By Eric Vandenbroeck and co-workers 27 Dec. 2006

China and the Thucydides Trap

Most Asia-Pacific Rim observers and scholars appear to agree that China (Zhongguo) represents the key factor as to whether the region continues to evolve in relative peace and prosperity, or plummets into the traditional angst and tensions associated with hegemonic power politics. Former U.S. Secretary of State Henry Kissinger wrote in an article for the Australian, in June 2005, The rise of China, and of Asia, will, over the next decades, bring about a substantial reordering of the international system. The centre of gravity of world affairs is shifting from the Atlantic, where it was lodged for the past three centuries to the Pacific. The most rapidly developing countries are located in Asia, with a growing means to vindicate their perception of the national interest.1

Hence, the hyper-verbosity and voluminous writings related to China's future have shifted into overdrive within America and Asia-Pacific. Thus we will first make some observations before answering the questions concerning the future relevance of China in the twenty-first century: For example, will China become America's geopolitical adversary, strategic competitor, or regional partner in Asia- Pacific? Second, how will the world react to the continuing growth of the Chinese economic juggernaut as the twenty-first century unfolds, and will China's financial prowess be ultimately directed toward global dominance? Third, can China avoid a domestic implosion from significant, if not staggering, challenges, such as unemployment, pollution, corruption, and ever widening wealth disparities? Finally, what will be the comprehensive effect of China's rise to power throughout Asia-Pacific? This p.1 of 3, will address these vital questions and present recent evidence that China is already emerging as a regional and global power. However, its long-term prospects as an emerging superpower and challenger to U.S. global hegemony remain clouded with uncertainty.

The current argument of whether China should be considered a geopolitical adversary, a strategic competitor, or a regional partner concerning the U.S. in Asia-Pacific, during the twenty-first century, will be the focus of debate amongst experts for the next twenty years. Yet what is surprising to many observers of the region is the accelerating speed with which the geopolitical dynamics have begun to change. Yet no one expects, or desires, the United States to withdraw from Asia-Pacific, including China. Nevertheless, the irrefutable swiftness in which the East Asian hemispheric landscape has been altered by recent economic trends, and, perhaps, will be by future military encounters, once again reinforces the historical perspective concerning the unpredictability of human affairs.

Jonathan Spence, noted Yale University historian and eminent China chronicler, puts this debate and its inherent complexities, we believe, in their proper perspective: The prospect of China's rise has become a source of endless speculation and debate. To speak of China's "rise" is to suggest its reemergence. It can also imply a recovery from some kind of slump or period of quietude. But "rise" can also mean that a change is being made at someone else's expense. Must a fall always accompany a rise? If so, then a conflict will occur almost by definition. These are difficult questions made all the more so by the fact that a country as vast and complex as China makes up at least half of the equation.2

David Shambaugh, director of the China Policy Program at the Elliot School of International Affairs at George Washington University, agrees with Professor Spence's overall observation concerning China's current status in Asia. In January 2006, Shambaugh spoke at the Chicago Council on World Affairs. His topic was "The Changing Nature of the Regional Systems in Asia-Pacific."3 Professor Shambaugh emphasized that China represents a complex challenge for the U.S. and the Pacific region. China's recent economic and military growth is a bit disconcerting for its regional neighbors, yet over 70 percent of China's foreign direct investment (FDI) originates in Asia-Pacific.4 As a result, China has emerged as the economic engine for the region's steady growth, and the world's as well. Shambaugh makes a subtle but important point when he analyzes China's current intentions for itself and the region: "China is not attempting to dominate ASEAN (Association of Southeast Asian Nations) or APEC (Asia-Pacific Economic Cooperative), the region's two most important organizations at the present time, but how much longer will China allow itself to be a 'backseat' partner?"5 That is the question that many in the region want answered, but it is an answer some fear with equal trepidation.

Natalia RigoI, an associate editor for the Harvard International Review, believes there is little cause for alarm, right now, for those who fear a U.S.China showdown in the near future.6 Rigol presents a rational and well thought-out argument on the current nature of relations between these two global powers. Hence, I will mention a few of her major observations below that most accurately reflect her analysis concerning the U.S. and China situation. First from a geopolitical standpoint, China, presently, accepts the status quo condition of U.S. hegemonic power in Asia-Pacific. And there is currently no major issue, or primary reason, for China to challenge the U.S. position. Secondly, within the Asia-Pacific region, the Chinese have not directly challenged American leadership, or any of its key alliances.?

However, China has sought to establish itself as a power in Asia and around the world by further integrating itself into the international business community. Merle Goldman, history professor emeritus at Boston University, stated, "China has integrated itself into the world system by becoming a member of such global institutions such as the WTO, IMF and the United Nations. Thus, the economic transformation of China has occurred very fast."8 This aggressive economic behavior can be described as the Chinese version of" dollar diplomacy" that was energetically pursued and imposed by the American government and its business clients upon its quasi-colonial outposts in the Caribbean region, and in Central and South America, beginning in the early decades of the twentieth century. This philosophy remains functional and powerfully served in these regions today. In short, it is focused upon using intimidating economic incentives, and, at critical times, military intervention, to obtain the kind of business agreements desired by powerful American corporations. The U.S. Congress has often played the role of a well-bribed midwife in this unholy process.9

In the case of China, this strategy is once again paying off handsomely. Yet the Chinese are aware and sensitive to the irrefutable fact that not all their regional neighbors are enjoying the near double-digit growth that is transforming the Middle Kingdom. According to recent global trade figures, China now represents over 13 percent of total world trade-second only to the U.S. Therefore, to avoid what Rigol calls "sociopolitical instability" in the region, China has negotiated beneficial economic partnerships with most of them. 10 In short, China's diplomatic efforts to date have been subtle and under the radar in terms of acquiring and projecting influence throughout Asia-Pacific. Nevertheless, almost everyone acknowledges that China and the region's status and stature will change dramatically in the coming years.

Of course, the ultimate outcome in the Asia-Pacific region will greatly depend on the U.S. response to China's economic and military rise in the twenty-first century. If mishandled (i.e., war), the entire economic and security artifice built within the region during the post-WWII period would suffer irreparable harm. This type of regional catastrophe would most certainly stunt the Pacific Basin's development and growth for decades to come. Thus, the omnipresent question of America and China's coexisting in this vitally important area of Asia is not a rhetorical exercise based upon vacuous or mundane academic doublespeak, but rather one of profound international importance. And what results will occur due to the expected stress and strains associated with financial military, and technologically driven change remain speculative at best, and certainly unnerving and unsettling for many in the region. It is a given that the collateral damage from a failed U.S.-China collaborative effort to coexist in Asia-Pacific will be significant and far-reaching throughout the world as well.

Eric Heginbotham and Christopher Twomey believe America is exercising an Asian policy that is poorly designed for the realities confronting the region and the interests of the U.S. in the twenty-first century. They believe U.S. President George W. Bush is currently exercising wile realpolitik philosophy utilized in the late 1800s by German Chancellor Otto von Bismarck. Yet, unfortunately, they also think that this particular policy is ill suited for the challenges and demands confronting the U.S. in Asia, at this point in time. First, this Bismarckian (Le., "realist") approach dilutes America's ability to shape and define Asia's security framework, and, secondly, its implementation will result in increased nationalist sentiments that will trigger regional tensions-leading to unrest and unpredictable results.11

Their antidote to this policy predicament is for the U.S. to create a more balanced and nuanced approach to the region, and not see it as an opportunity to exercise raw power-economic and military-to achieve its goals. Thus, America should support Asia's multilateral institutions, such as ASEAN, APEC, ASEAN Regional Forum, and, perhaps, a formalized version of the Northeast Asian Cooperation Dialogue. This path, in their opinion, would go a long way toward stabilizing the region and enhancing America's voice in regional affairs. Secondly, the U.S. should support the development of democracy and its relevant institutions, but not support "nationalist agitation" because the outcome is almost always unpredictable, and the perceived potential of U.S. intervention could lead to an unwanted war.12 Death and destruction are not the kind of factors that usually lead a nation, or a people, toward democracy.

