A Canadian "World View?"

[Edward Campbell]

This column, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is a “world view” by Jeffrey Simpson, a smart, well connected, popular and all pervasive national opinion leader:

http://www.theglobeandmail.com/news/opinions/obama-visits-china-as-a-supplicant/article1365597/

The defining story of our time: Obama visits China as a supplicant
Will the Chinese decide they've lent enough to the U.S. and begin intensifying their diversification strategy?

Jeffrey Simpson

Tuesday, Nov. 17, 2009

In 1972, when Richard Nixon visited Beijing, his country was embroiled in a war in Vietnam, but its principal adversary was the Soviet Union; China was an economic pipsqueak and a military irrelevance. The U.S. economy was so much bigger than China's that a telescope would have been needed to see it.

Nearly three decades later, Barack Obama visits China as a supplicant. His country, now fighting two wars, is in financial hock, especially to China.

The tale of one country's rise, and the other's relative decline, is the defining storyline of our time and the foreseeable future, changing power relationships, altering international institutions and affecting domestic economies.

China enjoys surpluses everywhere – budget, trade, current account, foreign-exchange reserves – whereas the U.S. has deficits on budget, trade and current account. China sits on $2-trillion (U.S.) and is casting about where and how to spend it, whereas the U.S. is heading for $9-trillion of debt in the next decade (according to the Congressional Budgetary Office) with no serious idea how to stop borrowing.

The Chinese save, in part because their country offers neither a national pension nor a health-care plan; Americans spend beyond their means, or at least they did until the recession arrived. A nation in constant hock cannot dictate much, if anything, to the country from which it borrows.

China is very touchy about this accusation, but there is no doubt that it has artificially pegged its currency. Trade flows, economic growth numbers and every other economic indicator suggests the Chinese yuan is undervalued by 20 per cent to 40 per cent, because a lower yuan assists the country's export-led growth strategy. Yes, the yuan has declined, but by not nearly as much as if it had been allowed to float freely, as does the U.S. dollar.

The greenback, of course, has been declining in value, and will continue to do so, given U.S. trade deficits and the country's massive borrowing requirements. This will make U.S. exports more competitive, but it will also make life tougher for Canadians and other exporters who have depended on that market.

Worldwide, therefore, things are out of whack, with the Chinese manipulating their currency in a way that will be detrimental to everyone else's currencies that will rise.

The Americans, of course, have been their own worst enemies. Their budget deficits have promoted larger trade and current account deficits. Why? Because they have excessively stimulated domestic demand (as in the housing sector, epicentre of the economic collapse) and pulled in foreign financing.

For the moment, with recession having stopped growth, interest rates are low. But to keep huge amounts of borrowed money flowing into the U.S., interest rates are going to rise, and so will interest payments on the burgeoning debt.

The Chinese, as the largest foreign holders of U.S. dollars, can be excused if they're slightly nervous about their monetary client's future behaviour.

Will the U.S. monetary authorities decide to let inflation rise, because the political arm of government cannot grapple with deficits – in which case, the value of U.S. holdings in China declines? Will the Chinese decide they already have lent enough to the U.S. and begin intensifying their diversification strategy?

Although the interests of lender and borrower are, to some extent, symbiotic, the lender usually has more options than the borrower: to stimulate domestic purchasing, lend money to others, buy assets elsewhere, spend money on arms – in other words, to strengthen itself at home and abroad.

The U.S., alas, is struggling to govern itself properly even with a brilliant President, which must give everyone pause, including the Chinese. Such a great country is having enormous trouble dealing with just one of its major policy challenges, health care, with a raft of others looming, including climate change, Social Security, education, immigration – to say nothing of its calamitous fiscal situation.

Then there is the proposal now before the President to increase forces in Afghanistan, at a cost the U.S. treasury can ill afford and with very little likelihood that this doomed mission can succeed, even by the most minimal definitions of success.

Richard Nixon would have known about the temptations of deepening a war. He would not have believed China's position vis-à-vis the U.S., only a generation later.

There’s nothing inherently wrong with the few facts and many opinions Simpson marshals to support his world view but they, even the facts and especially the opinions, are highly debatable.

Thus: China IS an emerging economic powerhouse which has been growing at an astonishing rate but it is not clear that it can or will sustain that growth. There is a sensible case suggesting that China is headed for an economic collapse, chaos, revolution and so on.

Thus: The USA is in relative decline – not because it IS declining but, rather, because the US economy is not growing as quickly as those of e.g. China and India. Some of Europe is in absolute decline; the USA is not.

Thus: The USA continues to enjoy a robust, argumentative, divided democracy that makes problem solving a slow process of courting public support and compromising with opponents.

Thus: Climate change is a wildly popular issue that, of necessity, drives some politics and policies, too. But it is not clear that the new G2 (America + China) are being driven quite as much as are lesser countries. The G2 leaders look at the scenarios presented by Gore, Suzuki et al and they see financial ruin. The industrialized West is unwilling to pay for the ongoing industrialization and competitiveness of China and India while China and India will not retard their socio-economic progress to pay for the industrialized West’s guilt trip. The problem and the solutions, and there have to be some, need to be redefined for both G2 partners.

