ARTICLE: “Steep Increase in Chinese Exports May Add to Trade-Policy Tensions,” by Murray Hiebert, Wall Street Journal, 14 February 2006, p. A4.

ARTICLE: “U.S. to Press China on Trade Laws,” by Greg Hitt, Wall Street Journal, 14 February 2006, p. A4.

NEWS ANALYSIS: “As Congress Blusters About Trade With China, U.S. Companies Play Coy Over Profits,” by Andrew Browne, Wall Street Journal, 13 February 2006, p. A2.

ARTICLE: “Companies in Emerging Markets Spark Deal Wave: Flood of Cash, Loans Power Purchases in Europe, U.S.; ‘The Mindset Has Changed,’” by Jason Singer and Dennis K. Berman, Wall Street Journal, 13 February 2006, p. A1.

ARTICLE: “Bill would keep servers out of China: Move comes after Google agrees to search limits,” by Jim Hopkins, USA Today, 13 February 2006, p. 3B.

ARTICLE: “Chinese Censors Of Internet Face ‘Hacktivists’ Abroad: Programs Like Freegate, Built By an Expatriate in U.S., Keep the Web World-Wide; Teenager Gets His Wikipedia,” by Geoffrey A. Fowler, Wall Street Journal, 13 February 2006, p. A1.

ARTICLE: “Beijing Censors Taken to Task in Party Circles,” by Joseph Kahn, New York Times, 15 February 2006, pulled from web.

There is no question that China is a handful for the U.S., and as I’ve said many times, the biggest danger right now is how few American leaders realize just how intensely intertwined our two countries’ economic fates are already. In short, the political and military connectivity has not kept pace with the economic and network connectivity, and to me, that’s the definition of system instability and a potential downstream crisis.

As readers of PNM know, that was my basic diagnosis of the 1990s: economic rule sets racing ahead of political ones, and technological rule sets racing ahead of security ones.

The recent David Barboza piece in the NYT proved the lie about our “massive” trade deficit with China (i.e., we’re just renting their labor for end-of-global-supply-chain assembly), and yet we’ll see Congress get jacked up enough about such misleading stats to engage in all sorts of restrictions on trade.

Meanwhile, watch so many American companies (e.g., GE, Motorola, Nike, Wal-mart, GM) do their best to hide just how dependent they’ve become on Asia and China in particular for their global profits.

China’s rise in global manufacturing/assembly hasn’t produced global brands as Japan’s did a couple decades earlier, but so flush are some Chinese and Indian and Russian companies that they’ve started hunting for acquisitions in the West.

Lions, tigers and bears, oh my!

Especially in the case of Russian and Chinese companies, is this unfair if government backing is part of the mix? All things being equal, it’s better for such acquiring companies to steer clear of such government ties, because unless they do, the West is right to complain about unfair advantages. Understandable for New Core powers to engage in enough protectionism to let those firms flourish and establish themselves for such overseas projections of power, but once those firms reach that point, it’s either choose the pathway of privatization or face similar protectionism from other states.

Clearly, we want New Core companies to buy Old Core companies. It keeps us healthy to have our deadwood cleared, plus encouraging cross-ownership just jacks up the mutually-assured dependency between Old and New Core economies. But the process can’t proceed without further reform on the part of New Core governments, meaning more privatization, so it’s a delicate balance.

Less delicate, in my mind, is when Congress steps in on things like information technology, which they inevitably screw up with their meddling. Trying to restrict the IT companies from selling to China unless China opens up more democratically on free speech is a heavy-handed approach. In the long-running war between censors and hacktivists, my money’s on the latter. The more the connectivity, the exponentially more the possible workarounds. The soft kill is the best kill and the IT soft kill is the best of all.

Bet on connectivity, I say.

And yet, you have to wonder: a few threats from Congress and a growing sense of moral unrest in the West about Google and MSN and their “collaboration” with Chinese censors, does this push Beijing to rein in the censors? Reading the fine print on the last story, you note that the censors censured were those involved with print media, and that the damning Party “letter did not address Beijing’s pressure on Web portals and search engines.

Still, if we speak softly and only threaten our stick every so often, there may be good things that result on China’s side. My only fear is that those who tend to wield the sticks in Congress also speak the loudest, and most crudely about China.