– China, Growing Superpower

Be wary of the next superpower
Taipei Times

Advertising A friend of mine said at a seminar that when people speak of "anti-imperialism" or "anti-superpower" nowadays, they are referring to the US. No one seems to have thought of the fact that China will be the superpower of the 21st century. Taiwan should be more concerned about China than about the US.

A few days ago newspaper reports announced the signing of the China-ASEAN Free Trade Agreement. In 2010, together with 10 other Southeast Asian countries, China will establish a free trade area, with a view to including Korea and Japan later on. Of course, it is still too early to tell whether all of this will actually come to pass and whether it will all operate smoothly. Regardless, this is already one step toward China becoming a superpower within Asia and sets it on the path to becoming a global one.

The words "empire" and "superpower" both have negative connotations. Like the British Empire of the 19th century, the "American Empire" relies on military force in dealing with countries with which it doesn't quite see eye to eye. However, a superpower can also be an entity that maintains international political and economic order. With its decline, the British Empire was no longer able to maintain the gold standard, causing the international economic system to descend into chaos until the US rose to take its place. By the 1970s, serious trade deficits in the US obliged it to adopt a floating exchange rate, leading to more economic instability internationally for the next three decades.

In 1985, the US forced Asian countries to revalue their currencies, deeply affecting exports from countries such as Japan, South Korea and Taiwan. This even caused Japan to fall from a peak in the 1980s into a trough that would last over a decade.

As the US began to lose its ability to maintain global economic order, multilateral negotiations became all the more important. This is why in the 1980s Taiwan moved toward entering the General Agreement on Tariffs and Trade, and later the WTO. Through participating in such multilateral organizations, one can guarantee one's rights in international trade.

The implications of this decline extend beyond America itself. Other countries, whose development had relied on the economic order it established, will have to make some painful adjustments. Taiwan, Korea, Japan, Hong Kong and Singapore were all hit by currency revaluation in the late 1980s, and the Asian financial crisis that occurred toward the close of the 1990s. As these countries restructured their industries, they relocated manufacturing to China, which would later become a market for their goods.

Those who bewail Taiwan's prospects tend to look at its internal problems in isolation, although each of Asia's "four little dragons," and Japan, which have relied on the US for their development, have had a bad time of it since the late 1980s.

South Korean farmers were bemoaning their situation throughout the 1980s and 1990s. More importantly, the troubles that Taiwan's farmers went through during the 1980s occurred prior to its entry into the WTO. At the time, farmers' income from alternative means surpassed income from agriculture: they had to work in factories or go into the cities to earn money for subsistence.

The fatal blow came when Taiwan's factories were moved to China. Should the rice bomber, who set off a series of bombs last year and this year, apparently in protest of rice imports, be protesting the rise of the Chinese superpower, or instead Taiwan's entry into the WTO?

The Democratic Progressive Party (DPP) government has been criticized for being inept at running the country, for playing politics and not understanding economics. They have been blamed for the recent widening of the income gap, the drain in talent, a fall in the prices of agricultural produce and slipping competitiveness in the high-tech field. In fact, their guilt is evident, but where does the solution to all this lie?

The DPP government has also been criticized for being blind to major global trends, but are their critics in fact seeing clearly? Taiwan is currently caught between a declining US power and an ascending Chinese one.

The presence of a superpower will lead to both political and economic order and this will provide both advantages and disadvantages for society. The trouble is, the ascending superpower's political intentions

concerning Taiwan are very worrying, leaving Taiwan in a weak position compared to its Southeast Asian competitors.

Taiwan's most pressing problem is how to deal with China as its power grows, and there is no easy answer to this.