The Peaceful Rise of China by Tim Swanson

Since World War II, the US military has bombed, invaded and occupied dozens of countries. In the last 25 years alone it has caused fatal action in over a dozen countries spanning the globe. The American empire currently boasts a peerless expanse comprised of more than 300,000 men and women stationed in over 700 bases throughout nearly 130 countries. [1]

To fund its ambitions, traditional empires have historically extracted rents and tributes from the subjugated regions. The American empire on the other hand, has craftily erected an unseen tax, through pegged currencies and bank reserves.

Gone are the days of hauling cumbersome reparations of bullion across valleys and rivers to the local chieftain. The new, carbon-friendly method for funding the federal empire is by selling US treasury securities to countries that peg their domestic currencies to the USD. And as Congress legislates a never-ending array of spending appropriations, the US taxpayer is somewhat sidelined for bigger, faceless purses thousands of miles away.

In order to maintain their peg, countries such as Kuwait and Saudi Arabia must purchase US treasuries and expand their credit supply to keep their domestic ducat at par with the USD. However, the people who actually pay for these treasuries are not central bankers, but rather anyone with denominated assets in the domestic currency. Thus the average Saudi consumer witnesses inflation first hand when the price of everything, including oil, increases (e.g., they lose purchasing power because more credit is chasing a fixed supply of goods).

Debt is literally America’s largest export as foreign banks and sovereign wealth funds have amassed trillions of increasingly worthless dollars; and it is the number-one revenue stream that funds the American empire from sea to shining sea. [2]

As the Summer Olympics approach, self-righteous pundits from the West have concocted a false image of a rising, military empire from the East bent on world domination.

While the rhetoric and actions of Chairman Mao certainly held such ambitions, many of the reforms of Deng Xiaoping are nothing short of liberalism in its purist sense.

First and foremost, he slashed the 4.5 million-men military by more than half and reinstituted civilian control over it.

Contrast this trend to verbiage extolled by Bush, Obama and McCain. Not only do they not talk of dismantling the Imperial legions; they all want to increase the size of the military. [3] Dare we even discuss Congressional oversight over military activities, or lack thereof? [4]

Members of the Blue Team, perhaps the most influential sinophobic organization today, speak of a widely expanding Chinese military. [5] If one is to believe the official GDP numbers of either country, China still spends less than half of what the US does as a percentage of GDP (1.7% versus 4%). [6]

Ah, but the Chinese military hides the military expenditures in the shadowy Chi-Com corporations, right? Wait, and the US military doesn’t? According to economist Robert Higgs, while the official US military budget is roughly $550 billion a year, when the defense funding that is spread across a slew of other government agencies is added together, the scales tip at over $1 trillion.

But the US must continue to build up and maintain a force in the event that hostilities with China occur, right?

The US spends more than the rest of the world combined on defense appropriations. The UK ranks 2^nd, China ranks 4^th. And even if you doubled China’s defense budget by assuming they smooth their numbers like their American counterparts, the Chinese budget would reach one-tenth of what the US spends each year.

While there have been several cases of purported Chinese espionage of the US satellite, nuclear, and intelligence gathering agencies, the Chinese have a nuclear arsenal of about 200 warheads – equivalent in size to the clandestine efforts of Israel. In contrast, the US military has more than twenty times that number and threatens to use them on a semi-monthly basis against a slew of imaginary enemies (e.g., Iraq, Iran). In fact, the US military is the only organization to ever have detonated not one, but two of the weapons in an offensive role.

But the Chinese are stealing the satellite imaging and guidance technology to use on the continental US, right? Again, who is the organization that they allegedly stole it from in the first place? Why does the US military still have armed weapons aimed at countries that pose no threat? Where is the uproar and protests in the street for the fact that the US military has developed weapons of mass destruction and guidance systems in the first place?

If nothing else, this is a great argument for why the US military should shut down its government labs – so the lethal information cannot be used, let alone stolen, in the first place.

Nothing could be farther from the truth. Since the late ’70s, Taiwanese businessmen have invested billions on the mainland setting up factories and enterprises. In 2007 alone, cross-strait trade accounted for more than $100 billion. And relations have become even rosier under the new Ma administration, in which among other liberalizations, the first direct flights between the two landmasses have taken place in sixty years. [7]

In contrast, every administration since Kennedy has heaped sanctions, barred cultural exchange and threatened embargos on the isle of Cuba. [8]

Perhaps the microcosm that easily illustrates the mentality of the two governments is recent natural disasters. Shortly after Hurricane Katrina landed and devastated the Mississippi delta region, the governor for Louisiana was unable to fully mobilize the Louisiana National Guard, because 35% of the units were deployed to Iraq. And to add insult to injury both FEMA and Bush were too proud and incompetent to allow outside help from assisting with the relief effort, including specialists from other countries.

