Citizen Tom

Two events conspired to draw my interest to this subject.  I saw this interesting post referenced on Instapundit.com.  This post considers the implications of China’s government owning portions of its “private” economy.  Imagine if the United States invested all the revenue it takes in from Social Security taxes into private companies.  Imagine that our government exercised all the latitude it wanted in the management of the “Social Security” fund.  How would this leverage on our economy be used?  How would it be abused?

Next I noticed articles such as this one (here) in today’s Washington Post.  Consider this quote.

China’s regulated oil prices have been blamed for spurring shortages in the domestic market as oil companies hoarded supplies and refineries stopped processing in order to avoid losses. At the previous prices, domestic refineries were losing the equivalent of more than $100 for each ton of crude they processed.

The situation has caused China’s oil company stocks to tank in recent months. For instance, shares of PetroChina, which in November became the world’s first trillion-dollar company by one measure of stock market capitalization, is now trading at half its peak.

As this BBC article notes (here), PetroChina is a state-owned enterprise.  China’s government regulates fuel prices, and it owns and regulates PetroChina.  Sounds like the Chinese government has everything under control, right?  Imagine an economy where everything becomes a political decision instead of just a business decision.  An article in the Wallstreet Journal put it this way. 

With inflation an increasing worry world-wide, the political furor over China’s price controls has been threatening to supplant the longstanding tussle over its exchange-rate policies as the nation’s most contentious international economic issue. U.S. Treasury Secretary Henry Paulson has been talking more about energy. He has urged Beijing to abandon its fuel-price controls, saying the U.S. found out the hard way in the 1970s they don’t work, and raised the issue again at this week’s U.S.-China Strategic Economic Dialogue.

“China’s on the verge of being the main thing the U.S. blames for high oil prices, replacing the Saudis. It’s close,” said Trevor Houser, a China energy specialist at Rhodium Group, a New York consultancy. “The people in Washington complaining about price controls are the same people talking about” the yuan, China’s currency, he said.

On Wednesday, 16 Democratic senators sent a letter to U.S. officials in President George W. Bush’s administration that blamed China’s price controls for high oil prices and urged them to press Beijing on the issue. Signers included former presidential candidate Hillary Clinton. “What Americans see happening at the pump is driven, in part, by what is happening in China,” they wrote. (from here)

Our socialist Democrats blaming communist Chinese for rising oil prices?  I suppose this example demonstrates ideology is not the first priority of a politician.  The first priority of a politician is to shift the blame. 

Anyway, it would appear that China is a much more multi-faceted threat than the USSR ever was.  As China’s economy grows, the “political” decisions of its leaders can easily roil world markets.   However, there is also a positive side.  China serves as an excellent bad example.  When we look at China’s government and economy closely, we can see where our big government advocates threaten to take us.

Recently I saw an article in the Washington Times that got me to thinking.

During a weeklong visit with President Bush last month to five sub-Saharan African nations, Mr. Geldof pointed to the continent’s increasing stability but lamented the lack of U.S. business-sector investment.

“What is it that the Chinese get that we’re missing?” he asked.

The rate of Chinese trade and investment in Africa is exploding, and while it is driven mostly by the government in Beijing, the private sector is increasingly involved. (from here)

What is China doing in Africa? Well, what does Africa have to offer? Here is an example.

Also speaking at the recent Mining Indaba, Carroll said: “I think it is important, though, to set the context as to why Anglo American, as a major mining group, intends to remain a major — and, hopefully, the major — investor in African mining going forward. Quite simply, we see Africa as a land of unparalleled opportunity for the mining and extractive industries.”

The continent is estimated to have the best unexploited or under-exploited mineral reserves.

“It may only cover 20% of the world’s land mass, but Africa is estimated to have 88% of global reserves of platinum and 73% of diamonds. It also has an estimated 30% of global bauxite reserves, 40% of gold, 60% of manganese and 60% of cobalt — not to mention substantial untapped offshore oil and gas fields.” (from here)

With its large booming economy, China’s interest in Africa is inevitable, but what does it portend. I suspect that thought has the Bush administration concerned as well. So it is that we have a new military command to focus on this problem.

In a press availability at Osu Castle with Ghanaian President John Kufuor February 20, Bush said, “I know there is a controversial subject brewing around that is not very well understood, and that’s ‘Why would America stand up what’s called AFRICOM?’”

“I want to dispel the notion that all of a sudden America is bringing all kinds of military to Africa. It’s just simply not true. This is a way of making our command relevant to the strategy that we have put in place,” Bush said.

