Friday, April 24, 2009

Buying Friends

The developing world no longer sees befriending The United States as a solution to their problems. More and more, it is turning to China for aid.

From The Washington Post:

Photo from Xinhua News

BEIJING -- With Jamaica's currency in free fall, unemployment soaring and banks heavily exposed to government debt, the Caribbean island's diplomats went into crisis mode earlier this year. They traveled to all corners of the world to seek help.

Jamaica's traditional allies, the United States and Britain, were preoccupied with their own financial problems, but a new friend jumped at the opportunity to come to the rescue: China.

When contracts for loan packages totaling $138 million were signed between the two countries in March, China became Jamaica's biggest financial partner. Headlines in Jamaica's leading newspapers, which only a year ago were filled with concern about China's growing influence in the region, gushed about its generosity.

"The loan couldn't have come more in time and on more preferred terms," E. Courtenay Rattray, Jamaica's ambassador to China, said in an interview. While the island nation continues to value its close relationships with Western powers, he added, in some respects Jamaica has more in common with China. "Those are developed countries. They don't have such an in-depth understanding of the development aspirations of Jamaica as does China," he said.

Overseas aid and loans are just one way China is asserting itself in its new role as a world financial leader. While polishing China's own image, Premier Wen Jiabao and other top leaders have blamed the West for the global economic crisis. Chinese officials increasingly are challenging the primacy of the dollar, warning other countries about the danger of keeping reserves in just one or two currencies, such as dollars and euros. And as the global economic crisis has eroded faith in U.S.-style capitalism, there's growing talk that a new "Beijing Consensus" will replace the long-dominant Washington Consensus on how developing countries should manage their economies.

Read On

China, seeing an opportunity to assert itself during the financial crisis, is whipping up support and alliances with countries around the world. While this phenomenon surely worries some in the West, China is completely justified in wanting to be the one to fill in the gaps that the US used to be able to before it had such severe problems of its own.

It's easy to see why China could be seen as a preferable partner over the US to work with. Whereas the US aid came with assurances of commitment to free markets, fighting terror, and other things America loves, China, largely, has no guiding principles when it comes to shelling out money. From the Post article:
In a report last month titled "The Beijing Consensus," South Korea's Ministry of Strategy and Finance sounded an alarm over China's aid and loans. Developing countries that accept Chinese assistance, it warned, may lower their guard and gravitate toward a Chinese-style economic model.

Jamaica's Rattray dismissed those fears as overblown. China's financial assistance to his country came with "no requirement to adopt specific macroeconomic policy approaches," he said, and there is "no debate about the government of Jamaica's commitment to a free-market economic model."

China most likely sees these loans as long-term chances to improve its reputation as opposed to remaking the world into its ideological mold (whatever that may be):
Michael Pettis, a senior associate at the Carnegie Endowment for International Peace and a professor of finance at Peking University, says China's recent moves are more about public relations and aiding diplomatic allies than a true effort to remake the global financial system or to push a new model of development.
With all of the attention in the media and government now on the failure of Ameria's financial institutions and the subsequent financial crisis, we are largely forgetting the awful foreign policy under Bush and the consequences that his actions and decisions continue to have today.

The US is going to end up spending trillions (yes, trillions) of dollars on the Iraq war. Think about all of the things the US could've done with that money. Instead of fighting a shadow insurgency with a poorly thought-out war plan, it could've invested in developing countries who need the money to grow. That kind of investment, as opposed to inposing democracy through war planes, would've been a lot more effective.

With America weakened, China is seizing the opportunity to use its vast economic resources to position itself better for the future. I say more power to China for being able to do it.

The US blew any chance it had to fill this role when it elected an incompetent president, chose to start a war it didn't need to, spent recklessly on a war it hadn't planned for, and refused to see the writing in the sand and change approaches in the five plus years it's toiled in Iraq.

The US and its politicians are going to increasingly moan about the increasing influence of China, but one of the main causes of China's rise and the US' demise is the US and the disastrous decisions its people and politicians have made over the past decade.


Pat said...

I guess Hillary reads your blog:

Anonymous said...

"The US blew any chance it had to fill this role when it elected an incompetent president, chose to start a war it didn't need to, spent recklessly on a war it hadn't planned for, and refused to see the writing in the sand and change approaches in the five plus years it's toiled in Iraq."

Amen. Hey, I'm starting to notice you post a lot of stories and commentary regarding what things are gonna be like 10, 20, 30 years down the road for the US and China. Would be interested to hear your predictions sometime about US/China relations and their world roles in about 20 years.

Mark said...

I've noticed my recent posts focusing on the distant future too, Hopfrog. I'm not doing this intentionally. Just happens to be the most interesting articles that I'm finding each day.

It's so hard to make predictions about the future. There are some things that we can try to calculate though.

There aren't going to be enough girls. There are going to be too many old people. And now today, economists are predicting that China's economy will have the largest GDP by 2020.One thing that's on China-watcher's radars that I've neglected to talk about for a couple months is water scarcity. North China has no water. How North China, above the Yangtze, will be able to sustain life with no fresh water is going to be fascinating.

It's hard to say how all of these things will play out. They're all very serious issues though.

No matter what happens going forward, we're living in amazing times right now.

I think the beginning of the financial crisis in the fall of 2008 is going to be a watershed moment in terms of the world's balance of power.

Last fall will likely serve as the "emperor has no clothes" kind of moment for the rest of the world and how they changed their view of America and the other most dominant western countries.

Going forward, I really hope that wars aren't going to be seen by world leaders as the escape out of financial crises or collapse.

Anyone who reads this blog knows that I care deeply about China and its people. A future war between a jingoistic America and/or China scares me.

I don't think any kind of war like that is imminent and I don't see one happening any time soon. I just hope that if/when tensions between the US, the world's superpower, and China, the superpower in waiting, that the leaders have cool heads and will be able to see the value in soft power and diplomacy.

Although it is a very imperfect union in many ways, it's true that I'd love to see Chimerica thrive.

As an American engaged to a Chinese woman, I just am not going to be able to stomach these two countries at each others throats.

Anonymous said...

Wow, you just summed up a lot of my own concerns and hope. I agree with everything you just said Mark. I cringe everytime I hear an anti-China story on the news, because even though there is legitimate concerns for product safety and China is known for cutting corners, I sometimes get the feeling that they are being painted as the next 'enemy'. As you know, there is about half the country over here that feels the need to have an enemy for some archaic reason I have yet to figure out. I have a Chinese wife myself and want to see Chimerica also emerge as the next co-superpower.

I love all the stories and commentary about the problems that are lurking to emerge because people need to think about these things. If these things were more thought about 20 years ago, maybe the one child policy could have been changed to a one boy policy and avoided the problem we agree is coming. Interesting that China is about to become a superpower as these problems unfold. Gonna be a stressful life for this generation of Chinese. Trying to maintain a superpower's economy, supporting a large elderly population, and a lot of boys having to feel the dissapointment of not being married every year they go home for CNY.

JobSearchNinja said...

"Success is almost totally dependent upon drive and persistence. The extra energy required to make another effort or try another approach is the secret of winning."

Patel said...

why buying friends, just make friends..:)

Best Regards,
Make Friends, Make Money