The Journal Editorial Report | April 22, 2005 | PBS
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April 22, 2005

Chanting anti-Japanese slogans, Chinese protestors march in Beijing April 9, 2005. More than 6,000 Chinese protesters held a rally demanding a boycott of Japanese goods to oppose new textbooks that critics say gloss over Tokyo's wartime atrocities. Beijing's own schoolbooks are marked by significant omissions about the communist system's history and relations with its neighbors. (AP/Greg Baker)
Chanting anti-Japanese slogans, Chinese protestors march in Beijing April 9, 2005. More than 6,000 Chinese protesters held a rally demanding a boycott of Japanese goods to oppose new textbooks that critics say gloss over Tokyo's wartime atrocities. Beijing's own schoolbooks are marked by significant omissions about the communist system's history and relations with its neighbors. (AP/Greg Baker)

THE JOURNAL EDITORIAL REPORT panel discusses recent actions of China, the world's second superpower, as it throws its weight around, challenging the United States and its allies. Joining the panel is Michael Gonzalez, the editor of THE ASIAN WALL STREET JOURNAL Editorial Page in Hong Kong.

Chinese Military Most recently, China has threatened Taiwan and attacked Japan for demanding equal power at the U.N. In the end, those decisions backfired, helping persuade Europe not to sell arms to China. However, China will present a continuing challenge, based on its size and strength.

China has the world's largest population, 1.3 billion, the second largest military, and a known nuclear capability. China's new law authorizing the use of force against Taiwan if it moves toward independence has raised fresh security worries for the United States and Europe.

There are concerns about the rise of Chinese military spending and potentially Chinese military power and its increasing sophistication. The United States has promised military help, should Taiwan be attacked. All of this at a time when the U.S. needs Beijing's help on issues like controlling North Korea's nuclear weapons program.

China's military expansion has been fueled by its tremendous economic successes. The U.S. trade deficit with China grew by 31 percent last year, to a record $162 billion. China is sitting on a reserve of $500 billion and because China refuses to comply with President Bush's demands that it revalue its currency, Chinese exports will continue to be cheaper in global markets.

The signs of growth are everywhere. Forty percent of the world's concrete, 50 percent of the world's construction cranes and a quarter of all the steel goes to build new office and apartment complexes in China. The United States now competes with China for concrete and steel on the world market.

The worst may be yet to come -- oil. Today, China consumes only a fraction of the oil the United States uses, but that will change as Chinese citizens switch from bicycles to automobiles. One day China will be bidding for limited oil supplies, in yet another challenge to the United States. Mike Gonzalez

PAUL GIGOT: Do we know if the recent anti-Japanese demonstrations are spontaneous, or have they been encouraged by the government in Beijing?

MICHAEL GONZALEZ: The people I talk to at Peking University, one of the universities where many of the demonstrators in Beijing came from, tell me that the demonstrations were definitely tolerated and even encouraged. There's circumstantial evidence which suggests that the level of involvement was beyond just encouragement.

For example, the demonstrators were bused in often and sometimes even in advance of the work units that are so important in the Chinese companies. There is also the very damning evidence of the police standing by and allowing the demonstrators to run riot, pelting the Japanese embassy and the ambassador's residence with paint and with rocks, shattering windows. I need not add that this is happening in China, where a political demonstration would be quashed within 10 seconds and where a pretty defenseless sect, the Falun Gong, were swept off the street.

This suggests that the Chinese, even if they did not orchestrate it -- and they may have -- at least encouraged things.

Chinese ProtestorsGIGOT: What do you think explains this burst of Chinese nationalism, both in the Japanese instance and regarding Taiwan? What does the government hope to get out of it?

GONZALEZ: Two things. With Taiwan, the government was already in the process of getting the law passed which basically mandates that China invade Taiwan if Taiwan does not rejoin the motherland at a time of China's choosing. The Chinese government then passed it, even though Taiwan was actually giving signs that it wanted a rapprochement with China. The Chinese government just wanted to show its people that it could be tough with Taiwan. If Taiwan began to veer ever more toward its independence, it would be a huge loss of face for the Chinese government because this is one of its sources of legitimacy.

GIGOT: Does this seem to have backfired on China? The EU decided in the wake of the Taiwan law not to sell arms to China and now you have Japan really fighting back on the case of the demonstrations and saying this is going to have a cost in China-Japanese relationship. Was Beijing surprised by the reaction?

GONZALEZ: This has been a horrible two months for China. It suggests a certain Keystone quality to China's foreign policy. On the Taiwan law, they did not expect what they got at all. They thought that they were just passing a very mild law. In effect, people have taken notice that China's rise may not be as peaceful as China would like people to believe.

