China And The World's Power Pyramid II

This week and last, while the mainstream media's analysts and commentators were exclusively dissecting the difference between an apology and a regret, and whether or not the U.S. would alter its schedule of reconnaissance flights near China, we were watching, with rapt attention, the Latin American tour of Chinese President Jiang Zemin. We were thoroughly impressed with how he was received in his 6-nation tour of Latin America and how quickly those nations near the bottom of the world's power pyramid were rallying around the Asian nation of over 1 billion people. Quicker than even we thought, it is becoming apparent that China's resistance to, and even defiance, in the face of US demands, is beginning to resonate in the economically developing world.

I was amazed at the near and total ignorance of the Chinese President's Latin American tour among some of the political analysts and commentators with whom I spoke or communicated with via e-mail. Their "America-first" and Western-bias really revealed itself when I brought the visit and some of the reported statements from that visit to their attention. They either were totally shocked or attempted to dismiss the tour and interaction between China and the developing world on the grounds that China was somehow incapable of forging and leading a coalition outside of Asia.

We disagreed and saw in Jiang Zemin's visit to the lower half of the Western Hemisphere, the materialization of what we wrote about over 1 year ago - that China saw itself as America's partner in managing the affairs of the world household and that it would continue to increase its sphere of influence and assert its role by America, as a wife often does by her husband - regardless to what his reaction may be.

We are absolutely convinced that if America does not begin to view China as her partner in influencing and managing world affairs, and even resolving conflicts around the world, that she will soon lose more and more influence in the developing world with each passing year.

We see China's support of Brazil and Cuba in their intellectual property battle against the West has a sign of things to come that could eventually result in an intellectual property and trade world war that would have the US and Europe on one side and China, Latin America, Africa and India on the other side. Notice we did not even mention Asia or the Islamic world who have already demonstrated their sympathy toward China. Not to mention the fact that China has more Muslims in its country than any other. Throughout his tour, the Chinese president stressed that the developing world must unite on trade and economic issues.

We saw deep into the announcement, made during the tour, that China would be loaning $400 million to Cuba for a variety of projects. To the degree that China continues to grow economically and becomes more prosperous and wealthy we see a growing possibility that she will become a more benevolent "sugar daddy" or benefactor to the developing world than either the U.S. or IMF and World Bank have been.

We also looked very hard at Mr. Jiang Zemin's growing unity with Venezuela's leader Hugo Chavez. Most noticeable was Chavez's defense of China in the area of human rights violations. Venezuela has, with growing frequency, defended China on the grounds that no one nation has the right to condemn another - a direct stab at America's moral equivalency approach to foreign policy. Venezuela announced its intention to vote against a UN resolution being pushed by the US, which would condemn China's record on human rights.

The more one thinks about it, the more one begins to recognize the reason for the great desire the US has for China to enter the World Trade Organization (WTO). Hoping that it would have happened by now, both Republican and Democratic administrations realize not just that China's market means trillions of dollars but also, that, as China's credibility and popularity becomes greater and greater in the developing world, while China is not integrated into the world economy, it demonstrates and spreads the belief that a nation can survive and thrive without being a surrogate of the West.

Such a belief becomes even more emboldened by the fact that China has been able to produce economic growth with a mixture of policies that do not reflect the customary package of Western democracy and free markets, which are most frequently credited with spurring economic growth throughout the world. And even those economic policies that have worked most recently in the West, China has repackaged and claimed as its own - all while the West has continued to demonize her.

Oddly enough, China has been able to accomplish what it has because it has been able to recognize, in part, that lowering costs and taxes on production and transactions leads to economic growth. While many continue to paint China with the broad brush of "communism", many in the know realize that China's economic success is largely the result of maintaining a clearly defined unit of account - its currency, the Yuan, and by its decades-old massive tax reductions.

All done free of the influence of the IMF.

Notice that it was China's decision to not devalue in 1998 and 1999 that kept the Asian currency crisis from spiraling out of control. Few remember that it was the U.S. that asked (some say begged) China to not devalue. China's maintenance of a reliable unit of account is responsible for not just its own economic growth, but also that of some of its neighbors. And as China's tax burden fell by 20%, as a percentage of GDP, from 1978 to 1995, its GDP soared in the opposite direction, shooting up from less than $1 trillion Yuan in 1978 to $6 trillion Yuan by 1995. As a result, China set a world record in producing 20 consecutive years of economic growth of over 10% annually.

The United States knows that it no longer is dealing with a junior partner and now it appears that the developing world is coming to that same conclusion.

The world power pyramid continues its realignment.

Click here to see what we wrote about China, last year, in: "China And The World's Power Pyramid"

Cedric Muhammad

Wednesday, April 18, 2001

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