Perhaps, the implementation of "soft power," as defined by Harvard University government professor Joseph Nye can be much more advantageous and influential for the U.S. in Asia than the use of overwhelming military power to achieve its goals. American culture, consisting of our schools, music, books, movies, and way of life remains a powerful force and extremely influential for hundreds of millions of global citizens seeking a better existence. In short, Professor Nye believes that soft power is a very attractive alternative for individuals and governments who desire to transform their respective societies, and enhance their ability to bring new ideas to challenging problems.13 Therefore, Heginbotham and Twomey believe that Bismarckian philosophy should be left where it originated, in the nineteenth century. America, instead, should seek a more enlightened and constructive approach to a region that will have an enormous effect upon itself and the world in the twenty-first century.14

Finally, the recently updated analysis of China-U.S. relations by the Congressional Research Service uses the word "competition" to describe the present-day relationship between the two major powers in Asia-Pacific. Kerry Dumbaugh, specialist in Asian Affairs within the Congressional Services' Foreign Affairs, Defense and Trade Division, writes that both nations are in "competition for resources, power, and influence around the world."15 Dumbaugh points out that China's relations with its regional neighbors have improved significantly since the mid-1990St Issues such as "territorial disputes, diplomatic deadlocks, and deep ASEAN concerns about China's military ambitions and its regional economic competitiveness" represented a plethora of troubles for the Chinese government within the region.16

However, this sense of foreboding and mistrust of China has receded over the past decade. The Chinese have reached out to the members of ASEAN with the signing of a Free Trade Agreement in 2004. In the same year, the Chinese signed major trade deals purchasing iron ore and energy from Australia (a key U.S. ally). And, in 2005, China initiated a "strategic dialogue" with India (another U.S. ally) concerning terrorism, resource competition, and America's role in Asia.17 Though America's role in Asia continues to consume many Chinese officials, and the definition of U.S.-China relations remains frustratingly elusive, there are scholars and observers of U.S.-China relations who feel both countries need each other to create regional and global stability. Professor Patrick Shan, born and raised in China, who currently teaches Chinese history at Grand Valley State University, stated matter-of-factly that "China and the U.S. will not go to war because they need each other to stabilize the global economy. "18 Professor Shan also mentioned, "I simply do not believe that China will ever attempt a preemptive attack on America. And China has worked very hard during the past decade to improve its relations with its neighbors. "19

Perhaps, the best example of China reaching out to its neighbors, and attempting to be seen as a constructive leader and stabilizing force in the northeastern region of Asia, is their founding, in June 2001, of the Shanghai Cooperation Organization (SCO). The primary focus of the SCO is to establish economic and security agreements with Russia and the Central Asian nations formerly of the Soviet Union. Within this dual-policy framework, there is a consensus to build gas/oil pipelines, initiate rail-link development, and participate in joint military activities. The activities of the SCO have certainly caught the attention of policymakers in the U.S. and Asia. However, no one is interpreting this relatively new organization as a direct threat to America's dominant position in Asia-Pacific.

In short, the anxiety and tensions experienced in the mid-1990s have been replaced, thus far, by a constructively engaged China. However, the Middle Kingdom and its variable actions are being closely monitored by its Asian and Pacific neighbors to ensure that its rise remains within the realm of constructive and nonthreatening (i.e., military) competition for its legitimate place in Asian affairs, and not as a precursor for regional, if not global, dominance. As expected, it is not hard to find informed opinions or voices of alarm in America or Asia-Pacific that interpret China's emergence as a real power in the region as a threatening development-that will prob1b1y lead to some level of military conflict. The most candid of these voices is University of Chicago Professor John Mearsheimer, who states unequivocally, "If China continues its impressive economic growth over the next few decades that the U.S. and China are likely to engage in an intense security competition with considerable potential for war."21 Professor Mearsheimer, a selfdescribed great-power realist, also believes that if China becomes a threatening force in Asia, America's key allies and friends in the region will join the U.S. in containing China's hegemonic intentions.22

However, there are skeptics who believe that the anti-China mentality gripping the Bush administration in 2007 is a by-product of the neoconservative elements within the policymaking structures of the U.S. government. Professor Michael Klare points to the Defense Planning Guidance (DPG) for fiscal years 1994-1999 as the "master blueprint for U.S. dominance in the post-Cold War era."23 Professor Klare, director of the Five College Program in Peace and World Security Studies at Hampshire College, identified three events, in 2005, that reflected a new (manufactured?) hostility toward China: First in February 2005, the announcement came that the U.S.-Japan alliance was to be strengthened even though the U.S. knew that China would react in a hostile manner to this new agenda; second, Secretary of Defense Donald Rumsfeld's speech at a strategic conference held in Singapore, in June 2005, singled out the Chinese and its military buildup as a real threat to stability in East Asia; and third, in July 2005, the Pentagon released a report, The Military Power of the People's Republic of China, that once again focused upon the potential danger of China's military development. Klare writes, "The main thrust of the report is that China is expanding its capacity to fight wars beyond its own territory and that this effort constitutes a dangerous challenge to global order. "24 He continues on to say conservative policymakers in America, since the early 1990s, after the Cold War was acknowledged to have ended due to the complete dissolution of the Soviet Union in December 1991, have sought a complete and total dominance of military affairs throughout the world.25

Amongst our allies in Asia-Pacific, there seems to be a strong disagreement about the nature of the Chinese threat to the region. Two Australian writers and longtime observers of China's development since the 1960s, Gregory Clark and Ross Terrill, perceive China's emergence in Asia, and the world, through different prisms of interpretation. Clark, vice president of Akita International University and a former Australian diplomat, sees the "bogeyman" thesis, once again, being applied to China by its detractors.26 Terrill, an associate researcher at Harvard University's John K. Fairbank Center, interprets China as a country in transition and burdened with indecision by whether to become a fully functional nation-state, or a new Chinese empire. This dual internal struggle has reached a midpoint and China's final determination of its future will have tremendous regional and global ramifications, according to Professor Terrill, the author of The New Chinese Empire.27

Yet Clark believes the current hysteria over China's dramatic economic and military growth is a manifestation of the" China Threat" lobby, which has been constantly in motion since the Korean War, 1950-1953. Every political or military struggle in East Asia is always traced back to some subliminal plot hatched up by the Chinese government. In both Australia and America, the "China threat" crowd is constantly linking China with any, if not all, events in Asia that are considered a threat to the YankAussie interests in the region.28 Clark sees all this nonsense as smoke and mirrors to protect the real interests involved in these contrived moments of frantic Chinese xenophobia-the military-industrial-intelligence complex. This hydra-headed bureaucratic monstrosity needs threats to justify its budgets and expenditures (and activities), and it counts on dubious academics and other commentators in the media to sell the public on this new threat to freedom. Afterwards, Clark states, "when it is all over and the alleged threat has proved to be quite imaginary, the threat merchants move on to find another target. But not before billions have been spent. And millions have died. "29

Professor Terrill, on the other hand, sees a more savvy, ambitious, and dangerous Chinese empire emerging in the twenty-first century. By contrast, the American empire is seen by the author as a tripod of global interests: technology and investment, popular culture, and a nonimperialistic military that intervenes and then leaves. In short, America represents a soft empire in its overt handling of international affairs. However, Terrill believes that the Chinese see themselves, and their new empire, in a very different light. China's leaders perceive themselves as the "guardians of truth. "30 Therefore, any compromises or decisions that the Chinese leadership makes are done with the understanding that these are just tactical decisions. Thus, their decisions do not represent any moral comparability between China and the rest of the world.31 Nevertheless, according to Professor Terrill, the new Chinese empire does indeed represent a real threat to America's global preeminence and its hegemonic system-both of which are based upon its economic, political, and social values:

The new Chinese empire is different. At once more modest and more arrogant, it is an empire of theater and presumption. It is a construct both of domestic repression and of international aspiration. Its arsenal of weapons includes secrecy, deception, and a sense of history that enables it to take a long view of China's interests and ambitions.32Though, critics of the anti-China faction have made solid arguments concerning their dismay at the level of hysteria directed toward China" However, there exists equally persuasive evidence that China is indeed building up its military capabilities at an alarming rate. And this modernization of their military, overall, has caught the attention of their neighbors and the United States. When you look at the raw numbers, the Chinese are indeed putting together a rather formidable force that appears to have the potential to project Chinese power well beyond their shores. In an increasingly transparent world, any nation's military buildup does not go unnoticed especially by America. However, it is the issue of transparency that is most troubling to the U.S. government. Therefore, the lack of clarity on the issue of military expenditures by the Chinese government is emerging as an unsettling issue between the U.S. and China.