Also, the Europeans were moving inexorably towards lifting the 15-year-old embargo, egged on by France. It's going to become very difficult for France and Brussels to lift this embargo. The Chinese, by the way, are telling people that they realize they made a mistake with Taiwan, that they passed a law at exactly the wrong time. They told this to U.S. officials and to some reporters. With Japan, that was really the straw that broke the camel's back with regard to the Europeans. I think they are beginning to realize that they've had a very bad two months in terms of their foreign policy.

Condoleezza Rice shakes hands with a Chinese officialGIGOT: Dan Henninger, what do you think this tells us about China's emergence here as a great power? China has been a success of the United States foreign policy in the last four years, with relatively smooth, untroubled times. Suddenly we have this.

DAN HENNINGER: It says that China is in its adolescent phase, really. Just at the end of the week, they had this flap over the Japanese textbooks with China and the war crimes. The Japanese prime minister apologized to the Chinese for that and the Chinese spokesman said something very interesting. He said that is great. He said expressing it is one aspect, what is much more important is the action. You have to make it a reality. This is China's problem. They have to show that they want to be part of the world solution and not part of the problem.

GIGOT: You have a government which is not democratic and therefore doesn't have democratic authority that comes from elections. Instead it has to rely on other sources for legitimacy, does it not?

BRET STEPHENS: That's right. Ever since the death of Mao and the rise of Deng Xiaoping, the Beijing dictatorship has relied on two strategies. One is nationalism and the other is prosperity, a form of capitalism. Economic growth. These have sort of moved in fits and starts and often in opposite directions. Now we're going through a kind of bout of nationalism. That hasn't been helped by the fact that we're having our own bout of economic nationalism here in the United States. There are three anti-Chinese protectionist bills moving through Congress this month. There is this sentiment that the Chinese have to float their currency or else. The National Association of Manufacturers has been crying foul about subsidized Chinese exports and they're getting support in Congress.

Most of these bills are sponsored by Democrats. All of them are violations of World Trade Organization rules, which calls into question Democratic fidelity to multi-lateral international institutions.

GIGOT: This effort to confront China on trade in the U.S. is certainly taking place. What's the reaction of the Chinese to this new U.S. aggressiveness on trade?

GONZALEZ: It's called China bashing, and not just by China but by the sinologist community. I don't think the Chinese get the nuance. They just think that there is a movement, a ground swell in Washington, to bash China, to contain China. They don't see that it is Congress, oftentimes. These bills are put in by Democrats, or you have the more protectionist side of the Congress, people in the South, in South Carolina, that care about textile interests. What they often miss is that the policy that is coming from the White House and from the State Department is definitely very sophisticated. They don't get the nuances.

U.S.-China Trade DeficitGIGOT: Now when you say sophisticated, you mean that the United States government right now is now encouraging protectionism in the United States, but it is pushing back some on the security front. Is that what you're talking about when you say sophisticated?

GONZALEZ: I think that last year, the U.S.-China relations were as good as they have been in a very long time. It is very difficult to accommodate China's rise. Yet I think that the White House has done a fairly good job of just pushing back when China was being nationalistic and then trying to engage it and ease its growth as a world trader. This is I think what we want to do with China.

GIGOT: Wouldn't trade sanctions have the potential to backfire on the United States because so much U.S.-China trade is what we call "intra-company trade." That is, American companies like General Electric farm out manufacturing to China and then import those goods to sell here?

GONZALEZ: Absolutely. The growth in trade also makes China more and more a country ruled by law and not by men. If we see a rising protectionism, within five or 10 years times we may be going -- as we were in the 1950s -- asking that question, "Who lost China?"

GIGOT: What is the complaint you hear most from American businesses in China? What do they most dislike about doing business in that part of the world?

GONZALEZ: American businessmen want to do business ruled by the rule of law. China is not quite there yet. Connection -- guanxi is what it's called here -- matters a lot, whom you know. Even when corruption is absent, businessmen have to spend a lot of time talking to village leaders, that shouldn't have any say on a contract or about getting a permit. They have to get to know them, sometimes drink quite heavily with them. Often there is corruption involved and American businessmen don't like losing a case just because somebody's son happens to be on the other side.

A second common complaint that you get is intellectual property theft, obviously. It is a problem. The American government keeps telling the Chinese they have to get serious about this. The Chinese say, "Yeah, we will," but they haven't done that quite yet.

GIGOT: It sounds like this story of China as an emerging power is going to be with us for a long time.

Photo essay on China-Japan relations >