Don’t get mad, get cracking

David M. Lampton – The Boston Globe

Published Wednesday, March 16, 2005 – Copyright The Boston Globe
New challenge from the East
WASHINGTON The launch of the Soviet Sputnik satellite in 1957 woke up
Americans: It signaled that the United States could not take its
technological and military superiority for granted.
China has become this generation’s Sputnik. We hear fevered expressions of
anxiety that China is going to overconsume strategic raw materials, suck up
global manufacturing and investment and build a military behemoth that is a
new threat. But the challenges are very different, and the possibilities are
far more positive.
Sputnik represented principally a military challenge. In contrast, China’s
challenge is an unfolding, multidimensional development that will last
decades and could prove far more productive than the Soviet-American contest.
China wants to play ball with America. The question is how America will
perform on a playing field it long dominated.
To address this question one must examine the building blocks of national
power and competitiveness: national investment and savings, education, health
and sound, legitimate governance. China is doing comparatively well in the
first three, far less well in the last. If Chinese competition can push
America to make its own needed adjustments, this is to be welcome, albeit
painful.
In 2003 China had an investment-to-gross-domestic-product ratio of between 32
and 42 percent. This makes high economic growth very likely. Chinese
performance contrasts sharply with America’s. In 2003, the U.S. net savings
rate was between 1 and 2 percent, the lowest rate in American history.
The United States cannot long compete when it borrows for current consumption
while China invests using its own savings. America must rebalance its saving,
investment and consumption priorities. If it does, Beijing’s competition will
have done it a big favor.
As for the second building block, education, let’s look at a field that is
highly germane to economic modernization – engineering. In 2002, China and
the United States granted approximately equal numbers of graduate-level
engineering degrees, though China granted almost 3.5 times as many
undergraduate engineering degrees. And for more than a decade, China has had
about 60,000 students matriculated in American institutions of higher
learning studying science, technology, as well as business, economics and
international affairs.
China is turning out language-proficient, culturally adept and scientifically
and technically capable people at home and abroad in ever-greater numbers. We
must do the same. If China motivates us to do what we should be doing, this
is positive.
Public health is a tricky building block. There are millions of people in
China with virtually no medical care. Nonetheless, China had a life
expectancy in 2002 of 71 years, which compares favorably with the life
expectancy in a much richer United States, which is 77. Yet in 2002 China
only consumed about 5.5 percent of its still modest gross national product on
health expenditures while the United States consumed 13.3 percent, a figure
expected to rise sharply. The point is not that Americans should prefer
Chinese health care, but that if America is to remain competitive it must
control health expenditures.
The security implications of China’s rise merit vigilance. China’s defense
budget has increased in the double-digit range every year since 1990, placing
China in a league with Russia, Japan and Britain. And China has an active
space program, the dimensions of which would surprise most Americans.
China is developing these forces to have military options if it determines
Taiwan is moving unalterably toward independence, to deter Washington from
entering a Taiwan Strait conflict, to safeguard China’s nuclear deterrent,
and to secure its resource lifelines.
Beyond Taiwan, however, the U.S. security situation in Asia is changing less
as a consequence of China’s growing military power than of Beijing’s economic
growth. America’s post-World War II allies in East Asia (Australia, Japan,
the Philippines, South Korea and Thailand) are becoming increasingly
dependent on exporting to China and/or receiving increasing investment from
it.
Consequently, most U.S. allies will not allow themselves to be drawn into
what they view as unnecessary friction with Beijing. This is nowhere more
apparent than in Europe’s likely decision to resume arms sales to China in
the face of U.S. opposition.
The most productive way to enhance security in Asia over time would be to
work with China, Japan and others to build new security structures to
supplement the post-World War II bilateral alliances.
The China challenge, therefore, is not destined to put America out of
business or to cause war. A colossal misstep would be for America to respond
militarily to a predominantly economic and intellectual challenge. If
Americans make the needed corrections at home, adjust security structures
abroad, and all parties manage to avoid war in the Taiwan Strait, China’s
gains can push America and Asia forward.
(David M. Lampton is dean of faculty at the Johns Hopkins School of Advanced
International Studies and director of Chinese studies at the Nixon Center. He
is writing a book about the rise of China. This comment first appeared in The
Boston Globe.)

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