August 22, 2006--China's China

For the past two decades we have been interested in China for three basic reasons—first, as a good place to locate plants devoted to the cheap manufacture of textiles, toys, clothing, electronic devices, and whatnot; second, as a burgeoning market for American services and cultural products; and third, perhaps most important, as our banker—China is the major purchaser of US Treasury instruments, money we in turn use to finance our debt so we can continue to live beyond our means while buying expensive oil and making war.

There will of course a price to pay for this. And it has to do with who will emerge as the world’s dominant power. We may not be thinking this way, but the Chinese certainly are—we are in a hegemonic struggle with them: which of us will be the foremost economic (and military?) power by the middle of this century? Why, for example, are the Chinese so willing, in spite of our protests, to sell rockets and missiles to Iran, knowing that many of these will flow via Syria to Hezbollah? Because they perhaps rightly see Israel as our surrogate in the region; and by helping to foster confrontation and warfare there, they know that this is yet another way to help us overextend and thereby weaken ourselves.

Speaking of proxy ideological battles brings me to sub-Saharan Africa where, during the Cold War, many of these kinds of confrontations took place. The Soviets used Cuba and liberation groups as their surrogates while the US supported the repressive governments in places such as Rhodesia and Mozambique. But now that that war with the Soviets is over (we won that one, didn’t we?), we have little use for this part of Africa. Except, of course, for countries such as Nigeria because they have oil or other extractive resources.

The Chinese, on the other hand, are looking at this part of Africa in very different ways. In ways that should concern us. Or better, if we were smart and wanted to learn how to be more effective in the world, we could learn from what the Chinese are up to. They did, after all, teach Marco Polo a thing or two those many years ago.

They are trading with Africa. To such an extent that that commerce between them quadrupled since 2001 to $40 billion last year (see linked NY Times article). And they are doing it in a very different way—rather than through deals for raw materials that they then use for manufacturing, they are offering to work together as equals, with the enterprises they establish based on mutual interest. Jeffrey Sachs, though not always my favorite development economist, has it right this time—looking at what is happening he says, “China gives fewer lectures and more practical help.” And he should know since he gave the Russians more bad lectures than anyone else! Fewer panaceas from the International Monetary Fund and World Bank, and more investments in things such as soybean processing and prawn production.

Critics contend that China is in fact just as interested in exploiting Africa as the West. They too crave Africa’s raw materials and see the huge population there as an ideal market for their goods. But on the ground, many in Africa see China offering a development model quite different than ours, an attractive one that is based on China’s own experience of moving from an agrarian society to the world’s fastest growing economy. A move that many in Africa would like to replicate.

Fair warning.