This thesis, concerning the potentiality of a China threat and the lack of (complete) information on their overall military spending, are detailed in the Department of Defense's (DoD) annual report to the U.S. Congress from the Office of the Secretary of Defense titled, The Military Power of the People's Republic of China. This wellstructured report contained numerical figures representing China's troop levels, budgetary and expenditure figures, missile capabilities and present military priorities and strengths within the East Asian theatre, and what it will mean for future U.S. military strategists and regional policymakers.33

One of the primary focuses of the report was its analysis of China's capabilities in dealing with Taiwan, and with those nations who might potentially come to the island's defense, if a military conflagration erupted between them. It is not a secret to U.S. regional analysts that the most important regional matter for China is to reassimilate Taiwan into the Chinese nation-state family. This is a red-button issue for the People's Republic of China's (PRe) leadership in Beijing. The DoD's report also provides credible evidence that China's massive remodernization of its military also represents the potential capability of disturbing the power balance, or status quo, within East Asia.34 This disturbing fact has certainly caught the attention of China's neighbors, who are increasingly unsettled about such a development. Here are some of the basic figures presented in the DoD report on China's overall military situation:

                         Ground Troops: 1.6 million Tanks: 6,500

                         Artillery Pieces: 11,000

                         Air Force: 1,500 fighters; 780 bombers

Naval Forces: Destroyers/Frigates: 64; Landing Ships: 43; Submarines: 57 Ballistic Missile Capability: Short Range: 650-730; Medium Range: 29-37; Intermediate Range: 14-18; Intercontinental Range: 20-24 (5,500 km), 20 (8,500 km); Submarine Launched: 20-24

It is these precise figures (and growing) that have unnerved many in the u.s. government and in national governments throughout East Asia. Initially, China responded angrily to the DoD's report and its analysis concerning the threatening situation involving China and Taiwan. In a fit of nationalistic frustration, Zhu Chenghu, a PLA (People's Liberation Army) major general and professor at China's National Defense University, stated that China might have to resort to using nuclear weapons against America, if the U.s. interfered on the behalf of Taiwan during a war with China. This remark certainly caught the attention of the Bush administration and the Pentagon. However, the Beijing government dismissed the remark as an individual making a "personal opinion" about a sensitive matter. Interestingly, General Zhu was not reprimanded publicly for his impolitic and provocative comment.35

Many China-watchers were not surprised by the lack of zeal shown by Beijing to denounce General Zhu's inflammatory remark. Many believe that Zhu's position is widely supported within the upper ranks of the PLA. Therefore, the CCP (Chinese Communist Party) is reluctant to rebuke the general publicly. Jing Huang, a foreign policy analyst at the Brookings Institution, believes, "Mr. Zhu would never have been able to make such comments unless he was backed by powerful forces within the PIA. "36

So what is the future outcome, economically and militarily, between these two Pacific powers-America and China? In an attempt not to be ambiguous or evasive on this serious question, the actual consensus concerning U.S.-China relations remains deeply divided. Robert Kaplan and Richard Haass are perfect examples of the intellectual division existing in American policy circles today. Both are greatly respected and have done excellent work on global issues, especially concerning U.S. security matters. Kaplan, a renowned global analyst, whose writings have focused upon the future condition of various parts of the world, interprets the American position in the Pacific as the defining element that will determine the U.S:s future role as a global power in the twenty-first century.

According to Kaplan, the keys to America's future hegemonic presence in the Pacific will be its capacity to project naval power (re: Alfred T. Mahan's famous 1890 thesis37, and to possess the technological capabilities to match similar advances made by China in its land-based missile systems, and within its naval surface and submarine fleets as well. Kaplan writes, "In the coming decades, China will play an asymmetric back-and-forth game with us in the Pacific, taking advantage not only of its vast coastline but also of its rear base-stretching far back into Central Asia-from which it may eventually be able to lob missiles accurately at moving ships in the Pacific. "38 At the end of his article, Kaplan states that the U.S. Navy must redefine itself to meet the military challenges represented by China, and take special note of the significant geographical factors confronting our regional strategists with concern to China and East Asia.39

Haass, currently the president of the Council on Foreign Affairs, America's most prestigious foreign policy organization, states that both America and China simply cannot let things get out of control in East Asia, because both nations have too much to lose-economically, militarily, and in terms of global influence. However, he also emphatically believes it's futile to attempt to control, or manage, the overall development of any nation-state: The rise and fall of countries (like China) is largely beyond the ability of the United States or any other outsider to control. The performance of states is mostly the result of demographics, culture, natural resources, educational systems, economic policy, political stability, and foreign policy.40

understanding on many significant issues.41 However, Haass asserts with absolute certainty that "a U.S.-China cold war would be costly, dangerous, and distracting, robbing attention and resources from pressing internal and global challenges. Both countries have a stake in avoiding this outcome."42 On that note of rational introspection, I think it is appropriate and proper to end this section of the chapter with a survey that was completed by David Rothkopf, a visiting scholar at the Carnegie Endowment for International Peace and a widely respected national security analyst. In 2005, Rothkopf conducted an extensive survey at the Carnegie Endowment for International Peace on a number of issues, priorities, and topics concerning U.S. foreign policy. Overall, almost 180 individuals participated in answering Rothkopfs multiple questions. We will only focus on a few of the answers obtained by Rothkopf and his team of researchers. These experts were asked twice a two-fold question: The first was which countries and/or entities are most likely to be important allies or friends, or otherwise important to the support of U.S. initiatives over the next five and the next twenty years. The second question was the flip side of the first question. Which countries and/ or entities would most likely be America's potential adversaries, rivals, or challengers to our interests in the world over the next five years and the next twenty years? The answer for all four categories was China.43

It is not an understatement to say that the American foreign policy establishment is quite divided over the proper response to China's rise in global affairs. Therefore, should we be surprised that our inconsistent national policies and positions emanating from the White House and the U.S. Congress toward China are simply a mirrored reflection of the multitude of opinions within the ranks of academia, journalists, think tanks, and other policymakers within the U.S. government? This intellectual scrum, though vibrant and combative, does represent a distressing element involving the construction of American foreign policy. Almost all the "experts" mentioned in this chapter basically agree that the moment of truth is coming relatively soon for America and China. Yet we are not even close to having achieved a consensus concerning the development of a coherent and operational strategy concerning the rise of China, and East Asia, in the twenty first century. Put directly, this lack of a functional, proper, and, perhaps, visionary strategic framework for this vital region of the world is simply not healthy or reassuring for the collective global interests at large.

Napoleon is alleged to have stated, "When China wakes up, it will shake the world."44 This famous and prophetic quote remains shrouded by a degree of doubt concerning its authenticity, but its essential truth has come to pass in the twenty-first century. However, what is not in doubt is the present-day rumblings emanating from China's dynamic and evolving economy. Indeed, the world's focus is shifting irrefutably toward the Asia-Pacific Rim. Specifically, it is the steadily growing Asian economies, with China performing as the region's locomotive that is turning the global economic crankshaft away from a North Atlantic (i.e., America and the European Union) perspective to one now comprising the United States and the East Asian hemisphere. Henceforth, this specific section of the chapter will focus on two primary topics of vital concern: first, an overview of China's current and future economic prowess and the ramifications for America, East Asia, and the world. As China's economic presence looms ever larger amongst the advanced economies, particularly for those workers in the West, how soon will it be before the voices of nationalism bend their respective governments' policies toward greater protectionism? And influence their respective societies to finally distance themselves from the perils of globalization? In truth, most workers see this economic paradigm as the main reason for the massive layoffs, especially within the manufacturing sector, resulting in the physical relocation of friends, and themselves.

Secondly, the potential for conflict in East Asia exists over the issue of retaining access to the natural resources within the global marketplace, especially oil and gas. Specifically, if the advanced economies of the world continue their pace of growth and the volume of natural resources begins to diminish, who gets the resources? When the music stops, who is left without the necessary commodities to ensure economic expansion and prosperity? This is the key question that demands an answer from the major economic powers in the very near future. According to Gilbert Achcar, professor of politics and international relations at the University of Paris-VIII, "China plays a key role in the world capitalist market, and the more this market becomes dependent on the state of the Chinese economy, the more global capitalism will have a stake in the stability of China. "45 In short, China's economic growth has created a mutual need between itself and the outside world. Neither can prosper without the other. It's an international version of a shotgun wedding East and West brought together despite misgivings by both partners. For example, America needs the Chinese to purchase billions of dollars of U.S. Treasury notes to pay for our skyrocketing national deficits (i.e., America's domestic budget and international trade), and China needs access to our domestic market to sell their exports-which in turn keeps the economic engines running in the Middle Kingdom and helps to maintain employment for millions. The West, though, is finding out that this new economic gambit called globalization has a serious downside. In America and Australia, their respective automobile industries are increasingly confronting unrelenting Asian competition, primarily from Japan and South Korea. The production of cars and steel represents middle-class wages and it also provides a certain degree of self-respect for workers in these industries. In short, making automobiles and steel personifies a certain dignity and strength reflected by its owners and workers in their local communities and countries.

This sector of the American economy is under threat, and its painful transition due to international competition is tearing communities apartas witnessed in my adopted home state of Michigan. General Motors (GM), once the kingpin of American auto makers, is now in freefall in terms of its U.S. market share in North America. Conversely, this American corporate icon now possesses the largest market share (11.2 percent)-for a foreign auto maker-in China. It now possesses a workforce of over 15,000 in the "Middle Kingdom." In the meantime, its U.S. market share (26.2 percent) continues to slump, falling another 1.3 percent during 2005. Ironically, though a difficult reality for most GM autoworkers to accept, GM's highly profitable auto plants in China are now paying the bills in its ever-shrinking North American operations and market share.46 It should be noted that, in January 2007, GM publicly announced that it had achieved record car sales in China. Its overall sales in the Chinese market improved 32 percent during 2006. Overall, GM sold 876,747 vehicles in China in 2006.47 Many of them were assembled at GM's production plants that are now situated in China, not Michigan.

