Waking Up to China

We’re underestimating, if not ignoring, the profound impact that the rise of China is having on our lives and how it will only grow.

tThat’s the basic message of Ross Munro, co-author of “The Coming Conflict with China,” and he put the situation into perspective during a presentation at the Business Forum series sponsored by the University of Arkansas at Little Rock.

tThe timing was ideal — on the heels of the controversial U.S. visit by Chinese President Jiang Zemin. I’ll admit to not previously exploring the impact of China on the U.S. and world economies like I should have, but now I know better.

tLet me try to pull together Munro’s briefing on U.S.-China relations.

tHe sees two revolutions under way that are transforming the world: the information revolution, which is developing nicely, and the rise of China, which “this country is not coping with well at all.”

tThe Chinese economy is growing at a 10 percent annual clip and, during the first half of the 21st century, it will become the largest economy on earth. While it continues to be led by a dictatorship under one-party rule, Munro says, the people have enough freedoms that it can no longer be called a classic communist country.

tMany Americans haven’t been able to move past the issue of human rights, and liberal Democrats and right-wing Republicans want that to be the primary focus. Munro stresses that an economy the size of China’s won’t go away, nor can the United States successfully force its social beliefs on another country.

t”It’s great political theater … but there’s little we can do directly to change domestic politics of China,” he says.

tNeither the Clinton Administration nor the Republicans are handling the situation well, Munro says, and they have chosen to pander to the emotion of human rights instead of showing political courage and wisdom to deal with the situation appropriately. Clinton’s engagement policy proposes that “if we’re nice enough to China … then everything will be OK in the long run.”

tWhile we were supposed to be impressed with a few contracts with a handful of elite companies that can sell their wares to China, U.S. firms are still basically shut out from the lucrative Chinese market. While Chinese exports to the United States increased 26 percent through the first six months of 1997, U.S. exports to China haven’t improved since 1995.

t”There’s a new great wall of China,” says Munro, adding that we export more products to Belgium and Australia and that the Chinese trade deficit will reach $53 billion this year.

tFurthermore, Munro contends, U.S. dollars are being used to strengthen China’s superpower status by bailing out Thailand, investing in oil companies and buying state-of-the-art weapons from Russia for offensive warfare.

tA lifelong supporter of free trade and an anti-protectionist, Munro says he’s now come to the conclusion that managed trade with China is the only answer for the United States to help maintain a balance of power. “It’s like leaving the church to come out for managed trade,” he says grudgingly.

tWe can’t contain China. We can’t isolate China. We can’t write off China and disregard its impact on the world.

tNot only is China gaining strength as an economic power, but it also continues to build its might as a military superpower.

t”The military buildup is the most ominous aspect,” Munro says. The goal is not defense of the Chinese homeland but a display of outward power in its longtime quest to dominate Asia.

tMunro’s wakeup call on China is eery and worth remembering.

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tAs expected, an incredibly large net was cast on the alleged scandals involving state contracts and lawyers with strong connections to legislators.

tNote that I chose not to say “alleged legislative scandals.” A speech by potential but unlikely gubernatorial candidate state Sen. Mike Beebe, D-Searcy, stressed in so many words that it’s inappropriate to use a big brush that paints scandal over the entire Arkansas General Assembly. A vast majority of the gang has no interest in profiting from public office and was, like Gov. Mike Huckabee, oblivious to the manner in which child custody contracts would be handled.

tBut raids by state and national law enforcement agencies on at least 11 offices around the state — most with ties to state Sen. Nick Wilson, D-Pocahontas — and subpoenas on others demonstrate the magnitude of this case.

tInvolvement by the U.S. attorney’s office and the FBI is exactly what Wilson feared the most. Not because he thinks anything has been done illegally, but because federal authorities who spend enough time and money on a case will come up with something to justify their efforts. We need look no farther than Independent Counsel Kenneth Starr and Whitewater to see what good lawyers and a lot of money can do to make people miserable and broke.

tMy first reaction to the news of the raids was that an insider canary had begun to sing, using David Hale as a role model for such action to minimize damage. The names of a few scapegoats have been tossed around for weeks now, and they may be running for cover.

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tDuring his speech, Beebe again offered a plea to the governor to call a special legislative session that would address the conflicts that have been brought to light.

tHe continued to argue that this isn’t a partisan issue. Both the Legislature and the governor signed off on what they thought was a good program to help children, he says, and it was the execution of the program that went awry.

tA special session becomes more of a moot point than ever now that the feds have cast their net. Huckabee can sit back and watch a full-scale federal investigation do his political dirty work and contribute to a friendlier makeup of the General Assembly for 1999.

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tManufacturing jobs in Arkansas’ apparel sector continue to take a beating.

tThe number will continue to grow because of pressures from the world economy, and I figure this will become the biggest factor in limiting the state’s job growth over the next couple of years.

tThe latest news came from Levi-Strauss & Co., which will close plants in Harrison and Fayetteville that contribute 675 jobs and $13 million in annual payroll to the economy. Unlike most of the companies closing plants, Levi-Strauss showed some class in their announcement with straightforward information on transitional benefits for employees and those cities.

tBrown Shoe Co., Wolverine Worldwide and others have contributed to the slowdown in manufacturing growth. Fortunately, apparel and textile product employment represents only 1 percent of the state’s nonfarm jobs, and even that number is shrinking.

tWhile we may take a short-term hit, the closing of apparel plants should be good in the long run. They are typically low-paying jobs, and in tight labor markets such as Fayetteville, Jonesboro and Little Rock, workers are needed in other, better-paying areas.