In contrast, shortly after the powerful earthquake that shook Sichuan to its knees, the PLA, which wasn’t trying to police the world, was able to fully mobilize to assist in the relief effort. On top of that, the PRC accepted aid not just from their historical adversaries the Japanese, but also aid kits and search & rescue specialists from their political rivals in the south, from Taiwan. In fact, the PRC reportedly received so much aid and assistance that they essentially ran out of physical room and had to temporarily turn away helpers. In contrast, the boondoggle of New Orleans in the aftermath of Katrina is legendary as large organizations like Wal-Mart were turned away because they didn’t have permits. [9] [10]

While China may not have fully changed or modified itself in a manner that outsiders desire, it has made substantial reformations. These reforms should be applauded, encouraged and perhaps emulated by the West. Western countries such as the US and UK are on a dangerous road to become the very Orwellian countries that is dramatized in Hollywood dystopias. [11]

For instance, while some civil libertarians chastise the PRC for its omnipotent Seeing-Eye project, in London alone there are more than half-a-million security cameras watching your every move. [12]

Another easy target critics have of the PRC is the persecution of the Falun Gong. Does anyone else recall what happened to the Branch Davidians at the hands of the ATF? Who bulldozed and torched a compound filled with children? What about the recent hysteria surrounding trumped up charges of the polygamist sect in Texas?

One-child policy is unique right? What about federal funding of abortions vis-à-vis Planned Parenthood, or the onslaught of taxes and inflation that prevents American families from having more than one or two children? [13]

Perhaps worse yet: Iraq. While it has become chic to slap a Free Tibet or Save Darfur sticker on the back of your VW van, in terms of the blatantly observable disregard for human rights and civil liberties: what about the 1.2 million Iraqis that have died either through collateral damage or civil unrest since 2003? [14]

This touches on yet another holy rite progressive citizens of the West condemn the PRC: their precious protests and marches. While the average Chinese person may be prevented from publicly voicing their dissent, the West has all but given up on this purported natural right. Not only has the West stood by while its governments have ransacked and plundered regions of the planet, but by voting for wiretapping immunity, warrantless searches, secret tribunals, and rendition-filled prisons, it has become the very police state it supposedly abhors. [15]

In contrast, what foreign country has the PLA invaded and occupied within the past 25 years? The last foreign entity China fought with was Vietnam in 1979, for 16 days. They are now trading partners, erecting roads and rails to exchange raw materials, ideas and finished goods. [16]

In the last decade alone the US government has attacked and occupied parts of Africa, Eastern Europe and the Middle East. And to add insult to injury, US politicos are trying to build a wall between its largest trading partner – Mexico – the one country whose relatively cheap manual labor and resources allows the non-war-protesting, Free-Tibet residents of America to live comfortably in an inflation funded suburban house.

Unrest in Tibet. While some of the protests may be genuine, the CIA has had a long history of funding Tibetan insurgents beginning with operation ST Circus in the late 1950s. [17] This is not to say that Tibet should have been invaded or occupied in the first place, as that is an issue for another article. Rather, with the recent revelation that the CIA was given $400 million in 2007 to arm and equip insurgent groups with Iran, and given the fact that the CIA also spent billions of dollars in the ’80s arming and training the Mujahideen against the Russians in Afghanistan (Operation Cyclone), it is conceivable that the CIA is possibly behind the recent unrest in Tibet. The incentives are there: embarrass the Chinese at their coming-out party. [18]

This is not to defend or condone all of the actions of the PRC, rather as the parable notes: it is to point out that before you complain about the speck in someone else’s eye, you worry about the plank in your own.

Perhaps the most ironic illustration of how the West and East have traded places both morally and economically involves the Korean War. It was recently uncovered that the current interrogation methods practiced by the US military in its fight against terror were actually scripted by another entity nearly sixty years ago.

It turns out that when the PLA captured UN troops (including Americans) during the Korean War, they put together a handbook of interrogation techniques, many of which were condemned by the international community as torture. Guess what standard techniques the US military is currently using to extract information from alleged terrorists at Guantanamo?

