A Seismic Shift toward China

Look East. While America is preoccupied with the Middle East, directing an occasional nod to an expanding NATO and Europe, an economic supernova is rising in Asia--Greater China. The integration of Taiwan and Hong Kong into the fast-growing Chinese economy is creating a boom that is attracting huge amounts of technology, capital, and skilled immigrant labor from all over the world. We are witnessing a macro-event of immense geopolitical and historic significance (page 50). It's time to ponder the rise of Greater China and the shifting fulcrum of international wealth and power.

Japan is being eclipsed. Europe is being challenged, and the U.S. is torn between benefiting from the Chinese economic dynamo and worrying about China's Big Power aspirations. The good news for America is that the most contentious issue between Beijing and Washington, the future of Taiwan, is quietly being determined not by invading fleets but by invading businessmen. Much of Taiwan's high-tech industry is moving en masse to China--and with it, some 400,000 Taiwanese. Taiwanese students are choosing to study in Chinese, not U.S., universities because they see more opportunity there. If China's political rulers can maintain their patience, the eventual political integration of Taiwan into China is almost a certainty.

What is not so certain is China's political direction. Greater China's share of total world exports already exceeds Japan's, and its economic size will nearly match the European Union's in five years. But the country is still a dictatorship, ruled by an atavistic Communist Party. How long this can last in a society increasingly open and mobile, both geographically and economically, remains to be seen.

Odds are China will follow two other authoritarian Asian countries, Korea and Taiwan, which developed elective democracies after strong economic growth created middle-class societies. A democratic China would probably be more open to ameliorating tensions with other Asian countries and the U.S. in the future. China has outstanding territorial disputes with four Southeast Asian countries over the Spratly Islands and long-standing border disputes with India and Russia. Its domination of Tibet is of concern to many Americans, and its desire to built a modern military force commensurate with its rising economic power worries the Pentagon.

China already resembles the U.S. in building a dynamic, open economy that generates enormous opportunity and attracts students, immigrants, and investment from around the world. Washington should give China credit for this progress, and allow it time to progress politically as well. And China must recognize that the evolution toward a democratic political system would cement its economic gains--and its rising place in the world, for generations of Chinese to come.

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