Our mutual benefit

Tom Plate writes against fears of a Chinese-championed global Marshall Plan

By Tom Plate
Pacific Perspectives Columnist

Thursday, May 14, 2009

Los Angeles --- It’s a mistake for America to look China in the eye and only see an enemy. Sure, to characterize that two-way relationship as a blissful friendship -- now or perhaps ever -- would be to transform a willing suspension of disbelief into absurdity.

But deep mutual interests can bring two otherwise antagonistic national powers close together in ways that make professions of sincere friendship unnecessary and even redundant. Especially among nation-states, an alliance of mutual interests is generally the best possible bedrock for a relationship. Mutual needs that persist for the foreseeable future trump hot love that lasts only a fortnight.

Still, I hear the wise admonition of one of our best English diarists yelling at me: "There are no true friends in politics," insisted the late Alan Clark, famous British Conservative political figure. "We are all sharks circling, and waiting, for traces of blood to appear in the water."

Right you are, sir! But we are not proposing sophistic amity between Beijing and Washington but, rather, a non-altruistic alliance. The roiling world economic crisis should convince everyone that a worldwide economic system does exist and that, at the moment, it is royally and scarily shaky.

And so in this turbulent atmosphere, elements of the U.S. Congress waltz in to propose economic war on China because of the country's currency "manipulation" (cheap Chinese dollars make their exports cheaper and thus more insidiously salable here, and everywhere); and because of its "excessively" high domestic savings rate (that, it is claimed, contributed mightily to the West's credible bubble).

Congress can do what it wants, and frequently does; but it might as well go ahead and shoot itself in both feet simultaneously if it wants to do this.

Consider reality: China's authorities will not inflate the value of their currency unless and until they judge it in their economic interest to do so. They are not there yet. In the meantime, their exercise of national economic sovereignty has a potential bonus for us and the world: The Chinese economy looks to be emerging from the swamp of deep recession faster than America's. A resurrected Chinese economy would not only be good for the U.S. economy directly, it would be good for its neighbors in Asia. When healthy, its demand for goods and services -- from Japan, Korea and Southeast Asia and, of course, the world at large -- puts a spring in everyone's economic step. Without China back to normal -- or better -- it is hard to imagine a true sanguine global recovery.

Chinese leaders themselves are well aware that a rising tide lifts all boats. Thus, these days, in Chinese circles there's a growing consensus for a global Marshall Plan. This plan would earmark huge developmental sums for troubled economies.

This idea has been put forward with special acuity by Justin Yifu Lin. The former high Chinese official who is one of the country's most famous economists is currently the World Bank's chief economist and senior vice president. He is the first chief economist of the World Bank to hail from a developing country. For 15 years he was professor and founding director of the China Centre for Economic Research (CCER) at Peking University, from which he is now on leave. Of his 16 published books, perhaps his most famous is The China Miracle: Development Strategy and Economic Reform. He has garnered prestigious awards from all over, including offering the 2007-2008 Marshall Lectures at Cambridge University.

Beijing would appear to be pushing hard behind Lin. A recent signed article from the research arm of the all-power State Council of China that endorsed Lin's idea appeared conspicuously in China Daily. This is the English-language daily newspaper that foreigners are most likely to read. It took the view that it was in the self-interest of countries to help lift up the economies of all our global partners and markets. "During the current economic crisis, many capital-strapped developing countries will find it hard to get loans for their infrastructure projects," wrote researcher Ding Yifan. "With its colossal foreign exchange reserves and experienced engineering teams, China is capable of providing aid... which will not only benefit the recipients but create jobs for China."

Friendship, it is being suggested, has nothing whatsoever to do with anything, whereas mutual benefit has everything to do with everything. The United States should jump onto the worldwide Marshall Plan bandwagon, even if has been championed by a former Chinese official -- or perhaps especially because of that.

In any event, it would not be in the United States' economic -- or political and diplomatic -- interest to be left out. The U.S. Congress must begin to understand this. Not everything China proposes is bad for the United States.

The views expressed above are those of the author and are not necessarily those of AsiaMedia or the UCLA Asia Institute.

Date Posted: 5/14/2009