Yet GM's surge in profits in China was a distant second place to Ford's own eye-popping 89 percent increase in car sales (155,404) in ~hina for 2006.48 GM and Ford's increased profitability in China has meant the end of the line for thousands of U.S. autoworkers. Both Michigan-based car companies have drastically reduced their hourly and salaried workforces in their North American operations over the past few years. In 2007, no one really knows when the U.S. auto industry will hit rock bottom. However, most industry observers recognize that it will probably experience and suffer the same fate as the American steel industry in the 1980s. In the end, approximately 75 percent of the industry's employment was terminated due to the production of high-quality steel by a much lower-paid workforce, within more efficient steel mills in East Asia, primarily in Japan and South Korea. In short, in 2007, the cold-blooded realities of the modern-day marketplace, and the raw power of globalization, possess an irrefutable omnipresence throughout the automotive industry in America. It appears, for now, only a fraction of the U.S. auto industry will survive and remain profitable and viable during the twenty-first century. Yet this profitable situation for GM in China appears to be a short-term panacea, because Chinese auto makers are now in the process of building cars for their own domestic market, and for the international market as well. The Lifan Group, led by visionary Yin Mingshan, is planning to export cars to Europe and America by 2009. In 2006, the Lifan Group took a bold step in this direction by purchasing one of the world's most sophisticated engine plants in Brazil from the DaimlerChrysler and BMW auto company. They will dismantle it and transport it 8,300 miles to Chongqing in western China. In the end, the Lifan Group wants to produce a competitive sedan with leather seats, dual air bags, and a DVD system for only $9,700.49

America and Europe are not the only targeted markets for these Chinese autos in the near future. Australia is now being seriously considered as a new market for their cars. Of course, the (much) less costly Chinese models will completely undermine the price structure for cars in the Land Down Under. If allowed to penetrate the Australian market with any degree of significance, the Aussie auto companies will almost certainly become noncompetitive and perish from their local communities, because they will almost certainly be forced out of business due to a price war they can't win. Australian Greens Federal Senator Christine Milne stated, "If China obtains total access to Australia's car market, the nation's auto plants will soon be closed. It would be suicidal for the Australian car industry to give China a full-go at its domestic market."50 John Wormald, a senior analyst for Autopolis, a major automotive consultancy firm, confirms Senator Milne's assertion that Australia's car industry would be drastically damaged by unrestricted trade: "The effect of Chinese carmakers entering the Australian market would be dramatic. The effect will be to pull the whole price, structure (for cars) down. Even if the local industry isn't directly competing against Chinese vehicles the effect of their coming will be severe. "51

This same scenario is repeating itself in industry after industry in America, Australia, and the rest of the industrialized world. Growing market shares, trade surpluses, and an ever-expanding Chinese economy is indeed shaking the economic foundation of the world. Therefore, again, not unexpectedly, demands for government intervention on behalf of struggling industries in America are becoming a common occurrence in Washington, DC. Nucor's CEO, Daniel R. DiMicco, in charge of the largest steelmaking facility in America (in Charlotte, North Carolina), is concerned about the future ability of the U.S. to produce competitive steel in a global market being shaped by Chinese industrial policies. DiMicco states that China is exporting steel despite absorbing most of it for domestic use. He claims more steel mills are being built in China, and they are "massively subsidized" by government-supported interest-free loans, an undervalued currency, and generous export tax breaks.52 Thus, according to the embattled Nucor CEO, "if China decides to export significant amounts of steel there will be no such thing as competition."53 The American and Australian auto industries and the U.S. steel industries are concrete examples of the degree of market penetration associated with China's new economic presence in terms of global production and trade.

Already, China has a dominating global production presence in several categories involving labor-intensive goods, such as toys (70 percent), bicycles (60 percent), shoes (50 percent), and luggage (33 percent).54 The Chinese are now making serious and successful global inroads in product production requiring low-tech capabilities, such as microwave ovens (50 percent), television sets and air conditioners (33 percent), and refrigerators (20 percent).55 Oded Shenkar, author of The Chinese Century, writes that as China "moves up the ladder" in terms of product sophistication and technology, unlike Japan and Korea before them, they are not allowing these lower rung economic production systems to be moved (outsourced) to other countries. The profits from these low-level manufacturing sources of production continue to finance China's move toward "knowledge-intensive areas" such as products associated with the information age.56 The primarf reason for China's reluctance to outsource these lower-tech positions is because the Chinese government must maintain stable levels of employment for its 1.3 billion citizens. This challenge is unrelenting for the Communist leadership in Beijing.

The only reasons keeping China from even further domination of the products mentioned above, and gaining an even larger market share in the West, are the agreed upon quotas and tariffs which are insisted upon by the national governments throughout the developed world (i.e., the U.S., Japan, Australia, and the European Union). There is a good reason for these economic protections for America-massive job losses. Scott Robert, a researcher at the Economic Policy Institute in Washington, DC, provided disturbing and frightening evidence concerning the employment ramifications of America's trade policies with China since 1992. Robert's analysis determined that almost 700,000 jobs were lost between 1992 and 1999. And he projects even greater job losses (almost 900,000) for the American economy in the near future, if trade policies and trends remain the same with China. 57 In short, if everything remains the same in terms of trade policies and economic trends between the U.S. and China, the potential job losses for America's economy will be approximately 1.6 million. 58

Though the U.S. economy will gain some jobs during this period of global readjustment and transition, the message remains quite clear and disturbing. Presently, and during the next decade or so, China will represent a monumental threat to those who earn their livings in the manufacturing sector of the American economy. Again, Robert indicates that states in the upper Midwest and the Mid-Atlantic like Michigan, Wisconsin, Minnesota, Ohio, Indiana, Pennsylvania, New Jersey, and New York, have been, and will continue to be, hit hard by the Chinese economic juggernaut. 59 China's voracious appetite for the world's natural resources has grown almost exponentially, thus causing global prices for various commodities (oil gas, iron ore, copper, cement mix, etc.) to rise dramatically as a result. In terms of global distribution, the diminishing volume and/or availability of various resources represents a real danger concerning future global stability. It is a threat with many foreboding dimensions: economic, politicaL social and military. An editorial in the Asian Times declared that China now possesses the fourth largest economy in the world-having catapulted themselves over Great Britain, France, and Italy in 2005. Economist Jim O'Neill at Goldman Sachs, in London, stated about China's immense growth during 200S-without a revised gross domestic product (GDP) completed "China could squeak in ahead of Britain even without a revision. It just goes to show how much it's contributing to the world economy."60

Lester Brown, founder of World Watch Institute in 1974, and currently president of the Earth Policy Institute, wrote, in spring 2005, "Although the United States has long consumed the lion's share of the world's resources, this situation is changing fast as the Chinese economy surges ahead, overtaking the U.S. in the consumption of one resource after another."61 Brown points to China's importation of grain, meat, coal, and steel as examples of the Middle Kingdom surpassing American levels of consumption-except for oi1.62 However, in his latest book, Plan B 2.0, Brown states unequivocally, that "the inevitable conclusion to be drawn from these projections (concerning China's future resource needs) is that there are not enough resources for China to reach U.S. consumption lev~ls."63 China, from the standpoint of consuming the earth's resources, is increasingly interpreted by its neighbors and global competitors as a threatening element to their own survival in the twenty-first century.

Though we have focused primarily on the effects upon the American economy, the same scenario is playing out in national economies around the world. Therefore, the question that is increasingly asked amongst the developed world, developing nations, and even amongst Third World countries is, How does a nation maintain its competitiveness against an economic Goliath who possesses an immense workforce and an extremely low-wage economy? Will Hutton, the former editor of the London Observer and economic editor of the Guardian, utilizes within his book, The Writing on the Wall, the research of Suzanne Berger at MIT, and her team of researchers, who interviewed 500 companies in America, Europe, and Asia. Their collective efforts produced an irrefutable conclusion concerning the variables of globalization, and that was "wage costs are not the be-all and end-all of economics." 64

However, Berger's own book, How We Compete, indicates that a Chinese worker earns only 4 percent of the wage of an American worker, though she quickly points out that the Chinese worker is only 4 percent as productive as an American worker.65 Hutton, presently the chief executive of the Work Foundation, again, uses Berger's work to provide evidence, and dilute the ever-growing myth, that not all the low-skilled and low-paying jobs will disappear from Western economies and Japan. Berger's research showed that companies often found it necessary, physically and culturally, to have production facilities close to their respective markets. 66

Nevertheless, the recent outsourcing of millions of jobs from the U.S., and from other developed economies in the world, has accelerated without question. Indeed, it certainly appears that hiring Chinese workers, at a fraction of the labor costs encountered in developed economies, has proven extremely tempting and profitable for hydra-headed multinationals. Presently, the much-feared Chinese "economic tsunami" appears to be on the verge of permanently altering, if not reshaping, the global marketplace due to its sheer size and breath of existence-both of which are growing on a daily basis. Though there is concern over China's staggering economic presence and potential it has not yet evolved into an irrational panic within the global community. Why?

Well it is becoming increasingly evident to many keen observers of domestic China that there are several serious challenges within the Middle Kingdom. These problems are not just mere speculation, but are, in fact, fundamental issues that could quite possibly derail Asia's present-day financial juggernaut. At present, these complex and multiple dilemmas are very threatening to the long-term leadership of the Chinese Communist Party in Beijing. We will only address a few of these primary concerns.

