China couldn't have wished for a better time to project its international image. With the US preoccupied with Iraq and terrorism, Beijing exudes an image of serenity and quiet confidence. Even on Taiwan, Beijing some times tends to drive Taipei mad by simply acting as if the island already belongs to it. China's new strategy simply is to create an aura of power. With all the talk of its miraculous economic growth, it is increasingly seen as a potential global economic powerhouse. Very few analysts would want to spoil a good story by pointing out that China's banks are technically, if not actually, bankrupt.
Similarly, its growth statistics are not rigorously questioned. And those who do might not be taken seriously. For instance, as economic expert Nicholas R. Lardy has pointed out, "On average in 1990 to 1998 annual additions to inventories in China absorbed 42 percent of incremental output;" much of it reflecting "the continued production of low quality goods for which there is little or no demand." There is nothing to suggest that the situation has changed much. But such inconvenient facts are simply ignored.
Could it be that China's whole economic edifice is built on shaky, if not sandy, foundations? It has echoes of the Soviet system, finally hollowed out from inside due to the misallocation of scarce financial resources into wasteful production. Look at the billions being spent on the diversion of water from the Yangtze River into the Yellow River and the Three Gorges Dam project. Some of these projects are considered dubious and grossly wasteful. With such wasteful spending China's debt liabilities which, according to some estimates, already exceed its US$1 trillion dollars plus GDP, will increasingly become impossible to sustain.
The point to make here is that there is a great gap between the rhetoric and reality of China's situation. But, due to a combination of factors (requiring separate analysis), rhetoric and reality are becoming increasingly submerged. Therefore, a perception is growing that China is indeed the economic powerhouse to drive regional, if not global, economy. Having fostered, encouraged and promoted this perception, Beijing has come to believe it. Which is again reminiscent of the glory days of the Soviet Union, until it collapsed like a house of cards.
In international power politics too Beijing is cultivating a new, responsible image. Instead of confronting the US, it is simply taking a quieter approach. On terrorism, it has even won US appreciation through limited cooperation. In the process, it is escaping international scrutiny over human-rights violations -- be it Uighur separatism and the Tibetan autonomy movement. With the US straddling the international stage like a colossus, Beijing is aware that it will get short shrift if it sought to take on the Bush presidency.
In the Asia Pacific, Taiwan's neighbor to the west is quietly projecting itself as a new regional power center. It is managing to create a graduated perception among its neighbors that they have no alternative but to accept China on its own terms. For instance, the proposed ASEAN free-trade area is being sold as the region's ticket to the burgeoning Chinese market.
With US economy sluggish, China looms large in Asia. Take, the Spratly Islands dispute. It was quietly sidelined at the last ASEAN summit in Cambodia and Beijing maintains that all of the South China Sea and its islands belong to it -- a claim rejected by some ASEAN countries.
Beijing is also encouraging its neighbors to believe that if only the US were to withdraw from the region, and Japan behaved as an Asian country, the Asia Pacific would become an idyllic zone of peace and prosperity. There is even a view that if the US were to withdraw its troops from South Korea, China would be better placed to bring about peace and security on the Korean Peninsula. If only Japan would toe the China line, things would be so much simpler under the new Middle Kingdom. By not siding with China, Japan is only courting trouble for itself as an Asian black sheep, so goes the argument.
Japan aside, India too is a bit troublesome. Not so much because of its intrinsic power (on the surface, China is quite dismissive of India), but due to its emerging strategic relationship with the US. To China's great annoyance, it is also projected as the preferred democratic alternative to China's communist oligarchy. But Beijing is taking care to surround it with a security ring under its patronage, including Pakistan, Burma and Bangladesh.
Considering that the US has a more assertive presidency with no qualms about China's ambitions, Beijing hasn't done too badly. And sincerely hopes that US will over-extend, leaving China to further consolidate and extend its power role.
There is one important caveat, though -- apart from the wishful thinking of a weakened US from its overreach -- the communist oligarchy and the nation that they run have become indistinguishable.
Therefore, the nation is in the grips of an oligarchy. With social unrest growing from a host of factors (the rich-poor divide, regional disparities, growing unemployment, rural unrest, corrupt party elite and an unresponsive and arbitrary political system), it will be a brave person to vouchsafe for the durability of communist rule.
Sushil Seth is a freelance writer based in Sydney, Australia.
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