The Coming China Wars: Where They will be Fought and How They can be Won

Citation

Hemphill, T.A. (2008), "The Coming China Wars: Where They will be Fought and How They can be Won", Journal of International Trade Law and Policy, Vol. 7 No. 2, pp. 216-219. https://doi.org/10.1108/14770020810927372

Peter Navarro, an economist and business school Professor at the Paul Merage School of Business, University of California, Irvine has written a disturbing, but welcome, book on the present economic status of a rapidly emerging world power – the People's Republic of China (PRC). Navarro, unlike many western academics, business leaders, and politicians, has not been mesmerized by the PRC's flow of “cheap” imports nor taken in by the illusion of a “friendly” adversary of the West. In this well researched study, the author describes the economic, environmental and social costs (supported by empirical data and factual arguments) resulting from a quarter century of reckless and dangerous Chinese economic growth, with little thought (or apparent concern) given by the Chinese Communist government to the national and international repercussions of both public economic and private business policies.

In this study, Professor Navarro characterizes eight emerging “China Wars.” The first China Wars concerns the widespread violation of intellectual property rights (when properly enforced, a major spur to technological and market innovation) and the concomitant safety and health hazards foreign consumers confront with such poorly manufactured products and contaminated food and food products. Whether it is trademark, copyright or patent violations, the complicit PRC government policy toward counterfeiting and pirating western products, especially computer software, helps reduce the cost of domestic business operations relative to their foreign competitors. Furthermore, such intellectual property piracy helps keep domestic inflation low, creates employment for the country's tens of millions of itinerant and displaced agricultural workers, and generates export revenue. The second China Wars involves the alliance of South Asian Triad drug dealers, international smugglers and corrupt Communist Party officials that establishes the PRC as the world's key player in the global production, transportation, and distribution of illicit drugs. China has become the so‐called “factory floor” for precursor chemicals used in the processing of cocaine. Ecstasy, heroin, and methamphetamine, and presently supports a major transit route for opium out of the Golden Triangle. The third China Wars revolves around air pollution and the Chinese contribution to global warming trends. The PRC's dependency on high‐sulfur, low‐quality coal for 75 percent of its energy needs has resulted in it being the home of 16 of 20 of the world's most polluted cities and having two‐thirds of its 100 most populated cities failing to meet World Health Organization air‐quality standards. Furthermore, The PRC's destructive agricultural policies – encouraging over cultivation, overgrazing, deforestation, and inefficient water use – has increased the intensity of dust storms and the resulting smog (and its respiratory effects) is now being transported via atmospheric jet streams to South Korea, Japan and the Western USA. The fourth China Wars, so‐called by the author “Blood for Money”, focuses on the PRC's increasing demand for oil to drive its expanding industrial economy. Presently the second major consumer of petroleum (using 7 percent of the world's oil production, behind the USA at 25 percent), the PRC presently imports 40 percent of its energy demands and is forecasted to increase foreign oil dependency to 60 percent by 2020. Without major strategic petroleum reserves (presently only a ten‐day supply on hand), the Chinese Communist government initiated a policy of defending against any oil‐flow disruption by negotiating amoral “bilateral contracts” with rogue nations, such as Iran, to physically control oil before it reaches the market. These contracts involve the exchange of oil for ballistic missiles, nuclear resources, defense‐related technology, and affording international political protection for government‐sponsored genocide, e.g. for Sudan in the United Nations.

