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Sunday
Feb262006

China should not be ignored in global economy

While it seems like America's foreign policy debates are dominated by current events in Iraq, Iran and North Korea, if you really want to start an argument in Washington right now, "rising China" is your best bet.

Why? That's where you'll find the most divided opinions.

On one side stand congressional protectionists and defense-industrial hawks who are convinced that China's burgeoning trade and military power spell inevitable conflict, if not over Taiwan today then over Persian Gulf oil and African minerals tomorrow.

That's why our Navy is moving ships from the Atlantic to the Pacific: Pentagon hardliners argue that, if we don't show a strong hand today, China will inevitably grow more aggressive in its frantic search for raw materials.

On the other side stands America's high-tech industry, including a slew of multinational corporations coyly hiding just how much of their profits are derived from outsourcing manufacturing or, more to the point, final assembly jobs to China.

A controversial subject, no doubt, but it's that competitive instinct to exploit cheap labor that results in foreign companies owning almost two-thirds of everything China exports. Call this a trade deficit if you want, but that's a meaningless concept in today's global supply chain. China may collect salaries, but America keeps the profits.

Truth be told, both sides want to profit from China's rise - just in different ways. The reason neither argument is easily dismissed is that it really is hard to wrap your mind around all the immense change that China is experiencing today: multiple transformations that could either integrate the country far more deeply with the global economy or tear it apart internally - or possibly both.

China is simultaneously attempting a handful of revolutionary shifts: from a command economy to one defined by markets; from a rural society to an urbanized one; from a predominately agricultural base to an industrial one; from a centralized political system to one that allows for far greater local governance; from a society largely disconnected from the larger world to one that's increasingly wired up to it; and from a young population to one that's experiencing the most rapid aging process the world has ever seen.

That last shift is probably the most important. Both China and the United States will hit the "Florida mark" (20 percent of the population over age 65) in roughly three decades. But here's the twist: Our journey from the 10-percent threshold will have unfolded over more than six decades (1972 to 2036), while demographers estimate China will make that great leap forward in a mere 19 years (2017 to 2036).

The China hawks like to pose the question, "Will China get rich before it gets threatening"? But here's a better question, "Will China get old before it gets rich"? Think about which of those three outcomes is most inevitable.

China set up this demographic time bomb by restricting its birthrate over the past quarter century - the so-called one-child policy. Thanks to that somewhat draconian rule, today's China is short a good 400 million people (an entire Europe!), plus my wife and I have an adopted Chinese daughter to go along with our three biologicals.

Yet, despite all that effort, China's crams 1.3 billion people into a country the same size as the United States (9.4 million square kilometers). Put that in perspective: We'd need to invite everyone in the Western Hemisphere (900 million) and Europe (400 million) to come live here before we'd reach China's mass of humanity.

And, to make it truly realistic, we'd have to crowd most of them along our coastlines - just like in China.

My point? By opening China up to rapid globalization, Beijing's leadership set in motion a torrent of social, economic and - yes, ultimately - profound political change that continues to transform the lives of one out of every five humans on our planet.

America can choose to view China's rise in a zero-sum manner (i.e., if they're getting stronger, then we're getting weaker!) or we can rise above than myopic mindset and understand that China's tumultuous transformation will shape world history across this century much like America's emergence defined the 20th century.

There is no containing China's rise. We either choose to make China our ally or we risk destroying the entire global economy upon which our fabulous lifestyle depends.

I say, take the money and forget the war.

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