China Emerges as Big Winner in Afghan War

by Franz Schurmann

China is awesome. Of all countries in the world, it has been least affected by and has benefited most from the persisting slowdown of the world's economic giant, America. As America gets ever more deeply entangled in the Afghanistan quagmire, global markets ready and eager to move are reluctant to hitch their economies to the American locomotive. As a result, one key part of the world, Southeast Asia, is more and more turning to three Northeast Asian giants -- China, Japan and South Korea -- as substitute engines.

Of the three, only China dominates. Japan, though regarded as the world's second largest economy, will soon enter the second decade of its slump. Like China, South Korea has also survived the American slowdown because of its strong internal market. But neither of these two countries have the productive capacity of China's huge population, a good part of which is enjoying an internal boom that it has not experienced for over 200 years. Southeast Asians fear China. Few are worried that China will politically gobble them up. But they dread its enormous industry, which produces all sorts of modern goods and services and, to boot, sells them at low prices and ever-higher quality. Southeast Asians worry that they will more and more lose jobs to the Chinese industrial behemoth.

One Chinese leader, Prime Minister Zhu Rongji, has done a brilliant job in coupling the three Northeast Asian giants together to become a triad of locomotives to help the 10 nations who make up the Association of South-East Asian Nations (ASEAN) pull out of their slump. The fact that giant China is willing to work together with smaller Japan and South Korea to create an economy-stimulating locomotive convinces the Southeast Asian nations to hitch their wagons to the triad.

Japan and South Korea will invest in Southeast Asia, while China only sells to them. China is the only one of the three that can potentially replace America as the leader of the world economy. It is widely believed now that the world's economic center has moved from the Euro-Atlantic to the Asia-Pacific. If America cannot act as the locomotive of the global economy, then China is sooner or later going to move into that role.

The new Eastern grouping is called "ASEAN 10 + 3," in imitation of the Western "G-7 + 1." The latter began in the mid-1970s as an unofficial instrument of governance over the then rapidly developing world economy. In the early 1990s, the G-7 decided to let Russia -- the "+1" -- join, but kept it out of financial discussions because of its rickety economic structure. In the case of the "10 + 3," the separate number makes clear that the three are not Southeast Asian -- but neither are they American or Western.

But a third and older numerical logo, "ASEAN 10 + 1," includes the United States. In the ASEAN meeting early in November in oil-rich Brunei, Zhu Rongji said "both the '10 + 3' and the '10 + 1' are integral components of ASEAN and must work together." But the "10 + 3" and the "10 + 1" have different mandates. The latter grew out of the original ASEAN, founded in 1967 by Singapore with the behind-the-scenes support of America. Its mandate was security, not economic interests. The main threat to Southeast Asia at the time was revolution, allegedly fomented by Communist China.

In his speech at the Brunei meeting, Zhu Rongji began by saying, "China, Japan and South Korea must join hands and fight transnational criminality." Chinese president Jiang Zemin had already assured President Bush of China's complete support of the "war on terrorism." Nevertheless while both Southeast and Northeast Asians are concerned about terrorism, their major concerns are economic.

It's clear that the Southeast Asians are more and more tilting towards Northeast Asia and away from America. Zhu Rongji, along with China's other over-70 leaders, will soon retire. But Rongji could go down in history as the man who made China into the locomotive that pulled ahead the world economy.

"China hasn't replaced the U.S. (in Southeast Asia)," says American Southeast Asia expert Carlyle A. Thayer. "But it's eating away at American influence unless Washington changes its ways." In the 1960s, President Johnson was so entangled in Vietnam that he couldn't deal with America's deteriorating economy. Bush risks the same in Afghanistan.

In the short run, it seemed that America lost that war, while Vietnam won. But in the end, the awesome American economy beat out Vietnam's rickety socialist one. This time China has transformed its huge economy along American lines, and it, not America, could end up the long-term winner in the global economy.