A paper dragon?

Peter Skurkiss writes at American Thinker,

China's growth went into warp drive when President Bill Clinton signed a China Trade Bill in 2001, which gave China a permanent most favored trade status. Also under Bill Clinton, the U.S. approved China's entry as a member into the World Trade Organization (WTO) in 2001.

The thought behind granting China these trade privileges – and they are privileges – was that the totalitarian communist regime would mellow and move toward a more open, liberal type of democracy. That did not prove to be the case. As Steven Mosher, Asian expert and author of Bully of Asia: Why China's Dream is a Threat to World Order, says, instead, the U.S. "created a monster" in building up China. To quote him: "I think allowing China into the World Trade Organization must rank as one of the greatest strategic blunders by any great power in human history." This may be an overstatement, but not by much.

Looking at these events in retrospect, the Wall Street Journal called them a "transformational moment in the global economy – the beginning of a new era in globalization."

And indeed it was, for no sooner was the ink dry on these moves than companies began relocating factories (i.e., jobs) and capital to China. What Bill Clinton considered the last greatest legislative victory of his presidency was in fact the beginning of the hollowing out of much of America's industrial base and an explosion in U.S. trade deficits.

As formidable as China may appear, some see it as a paper dragon. Each step in China's rise was aided and abetted, and in some cases actually engineered, by the United States. This happened by several means. First, China's trade with the U.S., which was key to its growth, has been asymmetric from the start. China got far more from the agreements than it ever gave. Not only were the formalities skewed to China's favor, but U.S. leadership steadfastly turned a blind eye to copyright and patent infringements and blatant theft by China of American technology and trade secrets. Bully of Asia cites our own FBI's accounting of these thefts to be worth $600 billion per year.

It is undeniable that for their own reasons, the U.S. financial, political, and foreign affairs elite each wanted China to succeed by means fair and foul, even if it was at America's expense.

America also contributed to China's rise in other ways. As Peter Zeihan points out in The Accidental Superpower, the China we see on maps today is an anomaly. Geographically and historically, China is divided into three distinct regions – the north of the militaristic Han, the central part of the traders, and the southern area of secessionists. These parts do not naturally hold together. The different regions want different things and access to the world on different terms.

...The unvarnished fact is that China is still greatly dependent on America for its economic stability and even cohesion. In the Brenton Woods world, which America implemented, the Chinese, like others, took advantage and designed their economy to be export-driven, basically aiming at the open U.S. markets. The result: Ten to 15 percent of China's GDP depends on exports to the U.S. And because much of this trade is unfair, China enjoyed a continual trade surplus with America – some $275 billion in 2017 alone. Should the U.S. decide to play hardball on trade or just merely demand that cross country-trade be fair, China's internal stability would be shaken. And the Chinese know it.

...And even if for some reason the U.S. continues to accommodate China indefinitely, the Chinese still face a combination of nearly insurmountable problems, ranging from China's enormous debt to its inherent corruption and polluted environment to its unsolvable upside-down demographics. Given all this, it is disputable that China will still exist as a recognizable entity in 30 years.

China is much more fragile than commonly believed. It may indeed be a paper dragon.

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