First, there is a growing cacophony of voices within China's panoply of small towns and in its rural regions as well. They are demanding that they be allowed to participate more directly in the decisions concerning local development. Second, the Chinese people want the eradication of the dispiriting and suffocating corruption that is strangling their local and national politics. Third, the Beijing government must confront the gross and ever widening economic inequities in China-especially within the central and western provinces of China. There is strong evidence that the increasing amount of civil unrest in the interior regions of China is linked to peasants' demanding that more of China's resources be spent on their immediate needs-education, roads, sanitation, housing, clean water, more access to commercial goods, etc. They know the cities on the east coast are flourishing, and now they want their share of the nation's prosperity.

Finally; there is an elevating recognition, within the national leadership, to drastically diminish the levels of pollution in the industrial areas and rural regions throughout China. This condition is beginning to hurt productivity and the quality of life in many parts of the country. This particular issue could very well be the ticking time bomb that could explode and exacerbate all the issues previously mention in this paragraph, and ignite a full blown social revolt inside the Middle Kingdom. A plethora of issues-the economy, the environment, corruption, and the growing gap between the rich and the poor-represent the root causes for the dramatic rise in civil unrest throughout China. James Fallows, an Atlantic Monthly national correspondent, wrote in the December 2006 issue about what he learned during his visit to Shanghai, that "a nearly unbelievable 87,000 'public order disturbances' took place in China last year, according to China's own Public Security Ministry, up from an already alarming 58,000 in 2003."67 With these problems bearing down on China, Fallows asks the question that many analysts are asking themselves with concern to China's future: "Can China continue to adapt?"68

In China, even within provinces that are experiencing robust economic prosperity, like Guangdong, the local citizenry is demanding a larger voice on all issues involving their respective villages and towns, especially issues concerning their economic development. Esther Pan, a staff writer on Asian issues at the Council on Foreign Relations (CFR), commented, "Local citizens feel they don't have enough of a say in how their area is changing, they see local officials and their relatives getting rich from bribes and stolen funds, and they are angry and frustrated, experts llay."69 Ms. Pan, who has written on Asian affairs at the CFR since 2003, notes that local groups often look to the national Communist Party to eliminate corruption but even their efforts fall short of expectations: "It (Chinese Communist Party) wants to root it (corruption) out, but it's so systemic at the local administration level there's little party leaders can do from Beijing ... "70 This growing frustration at the grassroots level, particularly in China's small towns and rural communities, is putting tremendous pressure upon the national government to accept and implement new legal reforms. There are also constant demands for an expanded role for the local courts, because the outcry for fairness and justice is threatening the social stability of China-which of course threatens its future economic growth. Professor Jerome Cohen, at the NYU School of Law, states, "The Chinese government is plainly facing a domestic crisis of confidence caused by the failure of its institutions to deal adequately with a rising tide of public grievances relating to environmental pollution, real estate manipulation, unauthorized local financial demands, corruption, discrimination and other official abuses."71

Professor Cohen, a renowned expert on the Chinese legal system, believes that the movement toward achieving legal reforms will not be deterred by corrupt elements, or officials, within Chinese society: " ... We can expect robust law reform efforts to continue in China, even in the field of criminal justice. The PRC (People's Republic of China) is still considering whether or not to ratify the International Covenant on Civil and Political Rights (ICCPR), which it signed in 1998."72 There is little doubt that these grassroots efforts demanding the eradication of local corruption will, as a consequence, strengthen the overall future development of China during the twenty-first century. The question of whether Beijing is willing to enforce its will-anticorruption laws-upon corrupt local officials throughout China remains unanswered. The widening income gap, between individuals and families, and between those who live on the east coast and those who live in the cities, towns, and villages in the interior of the country, is growing and causing class-based stress throughout China. Though political free speech and access to multiple forms of information may be quite limited in the Middle Kingdom, nevertheless, the people know that their comrades on the east coast, particularly in the cities-Hong Kong, Shanghai, and Beijing-have it a lot better than they. Will Hutton provides startling statistics with an example that shows the huge disparities between Shanghai-per capita income exceeding $15,000-and the province of Guizhou in the rural west per capita income of only $1,247.73 It is this condition of massive income inequities existing in China which represents a real danger for the future stability of China.

An article in the Wall Street Journal chronicled the life of one Chinese laborer, Wei Zhongwen, who left rural China, and his family, to find work in Beijing. He succeeded in landing a construction job, like 2 million other labor migrants living in Beijing, which enabled him to send 80 percent of his monthly pay ($300) to his family. They live on a family farm in Yushu County, which lies within the northeastern part of Jilin Province. His family left behind, within the interior region of China, is classified as a "3861 army." This rather opaque governmental term indicates that women and children are receiving funding from an absent husband. Wei works fifteenhour days-seven days per week-and is often exhausted from the endless demands from corrupt bosses who often don't pay the workers the money owed them. Plus, construction work in China is the second most dangerous occupation-right behind coal mining. In 2005, it was reported to the national government that 2,607 fatalities occurred on construction sites.74

Nevertheless, despite the loneliness and the multitude of occupational hazards within the construction industry, Wei's earnings have paid for a new five-room home for his extended family, a twenty-one-inch color television set, and his daughter's secondary education.75 Wei's story represents just a glimpse of the daily ordeals, personal pain, and the undeniable economic gains experienced by millions of migrants who have drifted into China's large cities seeking higher earnings and a better way of life for their families.

Hence, Chinese laborers want, and are receiving, a larger portion of the prosperity that has resulted from the current economic expansion and enrichment within China. Conn Hallinan, a foreign policy analyst for Foreign Policy in Focus and a lecturer in journalism at the University of Santa Cruz, however, discovered a quote from a Chinese newspaper, Xinhua News, stating, "The income gap, which has exceeded reasonable limits, exhibits a further widening trend. If it continues this way for a long time, the phenomenon may give rise to various sorts of social instability. "76 Hallinan notes that this potential for "instability" is already occurring and is growing in frequency throughout China, particularly in inland communities who feel they have been forgotten by the Beijing government. In 2004, there were at least 74,000 "instabilities" involving almost 4 million people, and petitions to adjudicate grievances reached an all-time high in 2005. In April 2006, the issue of income disparity was the chief topic at the National People's Congress meeting.??

Australian scholar Jane Golley contributed a chapter to the book China 2003: New Engine for Growth, which explained how the southeastern part of China progressed in nineteenth century due to Western foreign trade, thus resulting in the central and western parts of China lagging behind in terms of economic development. However, this legacy lives on today despite promises by Mao Zedong, after the successful Communist Revolution in 1949, to rectifY this financial imbalance. It never happened.78 Professor Golley, who teaches economics at Australian National University, warned against simplistic statements about the nature of wealth in China: It's important to recognize that there is more than one China. You can see the economic inequalities in Beijing. You can see it if you get on the train and travel for an hour, or travel for 50 hours. You'll see every range from wealth to poverty that you can imagine.79 Golley also points out that the standard of living has risen for everyone in the last twenty years. In 2008, the Summer Olympics will be held in Beijing and the world will see how much China has developed economically, but she believes that pollution represents the nation's next biggest hurdle.8oThe last issue to be addressed in this section will indeed be the pollution crisis gripping China. In its rush to catch up to the major Western industrial powers, the Chinese, to put it simply, cut environmental comers to take the nation to the next level in terms of economic development. Of course, there are always consequences for overly ambitious behavior of any kind, and China's obsession for economic development is very similar to America's push toward urbanization and industrialization in the late nineteenth century. So far, there has been no Chinese equivalent of Theodore Roosevelt to appear on the political scene to recognize and take initial steps toward reforming development policies and preserving large sectors of China for posterity. Nevertheless, the pollution is beginning to take its toll on China and the people, and it might soon affect the phenomenal economic growth that the country has experienced for the last twenty-five years.