Beginning in the late ’70s and early ’80s Deng Xiaoping created Special Economic Zones within various regions of China. These were the first experiments in a move from centrally planned socialism to decentralized capitalism. And boy have they ever paid off. While tomes have been written on the rise of Hong Kong and Singapore as business-friendly export zones, each of these SEZs have become textbook examples of how fast free markets can transform both skylines and the standard of living. Take for instance Shenzhen. Most people have never heard of the former fishing village, yet over the past three decades it has turned into a metropolis rivaling the wealth and development of Western cities like Chicago or Paris.

These economic powerhouses are fueled by laissez faire policies that much of the West has given up on. Relatively low taxation coupled with a cheap, deregulated labor force has turned China into the world’s second largest economy in less than three decades. Foreign investment flows into the country at a rate unparalleled anywhere else in the world in an attempt to capitalize in the largest urbanization transformation (e.g., currently about 57% of the Chinese population still lives in a rural setting and is expected to migrate substantially over the coming decade).

In fact, Chinese cities are choked with a never ending stream of rural peasants who wish to pull themselves out of subsistence. Since 1981, some 600 million Chinese workers have emerged out of poverty to seek a healthier, wealthier life within urban cities. And as a result, China boasts not just a large share of construction cranes in the world but internally consumes more concrete than the rest of the world combined. All in an effort to erect modern high-rises, mass transportation systems, neck-bending skyscrapers, power plants, highways, airports – or in short, everything it missed out on in the previous generation. [19]

Shanghai’s new stock exchange even boasts listing from publicly traded toll companies. Yes, while the West abhors at the notion of privately built and maintained roadways, the major expressways that collect tolls in China (more than 20) can be shorted or gone long like any other security. [20]

Tens of thousands of state-owned companies have been privatized over the past two decades. By 2003, more than 25 million government workers were given the pink slip as their firms were reorganized, decentralized – and right-sized. From the period of 1997–2002, the number of state enterprises decreased from 262,000 to 159,000. Agencies that were once part of the government fabric, the commanding heights controlled by the state, have been restructured into publicly owned firms (e.g., China Telecom, PetroChina).

One example: August 24, 2005, China dumped 1,300 state-owned companies onto the stock market all at once – $270 billion worth of assets. And with the freedom to succeed comes to the freedom to fail – many of the firms have experienced less than stellar returns. But that is not because capitalism has failed, but rather the internal management practices and business models are simply ineffective and unprofitable. Some have even – gasp – gone bankrupt.

In contrast, at the beginning of this year there are now more employees on US government payrolls than on private. Government-sponsored enterprises such as Fannie Mae and Freddie Mac have not only contributed to a housing bubble, but have contributed significantly to a credit crunch that has been temporarily suspended by SEC commissioner Chris Cox – who effectively prevented the short-selling of 19 firms including Fannie and Freddie.

And believe it or not, China is party to seven Free-Trade Agreements. While these certainly are from perfect nor are they pure free trade (I have even criticized them in the past) it shows just how far they have come from the days of being an isolated, protectionistic land of communal farms. In contrast, members of Congress such as Hillary Clinton recently railed against free-trade agreements, including the failed Columbian agreement for being too free, too liberal. Talk about a 180.

Perfect, no. But China is definitely on the right track. And while China may be the namesake for crunchy fortune cookies, the West may one day be remembered as having gambled away its wealth by playing the lottery on the back of each fable: your past success will overshadow your future decline: 53 82 07 87 94 63 – the current cost, in dollars, of the Iraq War.

[1] As of this writing there are 150,000 troops stationed in Iraq. They will remain at this level for at least 45 days (“the pause”). As of April 2008: there are 57,000 troops in Germany. 33,000 in Afghanistan. 33,000 in Japan. 27,000 in South Korea. 10,000 in the UK. 10,000 in Italy. 1,200 in Spain. And the seemingly never-ending list continues down the line. Note: the US currently has five active Marine Expeditionary Strike Groups each comprised of approximately 6,000 seaman and Marines. In addition, the US has six Carrier Strike Groups deployed, each comprising 10,000+ seaman and Marines. The US government is also in the process of building 50 permanent bases in Iraq. See also statistics from Global Security.

[2] According to the US Commerce Department (pdf) in 2006, U.S. exports grew by 12.7 percent over 2005 to $1.4 trillion. During the same timeframe, foreign holders of US treasuries increased their reserves by $100 billion (or a 7.5% ratio). In the past year alone, these same foreign banks gobbled about another $500 billion – it's hard to imagine that the US exported more than $500 billion in CPUs or cell phones.