AFRICOM represents a unique command structure, the president explained. “It is a command structure that is aiming to help provide military assistance to African nations so African nations are more capable of dealing with Africa’s conflicts — like peacekeeping training.” (from here)

Peacekeeping training needs an entirely new military command? What is nature of this the threat?

The People’s Republic of China (PRC) aids and abets oppressive and destitute African dictatorships by legit­imizing their misguided policies and praising their development models as suited to individual national conditions. Beijing holds out China’s unique develop­ment model—significant economic growth overseen by a disciplined, one-party totalitarian state with full authority, if not control, over all aspects of economic activity—as an example for others to emulate.

Moreover, China rewards its African friends with diplomatic attention and financial and military assis­tance, exacerbating existing forced dislocations of populations and abetting massive human rights abuses in troubled countries such as Sudan and Zimbabwe. As a consequence, Chinese support for political and economic repression in Africa counters the liberalizing influences of Africa’s tradi­tional European and American partners. China’s vigorous campaign to develop close ties with indi­vidual African nations also reflects Beijing’s global quest to isolate Taiwan diplomatically (seven of the 26 countries that have full diplomatic relations with Taiwan are African). (from here)

Sounds ridiculous? Then consider this website (here). Here you can find pictures of Chinese leaders meeting happily with the likes of Zimbabwean President Robert Mugabe (see here).

Where is China focusing in Africa? As this web link shows (Jia Qinglin visits four African countries), China has managed to keep some party bigwigs busy visiting various African nations. Aside from Zimbabwe, recent visits included Ghana, Tunisia, and Kenya.

Suffice to say here that China has become the principal investor in Sudan’s oil industry and related transport and infrastructure projects. China was able to do so because western companies, in particular American and Canadian firms, were pressured to withdraw because of Sudan’s civil war and charges of both persecution and use of slavery against the people of the south, including in the region of oil production. Sudan represents the clearest example of how China comes to Africa with what one analyst has called the “complete package:” money, technical expertise, and the influence in such bodies as the UN Security Council to protect the host country from international sanctions. China, together with its partner Malaysia, replaced western companies and enabled Sudan to become a net exporter of crude. China has become its biggest customer. Meanwhile, China has successfully prevented the UN Security Council from serious sanctions or other preventive measures in face of the alleged genocide and crimes against humanity perpetrated in the Darfur region of that country. (from here)

China and the United States have different views on how the world should look. Africa is too weak to counter either power. So how serious is the problem?

China’s sales of small arms to Sudan increased as the violence escalated in Darfur, Human Rights First charged Thursday in a report pressing China to halt arms sales as Beijing prepares to hold its first Olympics this year.

The report says China stepped up its arms supply to Sudan as others cut back to comply with a U.N. arms embargo, making China by far the biggest supplier of small arms to Khartoum — providing 90 percent of all Khartoum’s acquisitions between 2004 and 2006, totaling US$55 million. Small arms such as assault rifles are the most common weapon used in Darfur. (from here)

What can be done? Well, the first step is to recognize there is a problem. The second step is to negotiate a solution. Nevertheless, it sometimes seems we first have to do a lot of negotiating with ourselves.

It is hard to argue with calls to end the bloodshed in Darfur. But some experts say the idea of holding the Chinese government accountable for violence in Darfur may not be realistic. They say manufacturers in countries such as Russia and Belarus can easily replace any withdrawal of Chinese small-arms exports to Sudan. Alternatively, if China stops buying Sudanese oil, another country will take its place. “It doesn’t hurt to yell for an arms embargo, but you need to ask yourself what will make it effective,” says J. Stephen Morrison, director of the Africa program for the Center for International and Strategic Studies (CISS), a bipartisan nonprofit organization that advises the U.S. government on foreign policy. “The markets for both oil and arms are global, so focusing on one country will have limited impact.”

Specifically, Morrison thinks the best outcome of Human Rights First’s campaign would be an agreement by Beijing to bar the sale of small weapons to Khartoum by state enterprises. “That is a perfectly good thing to do,” says Morrison. “It would have political and moral import, but it may change nothing on the ground.”

But Human Rights First is just starting on its pressure campaign against China, which it says can make strategic decisions on arms exports. “We want China to stop its arms transfers now to Sudan, and we want them to do so now,” says Apple. “We think that’s a very possible, achievable goal.” (from here)

Observations

• China already has military forces in Africa. These forces protect China’s assets and serve as peacekeepers.
• Because Africa is on a different continent from China, the can easily interdict any military forces China might send to Africa. That is because we currently have sufficient capacity capacity to do so, but China’s military is growing (see here, here, and here).
• Although the era of European colonization of Africa is over, we must consider the possibility the Chinese government has its own long term colonization plans.