A funny thing happened on the way to the recession: China's economy behaved normally.
Over two days, in tandem with other Asian economies, the Shanghai composite recorded its biggest loss in history. An unambiguous sign of China's integration into the world economy?
Yes, absolutely, according to believers in the idea that American trade with China solves, well, just about everything.
Economic interdependence will render war unprofitable and obsolete. Market penetration and Chinese prosperity will inevitably reform the Chinese Communist Party. In his book, The China Fantasy, author James Mann calls this belief "the soothing scenario."
For a Davos-minute, there was even giddy end-of-history talk of the high-growth Chinese economy pulling the wounded giant, America, out of recession.
Yet George Soros, perhaps a bit more in touch with the Chinese leadership's mindset, predicted a different sort of endgame, declaring in The Financial Times: "…the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world."
Not exactly soothing words. And the broader picture of China's rise—the annual increase in the military budget double the rate of GDP growth, the growth in internal surveillance, the external hacking—confirms the Chinese leadership's zero-sum mind-set.
Yet China has barely made a cameo appearance in the Presidential race. That's particularly curious for Republicans. Candidates routinely invoke Ronald Reagan's legacy—a legacy inseparable from his foreign policy achievements.
Duncan Hunter, the only Republican candidate to make China an element in his campaign, never polled above 2% and recently quit. Yet we can still gather clues—particularly from the less-scripted debates—as to how the remaining Republican candidates might manage relations with the emerging superpower.
Ron Paul staked a claim to the soothing scenario back in 2001. Following the "spy plane" crisis, he told Congress: "We must continue to believe and be confident that trading with China is beneficial to America…It's a fact that trade did help to resolve this current crisis without a military confrontation."
As a member of the American business community in Beijing during the spy plane crisis, I can report that the Chinese leadership was utterly disinterested in our opinions; they wanted an apology, if not a kow-tow, from the Bush Administration. They got it (possibly with an assist from our Washington reps).
Paul probably knows all this, but perhaps maintaining a consistent libertarian stance outweighs having to think about your business class being co-opted by a foreign power.
The soothing scenario cuts across political fault lines. Mike Huckabee, in an interview with TIME magazine last April (hat-tip, D.J. McGuire) said: "The good news is that China is becoming much more a part of the mainstream. In its economic development and even in giving greater liberties to its people."
The liberty to buy Coke versus Pepsi? Yes. However any independent assessment, from Amnesty International to the State Department, confirms that the liberty to make political or religious choices is diminishing.
Huckabee may not have examined these reports—or perhaps he just carries a whiff of the long-range optimism that some evangelicals have curiously projected on China century after century, no matter how many Chinese Christians are incarcerated.
In the Detroit debate, Mitt Romney seamlessly blended business concerns with focus group language: "I want to make sure that the American worker gets a fair shake. We need to make sure that the Chinese begin to float their currency and they protect our designs and our patents and our technology."
Romney clearly understands that America is facing a singular economic challenge from China. His record suggests that he will be a highly skilled negotiator. Yet to what end?
Romney may not fully buy into the soothing scenario, but he's also reticent to invoke the Chinese strategic threat, as if it could become a self-fulfilling prophecy. And Romney's statement that he would double Guantanamo offers a clue that Chinese human rights won't be an agenda item either.
In Detroit, John McCain defended free trade with China. Yet in previous speeches, he challenged the soothing scenario: "New prosperity in China has not brought with it the kinds of civic and political reforms that many in the U.S. and Europe expected. Today, China remains a one-party state lacking the freedoms of religion, association, and speech.
As Americans, we are obligated to speak out… With every export of wheat or software must travel the values that have always been the chief source of our greatness."
Clearly Human Rights—as evidenced by his pledge to close Guantanamo—are among those values; any Chinese citizen who suffered persecution under the Chinese Communist Party might want to look closely at a man who spent five years in an Asian prison. But how much pressure will McCain actually use?
The Bush Administration intended to get tough with China. Following 9/11, Chinese intelligence cooperated with American intelligence on anti-terrorism; any residual toughness became largely symbolic.
Rudy Giuliani straddles the line. In Detroit, he projected Reagan-style optimism: "China and India are trying to develop themselves to be like us, which is why we got a heck of a lot we can sell to them if we just put on our entrepreneurial hats and act like confident Americans."
In Orlando, he invoked Reagan's Cold War policy of out-spending the Soviets: "…increasing the size of our military…would send a heck of a signal both to Russia and to China to not think about challenging us down the road." One wonders how long Giuliani could hold this ersatz-Reagan stance.
Reagan himself bears some responsibility for inventing the soothing scenario when he referred to China as "this so-called Communist country" in 1984.
But now we are in uncharted territory. Is Soros right? Is the American model obsolete? Is state capitalism, unencumbered by sentimental notions of democracy and human rights, the future? Reagan only understood Communism in its classic form. But I think Reagan would have recognized that the situation we find ourselves in today—no matter how the Shanghai composite falls—is far from soothing.
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