Thus: The wars between America and its allies and increasingly militant Islam are of great concern in America but not so much in China. China is content to see America embroiled in the Islamic world. China is not a friend to West Asians or Arabs or Africans, for that matter, but it is very, very careful to not be an enemy to anyone. I think the Chinese, based on entrenched Confucian values, believe that Bush was entirely justified in retaliating against militant Islamists – which would have, perhaps should have meant dealing with Saudi Arabia and Egypt, from whence the money and ideology spring. I’m guessing the Chinese think the Americans made strategic blunder after strategic blunder which they, the Chinese, can and should exploit for their, Chinese, advantage.

But, the world view: Simpson presents a uniquely Canadian world view. He assumes that a robust, Canadian style, social welfare system is inherently “good” and even necessary (” The Chinese save, in part because their country offers neither a national pension nor a health-care plan ...”) even as he explains that a “weak” systems promotes individual savings which create jobs and prosperity. He assumes that America’s relative decline is also “good” even though it hampers the socio-economic progress of the US led West. He sees US politics as unnecessarily messy – reflecting a broad Canadian consensus that too much democracy is dangerous and that there is a useful role in governing for elites. He sees whatever America does – such as Afghanistan – as being doomed to failure because, I suspect he believes America is in some sort of götterdämmerung.

So, if Simpson’s world view is wrong, what is “right?”

First: A “world view” needs to be global, not nationalistic. Thus: American hyper puissance could not endure for very long. It is an unnatural state of affairs. The natural state of affairs in one in which several powers compete for the abilities to set regional and global agendas. The current state of affairs has two significant balanced powers: America and China. There are particular powers, too: the EU and Japan are economic powers but neither is a military one. Russia might still be a military power but it lacks economic power.

Second: A world view needs to be balanced. One cannot approach China wearing Toronto or London or Paris or New York-Washington blinders. Our history and our philosophy and, especially, our religions neither define nor describe China. To comprehend what China wants and might do we must toss aside our bibles and consider the Tao Te Ching, we must ignore Plato and Augustine and consider Confucius and Mencius, and so on.

Third: A world view needs to be realistic – grounded in geography, demographics and economics. Consider China again. We must understand what China needs: resources to turn into goods and markets for those goods. It has the latter, domestically, already but to satisfy the “needs” of its own people China must make “things” at home – providing jobs for Chinese workers – and then sell them abroad – earning wealth with which it can buy the resources (including food and water) it needs. Where are the resources? How can China acquire them? How do we want China to acquire resources? How does China want to act in the world? How do we want China to act?

Fourth: A “good” world view, like a good theory, needs to explain what we see. Is America in relative decline? If “yes,” so what? Is China a “threat?” What sort of threat? To whom? Why? And so on ...

Is there, can there even be a Canadian “world view?” The answer must be a “yes.” But it mustn’t be a nationalistic, particularist, unrealistic thing such as Simpson suggests when he says The defining story of our time: Obama visits China as a supplicant. Our world view needs to be one that recognizes that Mao and Nixon are both dead and so is the “world” in which they operated. Hu and Obama and Stephen Harper must deal with the world that exists and with the relative powers in it. Our realistic “world view” must aim to protect and promote our vital interests in the world.

So, what should be in our "world view?"

 

[Colin Parkinson]

So if all societies are busy examining and reacting to each other using the other’s parameters, I wonder if it’s possible that more confusion will reign as we will not act in the manner they expect and vis versa?

Frankly I think China’s internal issues will consume them for quite some time, as long as they have access to the raw materials needed they will refrain from to much international meddling. The west and China are aligned in their concerns/issues with Islamic radicals, there will be antagonism in Africa, but I doubt the west will get to wound up about the region. The Chinese’s will prefer strong leaders there representing stability. I suspect the west will be able to live with that as long as the leaders are not too barbaric. It will also serve China’s long term interests in building international support and possibly a area to send it’s educated class to work to help compensate for the internal job losses.

If China was to take military action anywhere, I suspect they would be looking for a quick decisive action that would allow global trade to resume quickly. They could not afford a protracted conflict that interferes with trade. I also see a lot more Chinese involvement in select “Peacekeeping” missions, after a study, which ensures that mission is inline with their needs and expands their influence.
Mainland China appears to be made of at least 2 parts, the educated urbanized centres and the rural areas where most of the population resides with minimal education. It’s is likely that unless carefully managed these two elements can come into conflict. The central committee will have to balance out how it treats these two parts likely keeping them slightly apart, but without conflict. The state of the environment, standard of living, distribution of wealth and power will be key issues in the next 20 years for China.   

 

[a_majoor]

Our world view (and everyone elses) is going to be particularistic, simply because the vast majority of people cannot see beyond the "world view" imprinted on them by the cultural environment they grew up in and live in. This is essentially the thesis of Samuel Huntington's "The Clash of Civilizations", and to a lesser extent Thomas Barnett (The Pentagon's New Map) and the works of Robert Kaplan, and is a pretty reasonable point of view.

Our Canadian "world view" is even more fractured and particularistic; rent by regionalism and politics to the point that there really isn't a "Canadian" world view at all. The Toronto centric national media is most certainly not representative; they can't even understand why the current government is gaining in popularity across the nation, much less explain Quebec or the West (or why they have such different views from Toronto, or Ontario). Just think about the oil sands and how they are preceived in Alberta and Ontario and you see what I'm getting at.

Perhaps we need to work backwards; what would Canadians view as existential threats to Canada? Once we find a set of common interests there, we can then look other issues and find commonalities.