Monday, June 27, 2005

China The Bogeyman


Some centuries back, an explorer by the name of Marco Polo brought discovery of the “Middle Kingdom” to Europe, and with him came the seeds of many rumors. Among these were the sort that are still around today, including fears of conquest and alien customs. Throughout History, people have had to balance the fear of this foreign power with the lure of rich trade routes. It’s a sad commentary on modern History classes, that many people forget the motivation for Columbus’ expedition was to discover a shorter trade route from West Europe to India. The contact with China has often been founded on equally expeditious hopes.

Throughout the 20th Century, fears of threats from the Orient have long affected U.S. policies. It is not now commonly understood, that during the 1930s Japan was allowed to build its military, in part because China was seen as a greater threat. It is not commonly explained, that while many in the United States were confident that the U.S.S.R. would eventually fall of its own weight and American discipline, most were unsure of how to battle a reinvigorated Chinese dragon. During the Vietnam War, misconceptions about arrangements between Moscow and Peking (as it was then called) prevented the U.S. from acting effectively in the region, for fear that China would flood troops into Vietnam they way it had in Korea.

Fast forward through the 1980s and 1990s. Along the way, through the blur you can see periods of Japan-phobia, a little Taiwan-phobia, even some recent India-phobia, but for some reason the People’s (supposed) Republic of China is only spoken of in terms much like those used in the old PRAVDA dailies. Ooohh, China is an economic powerhouse, didn’t you know? Ooohh, China is about to become equal with the United States in military might, better be nice to them! Ooohh, China has more people than anywhere else on the planet, they deserve our respect! Please. I notice the same stuff gets said about China over and over again, and it never pans out.

The hard facts are not very pretty. China has over a billion people, but no effective system to feed and protect them. In the old days, most people in China never saw the Emperor, nor even one of his mandarins, unless they lived close to one of the provincial capitals. Actual government came down to three things: paying taxes to keep the government pretty much off their backs, taking issues and concerns to the local magistrate, and after the Tangs came to power, civil service exams to provide something not unlike a meritocracy for those who did not wish to stay at home, or who had no prospects there. Things have not really changed much overall in China. A sad example is the recent rains in China, which led to mudslides, killing hundreds but displacing more than a million people. China still has trouble with basic civil performance issues.

It doesn’t get prettier when you consider business. The blunt fact is that well over 80% of Chinese private businesses fail, for two main causes: Either the government fails to provide an environment to allow the business to prosper, or else it tries to turn the business into a money grab. Beijing’s new securities laws very nearly destroyed the Hong Kong stock market after the 1997 takeover, as government agencies imposed draconian restrictions and fees. Worse, Beijing chose not to copy the successful British regulation of the markets, which allowed for extensive fraud and embezzlement. Even now, most analysts view Chinese financial statements with serious skepticism, as there is no effective audit confirmation of claims, especially when a business works with the Chinese government. Since Hong Kong was a choice prize specifically because of its stock market, the powers in Beijing have backed off, but there is no guarantee the HK markets will ever be under China what they were under the UK.

This does not even address the serious questions that must be asked about China’s economic stability. Like the Soviets they modeled their government after, the Chinese government does not release verifiable numbers on Unemployment or Financial Reserves, to say nothing of a Consumer Confidence Index or any measure of Inflation. Imagine any serious company being asked to invest in a venture where there is no effective guarantee that any of the claims they hear are valid, and you will find that China is involved. China has marketed itself well enough to pick some choice plums, but any investor in those companies would do well to question that decision and its consequences.

It is true that China works hard to educate its children, with very high literacy rates and truly impressive math programs. Then again, the Soviet Union covered reading, writing, and arithmetic instruction very well, which resulted in over-qualified people chasing jobs which did not yet exist, and which led to their best and brightest coming to the United States once they realized the situation. We’re starting to see that with China as well. The Committee for State Security is trying to figure out a way to be sure that Chinese kids to come to the U.S. for college, will eventually come back. A rising percentage of Chinese graduates simply don’t move back home.

And that brings us to the happy world of the Chinese dreaded Red Dragon, otherwise known as the Red Army, the People’s Republican Army, or the Paper Tiger. It’s true that China is pursuing the latest weapons. It’s true that China intends to fully modernize its navy, complete with aircraft carriers. It’s true that China intends to be the dominant power, in every respect, in Asian waters. The problems come with figuring out how to do that strategically.

Many people have neither the time nor inclination to seriously study military strategy, especially the mix between geopolitics and the purely military campaign. The PRC suffers in several respects if and when it attempts a military conquest. It’s not commonly observed, yet significant to this consideration, that the Chinese forces found the conquest of Nepal very difficult to accomplish, far slower and bloodier than they have ever admitted. More, during the 1989 Tienanmen Square crackdown, splits and outright revolts among armored units in the Chinese military occurred.

China, for all its bluster, is simply not trained, equipped or in any way prepared for a major war of conquest. Most effective battle doctrines in place today require significant delegation of authority to field and unit commanders, but this is plainly not an option for Communist forces. It is not commonly understood that by the late 1980s, the Soviets generally were considered superior in fighter, bomber, and tank weapon quality, but their doctrine was hopelessly unable to employ those advantages in a battlefield situation. The battlefield lesson of the Boer War, then Vietnam, was rammed home again in the Soviet invasion and abandonment of Afghanistan, and continues in Russia’s futile efforts against Chechnya. In blunt terms, Beijing has the capability to destroy Taiwan, but not to invade and hold it. And with relatively impressive democratic reforms in Taiwan, the troop morale and discipline in Taiwan is improving.

These points must be understood when considering the nature and intent of Chinese ambitions.

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