The fifth China Wars casts the PRC as the world's leading imperialist nation of the twenty‐first century. Throughout Africa and South America, the PRC offers low‐interest loans (as bait) to developing countries to build up a nation's infrastructure – roads, dams, hotels, palaces, parliaments and telecommunications structures – and then sends its army of engineers and laborers in‐country to help in the construction process. In addition, China also sells weapons to these countries military to ensure political control by the rulers, its new “allies.” In return, the PRC directs its financial capital and human resources into the extraction of natural resources, including Bolivian tin, Chilean copper, and Congolese cobalt, back to the Chinese factory floor. This “high‐low” trade strategy results in the PRC dumping cheap finished goods back into the African or South American country, often eliminating demand for local labor and driving up the unemployment rate. The sixth China Wars concerns China's increasing need for water (much of its fresh water supply is now horribly polluted with industrial and human waste). The PRC has constructed some 85,000 dams, the tallest and largest (by reservoir capacity) in the world, for electrical production and agricultural and fisheries usage. Yet, not only does this elaborate system of dams displace millions of Chinese citizens and negatively impact the country's aquatic ecosystems (including drying up the Yellow River), but it is also adversely affecting the food supply, transit routes, and employment opportunities for 50 million people living in the countries of the Lower Mekong River Basin, i.e. Cambodia, Laos, Thailand, and Vietnam. The author characterizes the seventh China Wars as “from within.” The PRC has growing problems associated with a reserve army of the unemployed now measuring 100 million people, tensions existing between the economic “haves” and “have‐nots”, a national culture of bribery and corruption by local government officials who seize land for developers, Muslim separatism and Tibetan unrest under the repressive Han majority (who are importing ethnic Chinese into western China to encourage “Hanification” of these provinces), and 100,000 domestic protests and riots occurring annually. This situation is a potential social and political powder keg. The eighth China Wars, also a challenge contributing to increasing internal social tension, is the challenge of an aging population and a declining public health care system. The PRC is faced with tens of millions of retired citizens without adequate pensions or health care. With a shortage of physicians, the sexual revolution in China, coupled with increasing tolerance of illicit drugs and the transmission of disease via blood (including a looming HIV/AIDS epidemic), is now severely taxing a health care system which has evolved into a “pay‐as‐you‐go” service (China contributes only 6 percent of its GDP to health care), often unavailable to the poor Chinese peasant farmer/factory worker.

Professor Navarro offers what he terms straightforward, “hard choice” policy prescriptions to “win” the China Wars – but no policy options which are particularly novel. To combat Chinese counterfeiting and piracy, he supports a “zero‐tolerance” policy toward intellectual property violations, with punishment meted out by the World Trade Organization. Furthermore, tightening US border security would interdict pirate and counterfeit goods, illegal drugs and “precursor chemicals”, and reduce risks from terrorism. To mitigate Chinese environmental pollution (and improve employee working conditions), minimum environmental, health, and safety standards are recommended to be negotiated with the PRC government in multinational and bilateral trade agreements. Also, the governments of the USA, Japan, Korea, and Taiwan are advised not to tolerate their business operations moving to the PRC to avoid the environmental, health, and safety regulations of their home countries. The author strongly recommends that western and eastern democracies condemn China's aforementioned foreign policy abuses in the forum of the United Nations and, if this fails to get salutary results, seek to strip the PRC of its permanent member veto power. Lastly, with the price of oil continuing its rise (partially fueled by increasing demand from the PRC), Professor Navarro recommends that an energy‐based “Manhattan Project” be instituted by the USA and Europe to wean the West off its oil dependency (and reduce this potential “flash point” in Sino‐US relations) and concentrate its efforts on the development of alternative fuels and energy‐efficient conservation technologies.

In December 2007, the Conference Board issued a report indicating that the PRC's GDP and investment growth rate was not sustainable due to economic imbalances, namely energy inefficiency, income inequality; deficiencies in education and healthcare, social security, and environmental pollution, echoing many of Professor Navarro's insights (Bottelier and Fosler, 2007). In this book, the author has chronicled these serious and growing economic, environmental, and social problems faced by the PRC better than any other analyst. Outside of a couple minor points of contention, such as a statement that:

[…] as China's Communist Party seeks to mold the country into a superpower, it is quickly losing control of its own destiny to powerful foreign economic interests [seeking to export some of their most polluted industries to the PRC] (p. 65).

an unlikely scenario as Communist Party officials have callously factored these costs into their authoritarian decision calculus, or temperature data on global warming (p. 60), many of which have been refuted in the last year (including the ten hottest years of the twentieth century), the real weakness of this book is that it is limited, by the author's choice and profession, to primarily discussing economic issues without the in‐depth geo‐political and military analysis necessary for a comprehensive strategic assessment of the global impact of the PRC's economic policies in coming years. While Professor Navarro does reference and briefly address potential geo‐political and military issues which could arise, the reader is still left wondering: just how politically realistic are his policy prescriptions for winning the China Wars?