Bridging the great divide

Bridging the great divide

By and large, global companies welcome China's growing integration into the international supply chain, even if they complain about China's unfair trade practices, opaque bureaucracy and currency manipulation. Free traders applaud the role that China has played in reducing manufacturing costs. Multinationals also see a long-term opportunity to profit mightily by turning millions of Chinese into eager consumers of global brands. China already is the fastest-growing market for U.S. exports.

Nevertheless, global logistics companies are often unaware that the national security community in the U.S. and elsewhere takes a much darker view of China. Driven by traumatic memories of the Cold War and Japan's attack on Pearl Harbor, many national security types see China as an authentic military threat to the U.S., and a bogus long-term economic partner. A recent Defense Department report, for example, argued that the rapid modernization of China's army and its air and naval forces will soon give China vastly increased capacity to attack the U.S.

Such apprehensions have made their way into "serious" publications such as Atlantic Monthly. Last year, in a sensational report, "How We Would Fight China," Robert D. Kaplan wrote, "The American military contest with China in the Pacific will define the 21st century. And China will be a more formidable adversary than Russia ever was."

What is responsible for the huge divide about China? Completely different mindsets. The national security specialists see globalization as a zero-sum game of power politics, in which China's emergence must inevitably mean losses for the United States. In their view, when push comes to shove, political power always trumps economics, a "dismal science" they would rather ignore. Old-fashioned balance-of-power theory argued that when one country ascends, the other must decline as a counterbalance. Today's globalists argue, in contrast, that both sides will win when trade and investment are truly deregulated - as Chi-na's rapid growth demonstrates. The national security gurus fail to appreciate that China and the U.S. benefit when hundreds of millions of Chinese emerge from poverty with the purchasing power to buy from Starbucks, Hewlett-Packard and Wal-Mart.

Are the globalists burying their heads in the sand about the Chinese military menace? After all, China remains in the hands of the Communist heirs of Mao Zedong. I don't think so. The implicit comparison between today's China and Japan on the eve of World War II is bogus. On the contrary, Japan's attack on Pearl Harbor demonstrated the risks of isolating a major country from the global economy, as China was isolated until recently. Japan's attack on the U.S. came as a direct result of the Japanese perception that their country was unable to access key natural resources or export to key foreign markets. The Japanese militarists who seized power were convinced that their country could prosper only if it acquired additional foreign territory.

Not so in today's China. China's growing integration into the global supply chain means that the Chinese have a growing stake in preserving peace. To prosper, China must satisfy its own needs and those of its trading partners who contract with Chinese suppliers. A military attack on the U.S. or its allies would be self-destructive and insane. Besides, China seems to have learned an important lesson from Japan - namely, that the surest road to prosperity is economic expansion, not military domination.

To bridge this divide, globalists need to better explain the lessons they have learned from their experience in China. Globalists will need to work harder to gain respect from national security analysts who have their enormous political power in Washington but have only a vague understanding of global supply chains. The globalists also will need to make it clear that their eyes are wide open about China's imperfections. The stakes are huge because feverish efforts to demonize China as a potential aggressor could wind up backfiring, and even lead China to weaken its commitments to deregulation and transparency.

To promote healthy dialogue, the U.S.-China Economic and Security Review Commission regularly holds public hearings that bring together experts in academia, business, industry and government to analyze the economic and national security implications of the U.S.-China relation-ship. Its Aug. 3 hearings focused on "China's Role in the World: Is China a Responsible Stakeholder?" The global logistics community needs to make sure that it has a prominent seat at the table during those sorts of discussions.

Alan M. Field is associate editor of The Journal of Commerce. He can be contacted at (610) 296-1233, or at afield@joc.com.