September 25th, 2004
China and global trade in the 21st Century
In an overdue development, China and Russia are developing a “strategic partnership of cooperation, particularly in the economic and trade sector.” The “partnership” may be historically significant it leads to a lowering of trade barriers that encourages trade between China and Russia, which is currently around $20-$30 billion – the highest in history, but very low compared other nations, such as the U.S., with over $100 billion. (That is up from virtually $0 since Nixon opened up trade in 1972.) This may a strategic step in the creation of a worldwide market centered on the U.S. and China – our best bet for making the 21st century less bloody then the previous. The fact that John Kerry is more likely to push trade restrictions is one of the few reasons (few because both candidates are pathetic) that make him a worse candidate– and make his presidency is more likely to lead to war, despite all his talk of “alliances.”
The question of China and Russia’s transition from a socialist dictatorship to a market economy recently prompted this forum post from me: As with all attempts at centralized economic growth, state-owned companies force out private competitors and capital and thus reduce economic growth in China. Since China lacks an effective taxation system, it depends on military-owned industries propped up by state-enforced monopolies and state-owned banks to maintain power and mooch of the real drivers of China’s economic recovery – foreign and domestic entrepreneurs.
There is no significant difference between China and Russia today. China’s economic potential is better because its political system is stable, the competition between the ruling party is more formalized, and there is more widespread recognition of the benefits of economic investment - the last being a result of cultural differences, I think.
Both countries are in a gradual flux, as businessmen with newly-found economic freedoms demand political freedoms– but neither government is going to give up power without a fight. I think the historical situation is somewhat unprecedented because there is no credible ideology to justify the expansion of state power. The possibilities for these countries are much the same as those facing America: religious authoritarianism, national socialism, or capitalism. I think that the kind of moral leadership the United States offers in the next decade will play a large role in determining the political landscape for the next century.