Choosing Chinas: Friend or Foe?

JAMES H. NOLT

James H. Nolt is a senior fellow at the World Policy Institute, New York.

The Writing on the Wall:
Why We Must Embrace China as a Partner or Face It as an Enemy
by will hutton
New York, Free Press, 2006. 432 pages
Hardback: UK £20, US $28

Will Hutton pens an economist’s plea for a multilaterally managed solution to the “unsustainable” pattern of economic relations between the United States and China. Hutton has a long and distinguished biography as former editor of the London Observer, economics editor of the Guardian, BBC economics correspondent, and governor of the London School of Economics. Currently, he is chief executive of the British think tank, The Work Foundation. He is the author of six previous books, including The World We’re In (Little, Brown, 2002), a best-seller in Britain. His new book about China, The Writing on the Wall, is typical economist’s fare. It proposes to solve the economically unsustainable with the politically impractical.

Hutton advocates a mature internationalist policy towards China. The United States and Europe should work to smooth China’s entry into the club of trading nations rather than confront the People’s Republic and thus exacerbate its problems. A policy of confrontation might even shift China from its current hopeful course towards a more aggressive and hostile path.

Hutton’s concern is admirable, but his case is weakly argued. He concedes too much to fearmongers who argue that China is an inevitable enemy of the United States because he does little to contest their exaggeration of China’s military capabilities and hostile intent. Even his economic analysis is coloured by inappropriately militaristic metaphors, as in his discussion of the potential for “resource wars”. Finally, Hutton seems to harbour an irrational faith in the ultimate victory in China of rational “Enlightenment values” over corruption, narrow self-interest, authoritarianism, and the profligate waste of resources. For example, in his discussion of the basis for political reform in China, he does not consider that its one-party state endures because those who have become wealthy through political patronage (virtually all of China’s rich) have every reason to fear the loss of their privileges should political pluralism prevail. Where is the powerful constituency for political pluralism? Given Hutton’s unacknowledged faith in the progress of an almost Hegelian rational Enlightenment “Idea”, such questions need not be posed.

Hutton’s dichotomous subtitle suggests the West must either reasonably and rationally accept China as an economic partner or turn it into an enemy. On the other hand, he insists that China has no choice but to continue its economic and political reforms and fully embrace Enlightenment values because of the structural difficulties its own economy faces. His arguments about the structural problems of China’s economy, including the increasing inefficiency of its investment, are among his most interesting. However, his insistence that continued reform in China is near-inevitable may appear to remove some of the urgency of his case. Although it is not his intention, his argument could easily be read as justifying US economic “containment” of China, along the lines of the containment of Iran, Cuba, North Korea and the former Soviet bloc. If Chinese reform is inevitable, why not restrict trade with China until it is fully reformed?

Hutton would have made his case stronger had he argued: (1) China is now militarily weak and economically dependent, so the United States and its allies can afford to deal with it from a position of strength; (2) given the preponderance of US strength and autonomy, the United States can afford a policy that indulges mutual interests; (3) China may not converge much more towards the United States politically or economically, but even if it does not, the scope for mutual interest is broad and sufficient for peaceful relations. At various stages, Hutton appears to be making elements of each of these points, whereas at others he argues at cross-purposes. The result is more a mishmash of wishful thinking and cautionary hopefulness than a pragmatic internationalist programme. The biggest weakness of Hutton’s approach, in common with that of most economists, is its treating nations as grey averages, i.e., as units of accounting, thus smoothing over and obscuring the deep divisions, warring interests and rival economic projects that actually propel political conflict and define real political possibilities. He knows his Adam Smith, but not his Machiavelli.

It is not clear who Hutton’s target audience is. Economists already convinced of the wisdom of globalism will mostly nod in agreement with a familiar presentation, but for those less persuaded by the inevitable triumph of economic rationality, Hutton deploys the tactic of his China-bashing adversaries: irrational fear. If we in the West do not offer China a smooth path to full integration with the global economy, it might lash out militarily, perhaps by invading Taiwan. Hutton provides no sober analysis of this possibility. He just borrows this stick uncritically from his adversaries, such as the University of Chicago’s John Mearsheimer and Pentagon propagandists. Whereas Mearsheimer argues that war with a rising China is virtually inevitable, Hutton counters that it is avoidable if the West adequately placates, or as others would say, appeases China.

