[Paleopsych] NYT: O.K., Japan Isn't Taking Over the World. But China...

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O.K., Japan Isn't Taking Over the World. But China...
New York Times, 5.7.3
http://www.nytimes.com/2005/07/03/weekinreview/03port.html

    By [3]EDUARDO PORTER

    NOT even 20 years have passed since the apparently unstoppable
    Japanese economic juggernaut struck fear in the hearts of Americans,
    and now China has emerged to be seen as the new economic menace
    threatening the nation's vital strategic interests.

    America's boom in the 1990's, coupled with Japan's decline into an
    economic quagmire through much of the decade, quelled most fears that
    the Japanese were going to eat our economic lunch.

    But now China has set out to snap up everything from Unocal to Maytag,
    not to mention a steady diet of United States Treasury bonds. And many
    of the leading voices who worried about Japan in the 1980's are
    warning that China presents a much bigger and more complex conundrum.

    "In retrospect I probably did overstate the nature of the Japanese
    challenge," said Chalmers Johnson, a prominent expert on Asia who in
    the early 1990's argued that Japan was "the only nation with real
    leverage over the United States." But, he added, "China is several
    orders of magnitude different from Japan."

    China is not only much bigger and more populous. Its economy is likely
    to become the largest in the world at some point in the next 50 years.
    As China keeps growing at a rubber-burning pace, competition with the
    United States over energy resources alone could cause substantial
    tension.

    Americans' fear of Japan's ascendancy in the 1980's was inspired by
    economics and pride. The growing bilateral trade deficit, as Japanese
    companies acquired leadership in industries that were once dominated
    by American businesses, cast a pall on America's self-confidence. The
    Japanese purchase of high-profile American assets, whether Columbia
    Pictures or the Pebble Beach golf course, just rubbed it in.

    Relations with China have a more complex geopolitical dimension.
    Unlike Japan, China is likely to become a military power. And it is
    not an unconditional ally. From Taiwan to the Middle East, the
    strategic interests of China diverge from America's. As it throws its
    weight around, to secure supplies of energy, say, or to avail itself
    of strategic technology, China can cause American policy makers no end
    of discomfort.

    For instance, if the United States government were to block the China
    National Offshore Oil Corporation from acquiring Unocal, it might just
    push China into cutting energy deals that the United States government
    would rather it did not make with countries like Russia or Iran.

    "Clearly the relationship between the United States and China is much
    more ambivalent than that between the United States and Japan," said
    Clyde V. Prestowitz, a trade negotiator during the Reagan
    administration who in the 1980's warned that Japan's ascent could
    eclipse the United States' power and compromise its prosperity.

    Those differences might warrant a more careful review of deals like
    the attempted purchase of Unocal by China's state run oil company.

    Robert B. Reich, the former secretary of labor in the Clinton
    administration who as a Harvard professor in the early 1990's argued
    that big Japanese investments in the United States were not
    threatening, says today that a Chinese acquisition of a potentially
    strategic asset like Unocal could be problematic.

    "In economic terms there is no reason to block Chinese ownership of
    U.S. assets just as there was no reason to block Japan from buying
    U.S. assets in the 1980's," Mr. Reich said. "But in political terms in
    2005 there may be a reason to take seriously the downside of China
    owning Unocal."

    But even those most concerned about China's rise up the economic,
    political and military ladder recognize another, perhaps more
    important difference between China and 1980's Japan. The United States
    has a vested interest in China's success.

    For starters, whereas Japan's success at the time was inevitably seen
    as America's failure, today American businesses are all rooting for
    China to succeed. Because they own a lot of it.

    "It was virtually impossible for a foreigner to make an acquisition in
    Japan," Mr. Prestowitz said. "In China its 'y'all come.' American
    business is part of the China lobby, not the anti-China lobby."

    Some of Japan's old foes view America's growing interdependence with
    China with suspicion. "Interdependence means dependence," said Susan
    J. Tolchin, a professor of public policy at George Mason University
    who in 1993 was the co-author of "Selling Our Security," which argued
    against allowing foreign investment in American technology companies.
    "If we lose our economic independence we are going to lose our
    independence of movement on foreign policy."

    Yet most acknowledge that China's transformation from a struggling
    Communist state to a prosperous nation with a growing stake in the
    global system of market economies is in America's best interest. For
    example, if the Chinese central bank owns oodles of United States
    Treasury bonds, it has a reason not to want to destabilize the bond
    market.

    "I cannot see how a rich bourgeois China could be not in our
    interest," Mr. Johnson said. "If we're interested in our security we
    should establish collaborative ties with China right now."

    The difference in emphasis appears in a shift in Mr. Prestowitz's
    writing about Asia. In 1988, he published "Trading Places: How We Are
    Giving Our Future to Japan and How to Reclaim It." This year, he
    published "Three Billion New Capitalists: The Great Shift of Wealth
    and Power to the East."

    Today, Mr. Prestowitz said, the biggest risk is not that China will
    succeed in rising to become an economic superpower. The biggest risk
    is that it will fail.