Unstoppable Easternization?

By | 2017-06-02T18:30:05+00:00 August 30, 2017|
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The Financial Times’ Gideon Rachman has written an excellent new book, Easternization: Asia’s Rise and America’s Decline from Obama to Trump. “The central issue,” Rachman argues, “is how the rise in Asian economic power is changing world politics” and we need to “understand how the governing elites of the big global powers see their roles in the world and the challenges facing them.”

Rachman’s analysis is fair, objective, and cogent. The implications of Rachman’s work for the United States are dangerous—especially since most policymakers are indifferent to Asia’s rise outside of a purely economic “everybody wins” point of view.

No, not everyone wins. They can’t.

Western Hegemony on the Wane
The process of Easternization began when economic power started shifting from the West toward the East in the postwar period. With the opening of China to world trade, this process accelerated. As the
Cold War came to a close in the early 1990s, the push for more globalization (what President George H. W. Bush called “the new world order”) began in earnest. What began as a massive increase in wealth in Asia has now become a seismic shift of geopolitical power.

Before the economic explosion in Asia, as Rachman documents, the West tended to shape world events. Western countries, first in Europe and then the United States, were able to lead the world because of their monopoly on economic and military power, as well as technological innovation. Yet, thanks to the massive transfer of wealth eastward, “the West’s centuries-long domination of world affairs is now coming to a close,” and the great advantages that the West has enjoyed over the East “are fast eroding.”

Throughout his tenure in office, President Barack Obama and his defenders intimated that America’s decline was natural and inevitable and, in any case. well underway. Rather than waste time and resources fighting it, the Obamians believed that they needed merely to manage America’s decline. We on the Right understandably were annoyed and concerned by such unwarranted defeatism. Those of us who voted for Donald Trump understood that innovative change was needed in our political system, to reverse the decline. Yet, the mere election of Donald Trump, in my view, has not been enough to stem the patterns of Easternization.

Reality repeatedly has sent America’s post-Cold War presidents (George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama, and now, Donald Trump) wake-up calls to begin focusing more intensely on Asia. Each time, those post-Cold War presidents have hit the proverbial snooze button. Instead, they opted mindlessly to continue the free trade policies that allowed China to sap America’s economic might and build up their own.

During former President George H.W. Bush’s presidency, we had to respond to the Chinese Communist Party’s brutal massacre of pro-democracy protesters in Tiananmen Square. Beijing faced some sanctions, but in the end the Bush Administration squandered a key opportunity to press for real change in China. Bill Clinton faced both a North Korean nuclear weapons scare in 1994 and the Taiwan Strait Crisis in 1996, when China looked poised to invade long-time American ally, Taiwan. In 2001, George W. Bush had to face China after they forced down a United States Navy E-3 spy plane flying near Hainan Island.. As these events continued and, even escalated, we ought to have seen a shift in policy. Yet, the greedy free traders in America used their influence and access to get presidents to back down.

30 Years of Economic Warfare
In the first nine months of the Trump Administration, Asia has become a topic of concern again. During the 2016 presidential campaign, Trump spoke forcefully about holding China (and other Asian states) accountable for unfair trade practices that damaged America’s economy and harmed American workers. During the transition, Trump
ruffled feathers when he accepted a congratulatory phone call from President Tsai Ing-wen of Taiwan—disturbing the Chinese leadership, which views Taiwan as nothing more than a breakaway province. Of course, we’ve had to contend with the ticking time bomb that is the North Korean nuclear situation. And, there remains the irksome unfair Chinese trade practices that have persisted for more than 30 years.

During that time, China has practiced a form of economic warfare against the United States; it has used our free trade practices as a weapon against us. Thanks to these practices, America’s trade imbalance with China runs at around $347 billion. Although the U.S. economy remains the largest in the world (in GDP terms), China’s is now the second-largest and closing in fast. In terms of purchasing power parity, China became the largest economy in the world in 2014—the same year that America distracted itself with reigniting its age-old obsession with the Russian bear. We should be focusing on China’s rise, not Russia’s inexorable decline.

China’s economic growth has fueled an astonishing military modernization. The Chinese military is now a truly potent force that is rising to challenge the Western-led international order in Asia. While China’s technological capabilities remain subordinated to the West (theirs is a highly imitative rather than innovative technological capability), the Chinese are gaining on the West, thanks in large part to their cyber theft and industrial espionage capabilities directed against Western businesses, academic institutions, and governments.

It is only a matter of time, however, before China’s supreme economic prowess coalesces into dominant technological innovation. In fact, the accounting firm KPMG has long speculated that the next great innovation hub would be in China rather than the United States, given how far China has developed its technological capabilities.

Who Lost (to) China?
You can thank the free traders for this. The one group of influential people who were totally opposed to the kind of free trade that has empowered China were led by Steve Bannon, the chief economic nationalist in the United States today. Unfortunately, the economic nationalists have mostly been removed from the Trump Administration. Meanwhile, the faction that benefits most from maintaining the status quo with China, the billionaires who comprise Trump’s economic policy team, now have the ear of the president. And, the military leadership in the Trump Administration is more concerned with the War in Afghanistan and Russian irredentism in Europe than with China’s economic warfare.

Bannon still maintains a firm grasp on the reality of the world we’re facing: unless drastic action is taken to reverse the trend of Easternization through trade protectionism and an increased military focus on Asia, the United States will become a middle-rate power in a Chinese-dominated world.