In July 2005, residents of Xinchang village, located about 180 miles south of Shanghai, attacked a local pharmaceutical plant because it was believed that the facility was an environmental hazard to the local community. As mentioned before in this chapter, the local citizens became enraged by what they perceived as indifference from the local governmental officials towards a serious grievance filed against this particular factory. The riot that ensued, involving perhaps as many as 15,000 people, took place in the Zhejiang Province-which is one of China's wealthier regions. The plant in question had been there for over ten years, but the local populace was convinced that its presence was detrimental to their health. The government stepped in to calm the local community by suspending the plant's activities. However, the local citizens demanded its permanent closure, because wheat production had dropped significantly. The local farmers were also convinced that the plant and its wastes were the root causes for the shortfall in their wheat production, and that the food grown there was no longer healthy for consumption.81

A few months later, in October 2005, the top Chinese environmental official Zhang Lijun, startled his superiors, and China observelli, by proclaiming that "pollution levels here could more than quadruple within 15 years if the country does not curb its rapid growth in energy consumption and automobile use. "82 Jim Yardley, a reporter for the New York Times, writes, "China, it seems, has reached a tipping point familiar to many developed countries, including the United States, that have raced headlong after economic development only to look up suddenly and see the environmental carnage."83 Yardley goes on to say that China, unfortunately, due to its size and degree of pollution, represents a much greater danger to itself and the world.84 Robert Watson, a senior scientist with the Natural Resources Defense Council believed that Mr. Zhang's prognosis concerning future levels of China's pollution was a bit on the high side. Yet Watson agreed with Zhang's basic assertion that the country's pollution levels are certainly going to spike upwards in the near future: "It could double or triple without too much trouble. And that's a scary thought, given how bad things are right now."85 The one environmental issue that has captured headlines throughout China and the world is the critical problem of water pollution. In December 2005, the provincial capital, Harbin, located in the territory formerly known as Manchuria, experienced a massive spillage of benzene into the Songhua River. This accident triggered a civic emergency and forced local officials to shut off all water supplies to approximately 3.8 million citizens. In the end, this crisis caught the attention of the international media despite efforts by the national government to hide this incident from outside scrutiny. The media coverage caused an unintended backlash throughout China. The people demanded to know how dangerous their environmental problems actually were within the country. And it became apparent to the Chinese citizenry, and outside observers, that these episodes of serious water violations were occurring more often than they had realized.86 Elizabeth C. Economy, author of The River Runs Black, writes that "these things happen all the time, all over the place, probably on a weekly basis."87

A Chinese governmental report stated that 70 percent of the nation's lakes and waterways are polluted. A vice minister for water resources, within the Chinese national government, believes approximately 360 million rural citizens are without safe drinking water. And, now large findings of cancer are found in villages and towns along China's waterways.88 In January 2006, this growing environmental crisis struck two more major Chinese cities. In the industrial city of Zhuzhou, in the Hunan Province, workers cleaning up a wastewater ditch mistakenly diverted the sewage water into the Xiangjiang River. The substance dumped in the river was cadmium, a metal used in manufacturing and linked to neurological disorders and cancer. In December 2005, this same substance was spilt into the Beijiang River in Guangdong Province, which threatened the health of millions inside the region. In Hunan, Jiang Yimin, director of the provincial Environmental Protection Bureau, stated that the sixty-mile slick of cadmium has already passed the provincial capital, Changsha, without corrupting local water supplies.89 The other major spill, in January 2006, occurred in the Henan Province due to diesel fuel being dumped in the Yellow River. This fuel slick reached neighboring Shandong Province and forced officials, even in the provincial capital, Jinan, to deactivate sixty-three pumping stations from extracting water from the river.90 Though the Chinese national government talks about cleaning up the rivers, the eventual costs will be astronomical. Professor Economy points out that a 2004 Chinese governmental study discovered that half of the nation's sewage treatment facilities, built during China's last five-year economic plan, are not functioning due to high operational costs.91

Thus, tragically, in many cases, the facilities that are presently available in many areas to clean up the pollution in China's waterways are not being used, because the overarching priority is to keep the economy functioning and growing. Hence, China is stealing from Peter (China's environment) to pay Paul (economic growth). Obviously, this convoluted thinking will not prevail in the future. Though, to be fair, China is making some adjustments due to environmental realities. In 2006, a governmental report recommended that only four of the proposed thirteen dams should be constructed on the Nu River in southwestern China. Despite the belief that the original Nu River plan would produce more electricity than the controversial Three Gorges Dam, near completion, the environmental fallout and the massive human displacement were causing a storm of domestic and international protests. What the government report actually said remains a state secret.92

It is this lack of government transparency (due to corruption and secrecy) by the Chinese central government, in Beijing, that accentuates the overall mistrust and suspicions shared by millions of China's citizens, particularly rural dwellers, toward its central government. And, along with the significant corruption present at the local level, it is not hard to understand why there is a lack of faith in the nation's decision-making processes. This cynicism permeates all issues within Chinese society-employment, health care, education, income equity, standard-of-living issues, etc. As in any capitalist society-even in Communist China-the questions concerning who gets what from the system, and who does the sacrificing to reach these arbitrary national goals, are becoming a growing concern for millions of Chinese. John Gittings, a British journalist, has witnessed China's evolvement since the Cultural Revolution in the late 1960s. He recognizes that past governments had a tendency to evade tough decisions and their responsibilities under the guise of nationalism or a perceived threat to party rule and sees the new generation of leaders in China in a much more positive light. He writes that they are now "more aware of the ne~d to bridge social divisions, to tackle environmental blight, to tackle bureaucratic obscurantism and encourage more open communication."93

Gittings believes that the main responsibility of the present generation of leaders is to keep moving the country steadily forward. He sees the main threats to China's future to be the "deteriorating environment" and the "uncertainties of the world trade system on which the health of the Chinese economy increasingly depends. "94

What is China to America? What is China to the Asia-Pacific Rim? In truth, the answers to these questions are clear and unclear, simultaneously. The range of opinions within the region represents a vast spectrum of interpretations. Though, as expected, the main arguments are being simplistically divided into two camps: first, those who see China's emergence in Asia as a threat to U.S. leadership, and secondly, those who interpret China's recent rise as nonthreatening-for now. The one thing they all agree upon is that China is changing the dynamics of the region, and the American response to this transition holds the key to the region's future.

An equally important question emerges: Will the Asia-Pacific region remain a shining model for those identified as the Third World and developing nations, in terms of future economic prosperity? Many of these nations are slowly but steadily integrating themselves within the global system, which consists of capital, commerce, education, information, labor, and technology. Even repressive governments, such as China, Vietnam, North Korea, and Burma, are realizing that their long-term economic futures and political viability are increasingly tied to this emerging regional and global economic model.

Thus, this section will focus on three thematic questions concerning Asia Pacific and the twenty-first century: First, how will America respond to China's rise in Asia-Pacific? Some perceive the China challenge as the defining determinant for the U.S. position in the Pacific region during the twenty-first century. Secondly, how are America's key allies-Australia, Japan, and South Korea-adjusting to China's new economic prowess and military influence in the region? And, finally, can America maintain the fundamental framework that has created and ensured unity and understanding, in terms of collective security, between itself and its key regional allies since 1950?

To answer the first thematic question, I believe America will respond to China's rise with policies and a strategy consisting of passive/aggressive characteristics. This is a typical response by a hegemonic power (America, in this case) that is internally threatened but does not want a specifIc individual, or nation (China, case in point), to think they are vulnerable due to their emergence as a global power. In short, the U.S. is still figuring out what to do about this evolving economic and military powerhouse in East Asia.

The Chinese, of course, are deciding (with great caution) how they can coexist with an established hegemonic power who observes their emergence with a noticeable degree of anxiety, and, perhaps, even fear. Without question, the future of China-U.S. relations remains speculative, and it also represents the unknown variable concerning Asia-Pacific's future status. Nevertheless, to say that war is eminent between these two powerful nations is extremely premature. Yet it is equally foolish to ignore the tensions existing between them. Why? Because, their respective agendas and vital interests within the region are very similar and yet increasingly conflicting within a relatively small geographical arena.

In the last five years, America and China have taken turns assisting and criticizing each other on a number of issues confronting stance, the North Korean situation is a perfect example where both sides have had to compromise to find a workable solution. Since 2001, the U.S. has been distracted by the war on terror in Afghanistan and Iraq. Both wars have absorbed enormous amounts of American financial and human resources. Not unexpectedly, when the North Korean leader, Kim Jong-il, announced, in 2005, that his country was reinstituting its nuclear weapons program, the Bush administration reluctantly looked to China for diplomatic assistance with this dangerous regime. In truth, the U.S. is stretched dangerously thin, diplomatically and militarily, particularly since its ill founded invasion of Iraq. And the Bush administration has acknowledged that China has maintained a strong relationship with North Korea since the end of WWII.

Of course, the neoconservatives within the Bush White House intensely dislike this admission of diplomatic inadequacy which exposes the inherent weaknesses within their overall plan toward achieving global dominance. Nevertheless, the U.S. government urgently asked and received assistance from President Hu }intao, and the Chinese Communist government, when North Korea stunned Asia and America with its first ever nuclear test in October 2006. As a result, after direct Chinese intervention, the North Korean leader, Kim Jong-il, agreed to return to the six-party talks involving China, North and South Korea, Japan, the U.S., and Russia.95 It is important to understand that China's assertive diplomatic actions towards North Korea are not due to an ideological kinship. In reality, China confronts an irrefutable truth that they have huge financial interests at stake. If Northeast Asia is engulfed by a regional war, those 9-10 percent annual economic growth figures enjoyed by China for the last twenty-five years will become a sweet memory for President Hu's government. And such a 'far's collateral damage may include the termination of the Chinese Communist Party's leadership in China as well. Nevertheless, China is not permitting American hegemonic unilateralism to be the only game, in terms of future economic and energy policies, in the region. China, as mentioned earlier in the book, created the Shanghai Cooperation Organization (SCO), and was a strong supporter of the East Asian Summit (EAS) that was convened for the first time in December 2005. In both cases, it is correct to perceive these two developments as future harbingers toward challenging American economic dominance in Asia Pacific. China is letting the U.S. know, on no uncertain terms, that the economic future of the region will not be predominately designed and directed toward fulfilling U.S. interests. Many nations (and allies) want a larger voice in determining the region's economic and geopolitical future. In terms of not an attractive alternative for many countries in the region, in terms of political freedoms, electoral democracy, and the ability to dissent against unpopular policies. However, their form of parochial nationalism is quite infectious and it represents a real threat to America's overall support in the region-if the U.S. ignores calls for greater participation in regional matters.

