The Magazine

Trading with the Enemy?

China wants to sell to us. We should be happy.

May 29, 2006, Vol. 11, No. 35 • By P.J. O'ROURKE
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If America's policymakers insist on worrying about the Chinese economy, what should worry them is the calculated ignorance and stupidity about economic principles among China's policymakers. The Chinese have--let us not forget Tiananmen Square--worse politics than we do.

China still legally limits the movements of "immigrant workers" seeking a job. The majority of the population lives in rural areas where the GDP per capita is $415 a year, one-third of the national average. And that's an official Chinese government figure. God knows what's really in peasants' pockets, if they have pants.

I went by car across 150 miles of the back-breakingly terraced, shank's mare-cultivated midget grain fields of drearisome Shaanxi province. To say that the poverty and suffering were unchanged since the Manchu Dynasty was to pay the countryside a compliment it didn't deserve. Worse things than corrupt court eunuchs and rack-rent landowners have swept through Shaanxi in the meantime. The trees are gone. They went into the backyard blast furnaces of Mao's Great Leap Forward. And lives are gone, from people the worst warlords wouldn't have thought to kill, murdered in collective famine and commune purge. I was told that existence in Shaanxi is a lot better than it was before the Open Door policy. It could hardly help but be.

Forget intellectual property rights. Civilization will survive pirated copies of Syriana DVDs. The Chinese don't have physical property rights. All land is leased from the government. The Chinese have no say in that government. The next landlord may be "Gang of Four--The Adventure Continues." Chinese civil rights don't bear thinking about, not that there are enough of them to warrant much thought. But, just from an economic point of view, putting people in jail for clicking on the wrong website icon is not a great marketing strategy.

China's state-run banking system seems to have been modeled on a combination of 1980s American Savings and Loan crisis and Jack Abramoff. I talked to an official of one of these banks. He claimed the situation was under control, with really bad loans down to 10 percent. He said, "This is an international acceptable level." If what you mean by international is Peru.

And China doesn't seem to have learned much from Japan's experience with export-driven growth. The Japanese ended up spending a decade with their economy stuck where the rising sun never shines. That could be disastrous in a country that, for all its growth, is still poorer in per capita terms than the Dominican Republic. And China now has the kind of income disparities that, a century ago, set off a century of miserable turmoil. Great Leap Backwards.

The U.S. trade imbalance with China is the last thing America should worry about, especially since, as I note, there's no such thing.

Although I could be wrong about that. I could be wrong about everything to do with America's China policy. Those of us with a Bush administration level of expertise have been, on occasion, wrong. China is manufacturing so many products for America and selling them to us so cheaply and helping us pay for them. Why? Maybe it is a plot to harm America. Maybe China will be more successful than Japan was at making us poor by giving us things. Maybe the entire Asian economic boom is a wily Oriental sneak attack on America. But if bombarding America with clothing, housewares, CD players, HDTVs, play stations, and PDAs is an Oriental sneak attack on America, it's certainly an improvement over Pearl Harbor.

P.J. O'Rourke is a contributing editor to The Weekly Standard and author, most recently, of Peace Kills (Atlantic Monthly Press).