Why Antagonize China?

Original Article

While attempting to appease a long list of utterly unappeasable foes—Iran, North Korea, Hamas, Hezbollah, and even Hugo Chávez—today the U.S. treats China, perhaps our most crucial economic partner, as an adversary because it defies us on global warming, dollar devaluation, and Internet policy.

It started last June in Beijing when U.S. Treasury Secretary Timothy Geithner lectured Chinese Premier Wen Jiabao, who recoiled like a man cornered by a crank at a cocktail party. Mr. Geithner was haranguing the Chinese on two highly questionable themes, neither arguably in the interests of either country: the need to suppress energy output in the name of global warming—a subject on which Mr. Geithner has no expertise—and the need for a Chinese dollar devaluation, on which one can scarcely imagine that he can persuade Chinese holders of a trillion dollars of reserves. This week in a meeting with Senate Democrats, President Obama continued to fret about the dollar being too strong against the yuan at a time when most of the world’s investors fear that the Chinese will act on his words and crash the dollar.

Meanwhile, Secretary of State Hillary Clinton and the president’s friends at Google are hectoring China on Internet policy. Although commanding twice as many Internet users as we do, China originates fewer viruses and scams than does the U.S. and with Taiwan produces comparable amounts of Internet gear. As an authoritarian regime, it obviously will not be amenable to an open and anonymous net regime. Protecting information on the Internet is a responsibility of U.S. corporations and their security tools, not the State Department.

Yes, the Chinese are needlessly aggressive in missile deployments against Taiwan, but there is absolutely no prospect of a successful U.S. defense of that country. Sending them $6 billion of new weapons is a needless provocation against China that does nothing valuable for the defense of the U.S. or Taiwan. Yes, the Chinese have also spurned America’s quixotic effort to herd the gangs of anti-Semitic, anti-American oil-dependent felines at the United Nations to undertake an effective program of economic sanctions against Iran.

A foreign policy of serious people at a time of crisis will recognize that the current Chinese regime is the best we can expect from that country. The Chinese revitalization of Asian capitalism remains the most important positive event in the world in the last 30 years. Not only did it release a billion people from penury and oppression but it transformed China from a communist enemy of the U.S. into a now indispensable capitalist partner. It is ironic that liberals who once welcomed appeasement of the monstrous regime of Mao Zedong now become openly bellicose at various murky incidents of Internet hacking.

Nonetheless, with millions of Islamists on its borders and within them, China is nearly as threatened by radical Islam as we are. China has a huge stake in the global capitalist economy that Islamic terrorists aim to overthrow. And China, like the U.S., is so heavily dependent on Taiwanese manufacturing skills and so intertwined with Taiwan’s industry that China’s military threat to the island is mostly theater.

Although some Taiwanese politicians still dream of permanent independence, Taiwan’s world-beating entrepreneurs have long since laid their bets on links to the mainland. Two thirds of Taiwanese companies, some 10,000, have made significant investments in China over the last five years, totaling some $200 billion. Three quarters of a million Taiwanese reside in China for more than 180 days a year.

With Taiwan, greater China is the world’s leading actual manufacturer and assembler of microchips, computers and network equipment on which the Internet subsists. Virtually all U.S. advanced electronics, as eminent chemist Arthur Robinson reported last month in his newsletter Access to Energy, are dependent on rare earth elements used to enhance the performance of microchips and held in a near global monopoly by the Chinese firm Baotou Steel Rare-Earth Hi-Tech Company in Mongolia.

The U.S. is as dependent on China for its economic and military health and economic growth as China is dependent on the U.S. for its key markets, reserve finance, and global capitalist trading regime.

It is self-destructive folly to sacrifice this core synergy at the heart of global capitalism in order to gain concessions on global warming, dollar weakening, or Internet politics.

How many enemies do we need?

Mr. Gilder is a founder of the Discovery Institute and author of “The Israel Test” (Richard Vigilante Books, 2009).

George Gilder

Senior Fellow and Co-Founder of Discovery Institute
George Gilder is Chairman of Gilder Publishing LLC, located in Great Barrington, Massachusetts. A co-founder of Discovery Institute, Mr. Gilder is a Senior Fellow of the Center on Wealth & Poverty, and also directs Discovery's Technology and Democracy Project. His latest book, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy (2018), Gilder waves goodbye to today's Internet.  In a rocketing journey into the very near-future, he argues that Silicon Valley, long dominated by a few giants, faces a “great unbundling,” which will disperse computer power and commerce and transform the economy and the Internet.