This is an unnecessarily weak argument. Hutton’s case for multilaterally managed internationalism would be better made by contesting rather than accepting the militaristic exaggerations of Chinese power. Hutton treats China and the United States almost as though they were equal, interdependent powers, whereas in fact China is economically dependent and militarily weak. Aggressive military action by China against Taiwan or any other external target is almost inconceivable during the coming decades because it would bring dire calamity upon its head. Hutton ignores the possibility that the United States might initiate a “pre-emptive” war against China. I judge this possibility, however remote, as higher than the likelihood of China committing national suicide by attacking US interests anywhere, including in Taiwan.

Even as an economist, forgoing any military analysis, Hutton should realise that a Chinese war against Taiwan (let alone the United States itself) would almost immediately end China’s three-decade economic miracle. China’s economy is heavily dependent on exports to generate wealth and jobs. Its military depends on imports for most of its limited stock of high-tech naval and air weapons. Nowhere in his book does Hutton consider how much China would suffer if the United States and its allies imposed an economic boycott against it. On the other hand, although China recently surpassed Canada as the largest source of imports into the United States, Chinese imports constitute only about 3 per cent of US consumption. China supplies the United States with nothing vital. Nearly everything it exports to the West could be easily outsourced from any number of other developing countries. Conversely, China depends on foreign sources for much of its productive machinery, high-tech weaponry, and oil. It depends on massive exports of consumer goods to fund such vital imports. If its sea-borne trade were interdicted, its economy would collapse. After decades of trade-led growth, the old autarkic Maoist economy is gone. No Chinese leader could risk initiating war with the West.

Elsewhere, I have argued in detail the profound weaknesses of the Chinese military today. In any war of machines (e.g., a primarily naval and air war in the Taiwan Strait), the United States (with or without its many allies) has overwhelming superiority—far greater than in the more balanced Cold War standoff with the Soviet Union. Of course, as the wars in Vietnam, Afghanistan and Iraq illustrate, it would be costly and probably self-defeating for the United States to try to occupy any significant portion of mainland Asia against a hostile population. But the United States is not in the slightest danger of losing control of the world’s sea lanes, and it therefore maintains its capability to choke off the maritime trade of any nation.

Given US economic and military preponderance, it is a wonder Hutton did not consider whether war with China might in fact be economically attractive to some elements in the United States. War with China would oblige the United States to boycott its exports, block its access to Middle East oil, and void all Chinese debt claims against the United States. Which economic interests would benefit from such a dramatic turn? Which would lose out? Analysing this would give Hutton a better understanding of why certain American interests are willing to push China to the wall. If this looks reckless to Hutton and me, it looks like an opportunity to many quite rational economic actors, but you would search in vain to find the material basis of nationalism exposed in Hutton’s work. To him, the problem is insufficient political will to promote Enlightenment values. But is it really a deficit of political will or is it conflicting political and economic interests at play? Economic nationalism has a rational basis, rooted in the power of insecure wealth facing foreign competition. I hope Hutton’s next book will take a closer look at the trends of nationalism’s economic base and political strategies. This will help him grasp a realistic political strategy to unite internationalists and oppose resurgent nationalism.

It is because I am sympathetic to Hutton’s internationalist agenda that I am concerned about the shortcomings of his political analysis. Yet there is much in his book that is useful. He is correct to argue that the current pattern of Sino-American economic interaction is unsustainable. His arguments why are well taken. But his prescriptions for how the relationship should be managed are not the most realistic. It would have been more useful to consider alternative scenarios for how things might unravel, with an analysis of the interests and political forces that would be arrayed on opposing sides. This is the sort of raw material needed for effective political strategy.