Jul 152013

I was a newspaperman before I became, in order, a newsletter editor-publisher, then a self-trained economist and professional speaker. I still love newspapers. And not just the on-line versions. I still savor dead trees. Four newspapers thud on to my front porch on weekdays, five on Saturdays, two on Sundays.

Of the four dailies, the one I would choose to have delivered to a deserted island is the Financial Times. It is the last one I read; in fact, the dead-tree version often stacks up for days. The on-line version of tomorrow’s paper is usually available soon after 5 p.m. Pacific Time.

I learn more from the FT about what is going on in the world than from any other news source. The FT’s op-ed page is, in my opinion, beyond compare.

Example: An op-ed essay last week by David Pilling, the paper’s Asia editor. What caught my eye was not the headline (“China’s sense of superiority and injustice is a potent mix”) but rather a subhead calling out a part of the text (“Despite the swagger with which Beijing at times conducts itself, in many ways it has never felt more vulnerable”).

Vulnerable? Really? The Chinese Dragon whose economy will overtake that of the U.S. in size in less than a decade? Vulnerable?

Well, yes. Here’s Pilling’s first zinger: China has about 13,600 miles of border. All around are neighbors, 14 in all. With many of them, China has “tetchy” (touchy, irritable) relations. Three of these neighbors have nuclear arms, Russia, India, and North Korea. The U.S. by contrast shares borders with exactly two neighbors, both friendly. Pilling doesn’t mention it, but it is worth noting: neither Canada nor Mexico is a nuclear power.

Pilling’s second point was based on a lecture last year by Australia’s former ambassador to China, Geoff Raby. Rather than quote Pilling, I’ll quote Raby:

China is now, for the first time in its history, utterly dependent on foreign markets and foreigners for all the things it needs to keep its economy growing.  I often imagine how in the middle of one night in the early years of the last decade, deep in the leadership compound at Zhongnanhai in Beijing, someone woke up and started screaming at the ceiling with the realization that China was now utterly dependent on foreigners.

After all, the reform and open door policies [of Deng Xiaoping] were never intended to integrate China’s economy into the international economy… Deng’s original design was mercantilist: trade as much you need to be able to purchase the technology you lack to be able to substitute for imports.  And over time build your reserves and build your arms.

The very success of the reforms, however, meant that if you make a big number of people much, much wealthier then you will end up relying on international markets, not only to sell your products but critically to supply your basic needs for survival. China is thus best thought of as a highly constrained power.

The dragon “highly constrained”? Wow. That’s not how I tend to think of China.

Another point, where Pilling perhaps also draws on Ambassador Raby’s lecture, is that China is more concerned with internal than external developments. Here’s Pilling:

China’s economy is undergoing wrenching change that will require the leadership to take on powerful interests. As Chinese people grow more wealthy – or see others around them accrue wealth – they appear to grow ever less satisfied with simple economic expansion. As is often noted, Beijing spends more on internal security than on national defence.

Pilling’s punch line: “[W]hile the rest of the world increasingly views it as strong and invulnerable, Beijing’s own view of itself is quite the reverse.” This is a nuanced view of China that I don’t see elsewhere. Well worth the trouble of registering at the FT’s web site, where you can read up to eight articles a month before encountering a pay-wall. Highly recommended.

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