Many Americans, particularly on the right, have comforted themselves with the notion that fears of an oncoming Chinese century are overblown. Per capita incomes in China remain well below those in the capitalist West, and the country’s arguably irresponsible stimulus policies have led to a potentially catastrophic build-up in debt, particularly at the local-government level.
And yet, even the most die-hard free marketers must concede that four decades of strong economic growth is pretty impressive. A crash will surely come one day (as they come periodically in purely capitalist countries as well), but the Chinese experience should probably make some of us question our assumptions about the inherent superiority of purely free markets. (Though it’s worth noting that China only began to grow when it began to accept certain tenets of capitalism. That’s why it’s not another Cuba or North Korea.)
Another point: Even though China remains home to hundreds of millions of horribly poor people, it’s clear that its raw economic might (based on population size alone) is affecting geopolitics. Indeed, two data points this week show that Beijing is increasingly able to have its way with the world. That’s deeply ominous.
First, the Korean conglomerate Lotte has announced plans to sell its chain of more than 100 discount stores in China. This is a result of pure coercion. Beijing was unhappy with South Korea’s utterly rational decision to deploy the THAAD missile defense system on its territory, so it shuttered 80 percent of Lotte’s Chinese stores for supposed “safety” inspections. (One of the first times the Chinese government can be accused of taking safety too seriously) Powerless in the face of Beijing’s bullying, Lotte will simply abandon the Chinese market.
Then there was the farce of the sanctions against North Korea at the United Nations this week. The U.S. had planned originally to push for tough measures against Pyongyang: an oil embargo, a freeze on Kim Jong-un’s assets (a superb idea, as I explained here), and severe restrictions on North Korean labor overseas. But Beijing, which wants to maintain the odious regime in Pyongyang, shot those measures down. So we ended up with restrictions on North Korean textile exports. Fine, but not nearly harsh enough to fundamentally change the situation in Korea. Not only does China hold a veto on the U.N. Security council, but Steven Mnuchin’s bluffing aside, its economic power as a major buyer and seller to the West gives it hefty leverage over political matters. More evidence of China’s growing clout is the U.S.’s eagerness to punish Russia for its various cyber intrusions, yet let China, which hacked the Office of Personnel Management’s files, off the hook. (Granted, this also says something about Russia’s economic weakness.)
OK: So are these developments the result of true Chinese power, or merely weak democratic countries and corporations, afraid to stand up to Beijing’s appalling intimidation? Well, actually come to think of it: Aren’t those really the same thing? Power, fundamentally, is the ability to bend others to your will. Beijing has that in spades.