Finally, the Americans and Chinese need each other much more than their respective publics realize or understand. Simply stated, America depends on China buying U.S. Treasury notes every day to pay for our overindulgent capitalistic lifestyle. Laura Tyson, a former economic advisor on President Bill Clinton's Council of Economic Advisors, once commented rather poignantly, "America spends, Asia lends."96 America's elected officials don't have the political nerve, or the intellectual integrity, to inform their constituents that the nation's national debt is now approaching $9 trillion. In short, the national economy is not producing enough wealth to pay for all the things that Americans believe they are entitled to in life. As a consequence, the Chinese government, in recent years, has been strongly persuaded by the American government to purchase billions of dollars of U.S. Treasury notes to finance America's increasingly obese society, its grotesque debt from mindless consumerism, and the out-of-control spending by the U.S. government itself.

Conversely, China cannot force the U.S. to change its domestic spending habits because much of the debt is due to buying cheap Chinese goods at stores, such as Wal-Mart, K-Mart, Meijers, etc. China's mind-boggling economic progression over the last twenty years, and relative social stability, would evaporate overnight if the U.S. market plunged into financial chaos. Both nations would wake up to high unemployment and social upheaval. In an almost Shakespearean sense, America and China, like two scorpions trapped within a bottle, each possesses the capacity to destroy the other financially. Thus, it is in the interest of both countries to maintain this financial charade. War, whether by financial fiat, or by military confrontation, is to be avoided at all costs. There are several critical issues, such as Taiwan's future sovereignty, North Korea's nuclear missile program, oil and gas ownership within the Spratly Islands in the South China Sea, and Japan's future military role in East Asia, which are extremely sensitive for America and China. They occasionally flare up in the course of doing regional business, but, so far, have been resolved quietly and efficiently. A U.S.-China war of any kind will accomplish absolutely nothing in terms of achieving common economic and geopolitical objectives within the region-for both countries.

To put a finer point on this volatile situation, the U.S. and China are increasingly seen by most citizens in the region as the dual caretakers of it for the twenty-first century. This acknowledged reality is also why many will be on edge during the coming years and decades. Can this partnership produce the type of peace and prosperity desired by the people and nations within the Asia-Pacific region? America, being the only superpower at this time, carries the brunt of the responsibility for creating a constructive and productive relationship with China. Rest assured, the people in this region are watching intensely the actions of both very carefully. The second thematic question concerning how America's key allies will react to the growing economic and military presence of China in Asia Pacific is already taking shape. I visited South Korea (2005), Australia (2006), China, South Korea (again), and Japan (2007) within the last three years. Therefore, I will answer this particular question by providing an overview of each nation relating to their current, and probable, relations with America and China. As expected, I cautiously proceed upon the unpredictable terra firma known as the Asia-Pacific Rim-without fear or favor-and I present a few of my own impressions and thoughts about America's key allies: Australia, South Korea, and Japan (and China).

In the case of Australia, the future challenges confronting this remarkable nation, and a people who are experiencing enormous change due to its relations with Asia- Pacific. We can't get the impression out of my mind of Australia being so small and vulnerable. It is true that their overall territorial sovereignty is huge-essentially equal to the U.S., but its miniscule population (20 million-'115 of the U.S.) is dangerously small, in terms of national defense. Even if Australia acquired top-shelf technological military weaponry, their tiny military forces (52,000 in total) are basically equal to the size of the New York City Police Department. In truth, it would be no match for a massive invasion force from one of its Asian neighbors. Australia, in truth, lives precariously on the southern cusp of the East Asian hemisphere. Its national defense is tied to a nation (America) that is dangerously in debt ($9 trillion) and overextended militarily (Afghanistan and Iraq). And its current and future economic prosperity is tied to a Communist nation-China. Yet we kept hearing from academics, politicians, writers, and regional observers that everything is fine and that the future will continue to be bright and prosperous.

Yet the tone, or lilt, in all their voices had a shred of shrillness, in their modulation, reflecting a degree of doubt within their statements of hopefulness. In short, they appeared to be determined to convince themselves, about the future of Australia. Yet despite their increased wealth and influence regionally and globally, there was a sense that this situation was fraught with danger. China's influence in Australian domestic and foreign affairs was acknowledged by all, but everyone also reiterated that Australia could maintain its balanced diplomacy between America and China. Like America, Australia's economic future is increasingly tied to China's own expansion. The unsettling truth for Australia, though they consider themselves a middle power, is that they are simply too small to survive as a neutral entity. The wake that would result from a U.S.-China confrontation would sweep over Australia, and Asia-Pacific, causing serious collateral damage throughout the entire region. Many analysts that I spoke to made it quite clear-Australia wants peace and stability. It is a relatively healthy country, but, without a doubt, a war between major powers in the region would certainly shake the country to its very foundation.

South Korea is, of course, in a very different situation. Though, like Australia, it greatly depends upon America and China for its national security and economic prosperity, respectively. However, it is these same two countries who are delaying the eventual unification of the Korean peninsula. At least this was the perception communicated at the fifth anniversary of the North-South Summit that took place, in June 2005, at the Shilla Hotel in Seoul, South Korea. In June 2000, South Korean President Kim Dae-jung and North Korean leader Kim Jong-il met at Pyongyang International Airport, shook hands, smiled before the world media, and, more importantly, for the first time since the end of the Korean War (1953) brought hope to this troubled peninsula.

We thought South Korea, in 2005, had a noticeably different nationalistic feel to it. The people and their society appeared confident and much more willing to assert themselves in their own lives, and in their relations with other countries. This was quite evident to me at the internationally attended conference commemorating the historic meeting between the North and the South. Again, there is no doubt in my mind that the Korean peninsula will unify-we think within the next ten years. However, we believe that the countries surrounding the Korean peninsula are less than enthusiastic about the eventuality of such a reconciliation taking place between these two Cold War adversaries. And I also believe that most Koreans understand that their primary neighbors, China and Japan, feel this way. Therefore, future progress toward national consolidation will probably be a slow and sluggish process. Why? First, Japan is fearful of having a strong and unified Korea as its neighbor because their recent collective history is one of Japanese occupation, repression, and violence toward the Koreans since the late nineteenth century. Unlike America, history is not considered unimportant and inconsequential to Koreans. They are proud of their recent accomplishments as a society meaning their newfound economic and military strength. And Koreans see not China, but Japan as their greatest threat-geopolitically. All you have to do is watch a sporting event between these two nations, even on television, and the hair on your arms will stiffen from the intense kinetic energy produced by the fans of these two nations.

Unfortunately, Korean-Japanese relations are a long way from achieving a high level of confidence and trust on both sides. Plus, it is important to understand that Japan has never looked across the Tsushima Strait (120 miles) and witnessed a strong Korea. This fact, alone, has had a sobering effect upon the Japanese leadership. Finally, from a geopolitical standpoint, Japan is currently confronted with the dual reality of a strong (South) Korea and China, simultaneously. This situation has never happily led in the region's prior history. Nevertheless, these historical phenomena must be recognized and respected by the Japanese, or regional relations could quickly deteriorate into a Cold War-type of existence in Northeast Asia.

Second, China is concerned about a unified Korea for other reasons. First, the Chinese Communists are worried about the potential of having a strong and unified Korea with Western values, a modern military, and an established democracy on its northern border. This does not bode well for the Beijing leadership, which is trying desperately to keep the Communist system of government in power, despite an annually growing number of public disturbances throughout the country. The Middle Kingdom, historically, has looked upon the "Hermit Kingdom" as an inferior and subservient entity.

However, in 2006, South Korea is much wealthier and more advanced technologically than China. And, if you combined both militaries on the Korean peninsula, there would be approximately 1.6 million in uniform. This is essentially equal to China's ground forces. If you add in the advanced weaponry that the North and South both possess, then you can see why China is a bit nervous about allowing, or promoting, Korean unity. Though North Korea is recognized internationally as being underdeveloped economically, South Korea's economy is ranked eleventh in the world. And South Korea, considered one of Asia's economic tigers-along with Singapore and Taiwan-and North Korea have both stated publicly that they would be willing to accept the presence of U.S. military bases upon the peninsula even after unification. Why?

