This new missile system enables China to shoot down American GPS and spy satellites, should the People’s Republic ever have an inclination. (The most likely scenario would be a war over Taiwan.) Both Washington and Tokyo have officially protested the missile test.
China’s military----the same one that has ICBMs aimed at Los Angeles—is gaining on its counterparts in the United States. This fact is less than astonishing when one considers China’s access to U.S. high-tech firms. These companies used to work only for the U.S. military and our allies. But times have changed. It is no secret that U.S. technology firms have played a significant role over the past ten years in building up the expertise of China’s military.
This isn’t the intention of corporate America, of course. But in China, the so-called “military-industrial complex” basically includes the entire economy. So any U.S. technology transferred to China---even to the civilian sector----will eventually end up in the hands of the PRC’s armed forces. (When U.S. firms do business there, technology transfers to Chinese “partners” are often mandatory. The Chinese military also has informants among the engineers and researchers that U.S. companies hire in China.)
From free trade to intelligent trade
Free-trade radicals often depict our relationship with China as an either-or alternative. According to this view, the U.S. has two choices: give China whatever it wants and hope that Beijing responds benevolently, or cut off all relations and slide irrevocably toward estrangement---and war.
There is, in fact, a third choice: we can manage our relationship with China based on a realistic assessment of what China is today, what it is not, and what it may become. There are many entrepreneurs and hard-working citizens in China who are pro-Western, and want nothing but peaceful relations with the United States. We need to maintain a relationship with China to encourage these people, and to help them to become the dominant voices in the China of tomorrow.
However, the government of China is still technically a Communist dictatorship, even if the Chinese do read Mandarin-language translations of Harry Potter, and eat Kentucky Fried Chicken and McDonald’s.
China’s communist government will do what communist governments have always done, since the bad old days of the Cold War: it will take as much ground as it can, wherever it perceives weakness. Lenin instructed his followers to “probe with bayonets until you encounter steel.” Mao Zedong said “political power comes from the barrel of a gun.” Let’s be hopeful for the future in China, by all means----but let’s also remember who we’re dealing with at the moment.
The last three U.S. administrations have been completely besotted with unrealistic expectations about China, assuming that complete indulgence is the best way to ensure responsible behavior from the Middle Kingdom. American corporate executives, equally besotted by the promise of cheap labor, have gutted American factories and research labs---sending key industries to China (among other places abroad).
We should trade with China; but we must exercise more scrutiny and greater caution when transferring technology to the PRC. China may indeed evolve into a Western-style democracy over the next ten or twenty years. But for the present, it is still a communist state that is clearly capable of rattling some very large sabers at the United States.
Notes:
http://www.cnn.com/2007/TECH/space/01/18/china.missile/index.html