Focus: The Opposition
A little while ago I wrote a column on the unlikelihood of a shooting war with China in the near future. One of the main points I made was China’s ideological neutrality when dealing with other nations. China’s interest are in resources for their industry and market for their goods, and beyond that the Chinese aren’t much interested in lecturing their trading partners about who they should put in charge or what policies they should embrace.
This gives the Chinese a genuine advantage in international relations, and that is now manifesting itself in our own back yard – Latin America.
Over the course of the last decade, Chinese trade with Latin America has grown to the point that they are now the second largest trading partner with the region, behind the United States. But with the global economic downturn, Chinese economic activity in the region has taken a new turn. China has become the largest source of developmental loans for the region. Coming as this does after almost a decade of United States indifference to Latin America, China’s influence in the region has skyrocketed. But this influence is, in what is becoming the clear pattern of Chinese international behavior, confined entirely to trade and economic issues, not attempts to influence either the domestic or foreign policies of these nations.
Venezuela has been highly suspicious of multilateral developmental loans and aid packages because of the conditions usually attached to them. But this last February China and Venezuela announced a doubling of the Chinese-backed developmental fund to $12 billion. The difference from other aid packages? The Chinese deal has no strings attached concerning Venezuelan fiscal or monetary policy. All the Chinese want is an increase in oil shipments from 380,000 barrels a day to one million.
China recently loaned $10 billion to Brazil’s national oil company to support additional offshore exploration and drilling. What do they want in return? An agreement to ship 100,000 barrels a day to China.
Are you beginning to see a pattern?
Argentina is strapped for hard currency, but was ignored by the Federal Reserve when it made currency arrangements with larger central banks around the world late last year. The Chinese have now stepped in and made $10 billion worth of Chinese currency available to the Argentineans, enabling them to draw on that for their import needs (provided the imports come from China, of course) taking much of the strain off of their limited supply of dollars. If arrangements such as this multiply – and at the moment there is no reason for them not to — it is a step toward use of Chinese currency as an alternative to the dollar as the global reserve currency.
While these developments are a genuine cause for concern, there is nothing sinister about them. This is not an evil plot; the Chinese have simply proven more adept at making the transition from a bipolar cold-war global environment to a multi-polar non-ideological world. (Read about the end of the bipolar cold-war global environment here.) As long as our foreign, economic, and trade policies are shackled to a never-ending search for enemies to punish, friends to reward, and factions to back, the Chinese will continue to gain markets, resources, and influence at our expense.
The Twentieth Century was The American Century, but the Twentieth Century is over. It’s a new world out there, and if we want America to prosper and flourish in this century as it did in the last one, we need to clean the cobwebs out of our strategic thinking.
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