Bad Policies, Bad Politics: The United States and China

Treasury Secretary Henry Paulson believes that the United States should not only tie its own prosperity and well-being to the whims of the world market, but also that it should tie itself to the Chinese, according to VOA News.

The Chinese economy is one of the most rapidly growing economies in the world today, and it has the potential to become a juggernaut of historic proportions in the coming decades. They have a stable currency, high growth rates – typically near 10 percent annually – and massive balance of trade surpluses.

The situation in the United States seems to be just the opposite, and for this reason, many Americans are concerned by the level to which China has ascended. Flying in the face of popular sentiment – which is after all, the basis of democracy – Secretary Paulson argues that we have nothing to fear from the Chinese. Citing the many interests we share – oil, energy security, etc. – Secretary Paulson believes that a strategic partnership is the best long-term solution.

What Secretary Paulson, and many others in this government, fail to notice is the vast ideological differences between the United States and China. The two sovereigns share strategic interests (i.e. oil), but lack ideological commonality– communism and capitalism are and may always be at odds. Therefore, our two countries are much more likely to be at odds than to be at peace. The United States and the Soviet Union shared strategic interests all around the globe – in southeast Asia, the Middle East, Afghanistan, Africa, and the Caribbean to name a few – and on several occasions very nearly pushed the human race to the brink of annihilation.

The United States must look beyond the glitz and gleam of Beijing and Shanghai. We want China to be the next Japan; a seemingly benevolent economic ally, but the odds favor conflict rather than partnership. The United States needs oil to survive, and China will soon consume as much if not more than our current pace. That puts the two states on a direct path to conflagration.

Paulson himself stated that there are still many issues which must be mutually agreed upon. We want the Chinese to lessen domestic economic restrictions, lower tariffs and respect patent and property right legislation. Most importantly, we want the Chinese to stop their constant currency manipulation – on the free market, the Yuan would be highly unstable due to the volatility of the Chinese regime – which undervalues their own currency in order to force the world to purchase cheap Chinese goods.

There is a reason that this government wants China to stay strong and prosperous. A healthy, wealthy China allows the United States to continue its horrendous practice of deficit spending. The Chinese are more than happy to lend us whatever we ask for, knowing that at some point they can call in their loans and take us for whatever worth we still hold. The U.S. government on the other hand, seems to operate on the premise that we can hoodwink the Chinese into pursuing our interest instead of their own. This scenario is foolish and costly, and very dangerous for the future.

Source VOA News:

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