Furthermore, in 2004, the US exported $111 billion in goods to Mexico, and sold $5 billion in US treasuries to it (year-on-year difference) (pdf). In 2004, while the US exported about twice as many goods to Canada it also sold them $7 billion in US treasuries. In either case, the largest single export to all countries is not automobiles or TVs, but rather US treasuries. See also: “Concern grows over a fiscal crisis for U.S.” by the San Francisco Chronicle.

[3] John McCain wants to add at least 90,000 soldiers to the Army and 30,000 more Marines. Barack Obama, while discussing troops withdrawals from Iraq, would like to leave a “residual force” of around 30–50,000 in Iraq and deploy 2–3 more combat brigades to Afghanistan. See also, “What do Shimon Peres and Mitt Romney have in common?”

[4] Seymour Hersh noted that there is no oversight regarding the $400 million appropriations for the CIA to conduct covert warfare in Iran. Nor has Congress once stepped in to cancel any funding or remove troops from the Iraqi theater – which is under their legal jurisdiction. Other instances such as the Iran-Contra scandal also come to mind.

[5] Fortunately not every uniformed officer is gun-ho or sinophobic. USN Admiral Timothy Keating is spearheading humanitarian drills with Chinese Lt. Gen. Zhang Qinsheng. It is hoped that this will lead to an agreement similar to the 1972–3 accord between the USSR and US regarding conduct and communication on the high seas.

[6] Regarding GDP numbers, it turns out that China may have overstated the increase in GDP (1 2 3). Furthermore, GDP is not necessarily the most accurate number to gauge economic growth, see “What is up with GDP?” by Frank Shostak. In addition, other measurements like CPI have been twisted in the past. In fact, "core" inflation was concocted in the early ’70s, by President Nixon who got then-Fed chairman, Arthur Burns, to hide the effects of Nixon’s inflationary policies. See also: interview with John Williams.

[9] Instead the rescue effort was led in part by Blackwater, the same unaccountable mercenaries that have killed hundreds of civilians in Iraq and Afghanistan. See: “Blackwater Down” and “Overkill in New Orleans” both by Jeremy Scahill.

[10] See: “A Flood of Folly” by Tim Kern, “How the Market Might Have Handled Katrina” by Robert Murphy, “FEMA Should Be Shut Down” by Christopher Westley, “Wal-Mart at Forefront of Hurricane Relief” by Michael Barbaro and Justin Gillis, “Making Hurricane Response More Effective” by Steve Horwitz (pdf).

[11] While the PRC may not be fully open with the official incarceration numbers, the United States has for the past decade held the world record for the largest prison population. As of February 2008, with 2.2 million adults – or 1 in 100 – the US leads all other countries, including China.

[12] The subways of New York and Washington D.C. are now patrolled by men with automatic weapons. And in the UK, the government plans to monitor, record and store every digital artifact produced in emails and phone calls.

[13] Over the past several years, the official One-child policy has come under internal CCP scrutiny and may be liberalized within the coming years. Furthermore, ethnic groups, parents that were only-children, and various other exceptions are exempt from the regulations and are not penalized for having more than one child.

[14] According to Just Foreign Policy the number of Iraqi deaths is more than 1.2 million. According to Iraq Body Count – which only tabulates deaths directly related to Coalition violence – the number of civilians that have died is at least 86,000.

[16] How many permanent military bases has the PRC erected across the globe? There is roughly the same amount of Japanese military troops involved in world conflicts as Chinese peacekeepers. Which one is supposed to be pacifist again?

[18] Dare I mention the institutionalized methods of racial discrimination enforced by the US government prior to the civil rights movements? Or wholesale theft of Native Indians properties?

[19] As Dan Rather chronicles in his latest documentary on the Discovery Channel, the Chinese want to live longer, healthier and above all, richer lives.

[20] As noted in Jim Rogers book A Bull in China: Jiangsu Expressway, Co., Zhejiang Expressway, Co., Anhui Expressway, Co. See also "From Mao to Wow!" by Kurt Andersen and "America and China: The Eagle and the Dragon" by Mick Brown. For example: Jiangsu Expressway, Co., Zhejiang Expressway, Co., Anhui Expressway, Co.

Tim Swanson [send him mail] is a graduate of Texas A&M University and currently lives in Seoul, Korea and enjoys kimchi and soju cocktail. Visit his blog.