Well, simply put, both Korean nations are wary about China's future intentions in Northeast Asia. With the presence of U.S. troops on the peninsula, this would mitigate, to some degree, China's desire to dominate the Korean peninsula as it did in prior centuries. Presently, despite serious misgivings by many Koreans concerning America's presence on the peninsula, it is still perceived as being much more benign, militarily and politically, than the potential of having a concerted Chinese, or Japanese, influence exerted upon them. You can make a credible argument by stating the balance of-power theory remains a real part of the Korean reality. Yet, in the coming years, perhaps within a decade, I remain certain that the Cold War era will end on the Korean peninsula.

With history as our road map for the twenty-first century, we believe there are individuals with the necessary courage, knowledge, and wisdom, in both America and China, to help their respective countries find new common ground, and to recognize their mutual interests-regionally and globally. This pragmatic, rational, and time-proven methodology has the potential to transform a possible adversarial relationship into a new partnership that could fundamentally transform the Asia-Pacific Rim during the twenty-first century.

 

1. Henry Kissinger, "China Shifts Centre of Gravity," The Australian, 13 June 2005.
2. Jonathan D. Spence, "The Once and Future China," Foreign Policy, January/ February 2005.
3. David Shambaugh lecture, "The Changing Nature of the Regional Systems in
Asia-Pacific," Chicago Council of Foreign Affairs, 26 January 2006.
4.           Ibid.
5.           Ibid.
6.Natalia Rigol, "A Game of Giants: The Future of Sino-U.S. Relations," Harvard International Review, Spring 2005.
7.           Ibid.
8.Merle Goldman lecture at Alma College (Michigan), 16 October 2006; Professor Goldman focused upon China's future and its economic reforms.
9. John Perkins, Confessions of an Economic Hit Man (New York: Plume Book, 2006). John Perkins wrote a fascinating memoir on his business dealings in Central and South America on the behalf of powerful U.S. corporations. This "insider" book stunned even the most jaded U.S. foreign policy critics.
10.           Rigol, "A Game of Giants," 2005.
11.Eric Heginbotham and Christopher P. Twomey, "America's Bismarckian Asia Policy," Current History, September 2005, pp. 243-50.
12.           Ibid.
13.          Joseph S. Nye, Jr., Soft Power: The Means to Succeed in World Politics (New York:
Public Affairs, 2004).
14.           Heginbotham and Twomey, "America's Bismarckian Asian Policy," pp. 243-50.
15.Kerry Dumbaugh, "China-U.S. Relations: Current Issues and Implications for U.S. Policy," CRS Report for Congress, Congressional Research Service, The Library of Congress, 20 January 2006.
16.           Ibid.
17.           Ibid.
18.Interview with Professor Patrick Shan, 20 October 2006, Grand Valley State University.
19.           Ibid.
20.Lionel Beehner, "The Rise of the Shanghai Cooperation Organization," Council on Foreign Relations, 12 June 2006.
21. John Mearsheimer, "The Rise of China Will Not Be Peaceful at All," The Australian, 18 November 2005.
22.           Ibid.
23.           Michael T. Klare, "Revving Up the China Threat," The Nation, 24 October 2005.
24.           Ibid.
25.           Ibid.
26.Gregory Clark, "No Rest for 'China Threat' Lobby," Japan Times, 7 January 2006.
27. Ross Terrill, The New Chinese Empire: And What It Means for thf United States
(Cambridge, MA: Perseus Books Group, 2003), p. 28.
28.           Clark, "No Rest for 'China Threat' Lobby."
29.           Ibid.
30.          Terrill, The New Chinese Empire, p. 26.
31.           Ibid.
32.           Ibid.
33.Office of the Secretary of Defense, "The Military Power of the People's Republic of China," Annual Report to Congress, 2005.
34.           Ibid.
35.Mure Dickie, Kathrin Hille, and Demetri Sevastopulo, "Report Strikes Beijing Nerve at Politically Sensitive Time," Financial Times, 21 July 2005.
36.           Ibid.
37.Alfred Thayer Mahan, The Influence of Sea Power upon History (originally published in 1890). It represents one of the most influential military essays ever written concerning the use of naval power on the global stage. In short, a nation uses its naval power to protect its vital interests throughout the world.
38. Robert D. Kaplan, "How We Would Fight China," The Atlantic Monthly, June 2005, p. 49.
39.           Ibid., p. 64.
40.           Richard N. Haass, "What to Do about China," u.s. News and World
June 2005, p. 52.
41.           Ibid.
42.           Ibid.
43.David Rothkopf, Running the World: The Inside Story of the Natior Council and the Architects of American Power (New York: Public Affai pp.452-53.
44. Bruce Cumings, "The World Shakes China," The National Inter 1996. Cumings uses this famous Napoleon quote in his article, but he tions that he is not sure if the quote is 100 percent accurate. NevertheJ used it in this chapter on China.
45.           Gilbert Achcar, "Assessing China," www.zmag.org, 25 June 2005.
46.Joe Guy Collier, "Growth in China Gives GM a Boost," Detroit 6 January 2006.
47. News Brief, "GM, Ford See Sales in China Jump," The Detroit New! 2007, p. 2C. This was just a small news article tucked away on page 2 0 paper's business section. You got the impression that they didn't want t( their readers finding it.
48.           Ibid.
49.Keith Bradsher, "China Seeking Auto Industry, Piece by Piece," TI Times, 17 February 2006.
50.           Interview with Christine Milne,S June 2006, Hobart, Tasmania
51.Robert Wilson, "China Exports Take Aim at Australia," The AI< March 2006.
52. I found an article by Ameet Sachdev-"Trade, China and Steel"in the Chicago Tribune in August 2005 on the website of Daniel, (www.danieldrezner.com). The article focused upon Nucor CEO Daniel and the problems confronting the u.S. steel industry in the glfbal marl
53.           Ibid.
54.Oded Shenkar, The Chinese Century: The Rising Chinese Economy m on the Global Economy, the Balance of Power, and Your Job (Upper Sadd Wharton School Publishing, 2006), p. 2.
55.           Ibid., p. 3.
56.           Ibid.
57.           Ibid., p. 136.
58.           Ibid.
59.           Ibid., p. 138.
60.Editorial, "China, the World's 4th Largest Economy?" Asia Times ber 2005.
61. Lester R. Brown, "China Is Replacing U.S. as World's Leading New Perspectives Quarterly, Spring 2005.
62.           Ibid.
63.Lester R. Brown, Plan B 2.0: Rescuing a Planet under Stress and a ( Trouble (New York: w.w. Norton & Company, 2006), pp. 10-11.
64. Will Hutton, The Writing on the Wall: Why We Must Embrace Ch ner or Face It as an Enemy (New York: Free Press, 2006), pp. 303-4. I
appropriate to list Suzanne Berger's book since it was the basis of Hutton's argument concerning the myth of the outsourcing of low-wage jobs.
Suzanne Berger, How We Compete: What Companies around the World Are Doing to Make It in Today's Global Economy (New York: Currency, a division of Random House, 2005).
65.           Ibid., p. 304.
66.           Ibid.
67.James Fallows, "Postcards from Tomorrow Square," The Atlantic Monthly, December 2006, p. 110.
68.           Ibid.
69.Esther Pan, "China's Angry Peasants," Council on Foreign Relations, 15 December 2005. Ms. Pan answered a number of questions concerning the issues angering Chinese peasants.
70.           Ibid.
71.           Jerome A. Cohen, "Law in Political Transitions: Lessons from East Asia and the Road Ahead for China," Council on Foreign Relations, 26 July 2005.
72.           Ibid.
73.           Hutton, The Writing on the Wall, p. 30.
74.Mei Fong, "So Much Work, So Little Time," The Wall Street Journal (Weekend Edition), 23-24 December 2006, p. Al and p. A.
75.           Ibid.
76.           Conn Hallinan, "China: A Troubled Dragon," Foreign Policy in Focus, 11 May 2006.
77.           Ibid.
78.           Jane Golley, "Contemplating China," ANU Reporter, Autumn 2006, pp. 7-8.
79.           Ibid.
80.           Ibid.
81.Howard W. French, "Anger in China Rises over Threat to Environment," The New York Times, 19 July 2005.
82. Jim Yardley, "China's Next Big Boom Could Be the Foul Air," The New York Times, 30 October 2005.
83.           Ibid.
84.           Ibid.
85.           Ibid.
86.           Jim Yardley, "China Chemical Spills Spur Plan to Guard Water Supply," The New York Times, 12 January 2006.
87.           Ibid.
88.           Ibid.
89.           Ibid.
90.           Ibid.
91.           Ibid.
92.           Ibid.
93.           John Gittings, The Changing Face of China: From Mao to Market (New York: Oxford University Press, 2005), p. 327.
94.           Ibid., p. 328.
Journalist Andrea Mitchell did a story for NBC news, and an article on the MSNBC website reflected that story, titled, "Report: Kim 'Sorry' about North Korea Nuclear Test," 20 October 2006. The story on the MSNBC website was a collective effort with information provided by Reuters, NBC, MSNBC. and the Associated Press.

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