“The strength of regional support for a continued strong U.S. role makes America’s determination to push back against Chinese hegemony both morally defensible and strategically feasible,” Rachman writes.

Yet, the pull of Easternization is great. The inability to push back against unfair trading practices will only ensure that any American resistance to Chinese hegemony will miss the mark, as the four post-Cold War presidents all have. Although Rachman believes that continued trade with China will mitigate the potential for future war, it’s more likely that Bannon’s view of restricted trade with China will provide the means for the United States to slow China’s rise and deter a future war.

Each day that the United States fails to reform its trade policies is another day that Americans (other than the upper 20 percent of wage earners) are left in the lurch. And the stronger China becomes, the more interested it will be in toppling America’s position as the global hegemon. So barring a serious course correction, it really is only a matter of time before Easternization permanently diminishes America’s power and standing in the world. Once that happens, there will be no going back.

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About the Author:

Brandon J. Weichert
Brandon J. Weichert is a contributing editor to American Greatness. A former Republican Congressional staffer and national security expert, he also runs The Weichert Report, www.theweichertreport.com, an online journal of geopolitics. He holds Master's degree in Statecraft & National Security from the Institute of World Politics in Washington, D.C. He is also an Associate Member of New College at Oxford University and holds a B.A. in Political Science from DePaul University. He is currently completing a book on national security space policy due out next year.
  • hamburgertoday2017

    Painfully true.

  • Peter63

    China itself, however, has an economy which is a Ponzi scheme with its unfundable debts.
    This may bring its power down.

    • Leatherneck

      What “unfundable” debts?

      • Peter63

        China’s government is hopelessly indebted in two ways.

        [1] It has erected all manner of gigantic public works – including whole cities full of
        offices and dwellings no one buys or rents – in order to make employment for its population who have swarmed from the countryside to urban areas demanding a better quality of life. One of these works, representatively, is the high-speed railroad which connects 29 of the country’s 33 provincial divisions, is 14 000 miles in length
        and on which the trains run at between 155 and 217 mph.

        This railroad and the rolling-stock on it make many others in the world look pitifully
        primitive. One travels through stations which are marble palaces; aboard you hardly notice the movement of the vehicle, it is all so smooth; and – here is the snag in this piece of amazing perfection the cost of a ticket from Beijing to Nanjing (the old capital 559 miles southward) is only $30 (US). That is to say, this railroad system cannot pay for itself commercially.

        [2] Optimistic propaganda from the government has induced in the Chinese people over long years the view (which in fact historically has also been their default mindset) that if a big problem arises, especially an economic or financial one, the government will fix it. They too, like most socialists, believe that any government has a magic-money-tree to which it can turn at will. Each Chinese individual supposes at the back of his mind what bankers in the west correctly assumed and put to the test: that whatever risks he or she undertakes, the regime will underwrite it.

        If you are a middle-class Chinese saver (and that nation, to its ethical credit, is keen on saving) you have a choice. A bank deposit will offer you about 2% interest; but you CAN choose to invest in something else the banks offer – a Wealth Management Product (WMP). This pays about 7%. In the past 10 years customers have chosen almost $12 trillion of WMPs; and these are the biggest Ponzi scheme (apart from the current world economy as a whole!) in history.

        Proceeds from sales of WMPs are loaned to speculative real estate developers and
        unprofitable state enterprises (SOEs) at attractive yields in the form of notes. So they are like the CDOs which sank Lehman Brothers in the panic of 2008.

        The borrowers behind the WMPs cannot pay their debts. They are relying on further
        bubbles in real estate or easy credit from the government to meet their interest obligations.

        When a WMP matures, the bank customer is encouraged to rollover the investment into a new WMP. If the customer wants his or her money back, the bank sells a new WMP to another customer and that sale pays off the departing
        customer. The new client now steps into the shoes of the first one
        in the same (enlarged) pile of bad debt. Sheerest quintessence of
        Ponzi.

        Why has the Chinese
        government allowed and encouraged this? It is terrified of its own
        people. It knows full well that it has no fundamental legitimacy
        politically. There are only two sources of authority recognised by
        humankind throughout history: (1) the belief that God Himself has
        instituted the nation’s system of rule – hence, religious
        coronation of monarchs in several lands; (2) the belief that the
        government rules by the will of the people.

        The Communist Party in
        China can make neither claim and knows that – should once living
        standards in that vast country really fall – it might well not
        manage to contain the resulting unrest.

        So it kicks ITS cans
        down the road; just like the US Congress!

        At the moment it is
        hanging on to the economy by its eyelashes, waiting to get President
        Xi confirmed for years (perhaps life?) at their party assembly next
        month before trying to think of some desperate, drastic, hopeless way
        out in (roughly) January or February at latest.

        There is no way out.

        Does this help?

        • Leatherneck

          So then, the USA doesn’t have “unfundable” debt? Our National debt is rapidly approaching 20 Trillion dollars.
          China’s National debt is currently 4.3 trillion, equivalent to about 41% of GDP which in 2016 was 11.2 trillion USD.
          America’s National debt is currently $19.8 trillion or about 106% of the previous 12 months of GDP which was 18.57 trillion USD (2016). And … we owe China approximately 1.2 Trillion.
          It looks as if they are in much better shape than we are, thanks to the past 30 years of our government’s fiscal stupidity.
          President Trump is doing the best he can to fix this disparity, but the obstructionists in both the RepubliCANT and DemoncRATic parties are preventing him to accomplish as much as we’d prefer.