On both Wednesday and Thursday, the price of oil briefly hit $100 a barrel. The new record made headlines, as well it should have. But what does it mean, aside from the obvious point that the economy is under extra pressure?
Well, one thing it means is that we're having the wrong discussion about foreign policy.
Almost all the foreign policy talk in this presidential campaign has been motivated, one way or another, by 9/11 and the war in Iraq. Yet it's a very good bet that the biggest foreign policy issues for the next president will involve the Far East rather than the Middle East. In particular, the crucial questions are likely to involve the consequences of China's economic growth.
Turn to any of several major concerns now facing America, and in each case it's startling how large a role China plays.
Start with the soaring price of oil. Unlike the oil crises that followed the Yom Kippur War and the overthrow of the shah of Iran, this crisis wasn't caused by events in the Middle East that disrupted world oil supply. Instead, it had its roots in Asia.
It's true that the global supply of oil has been growing sluggishly, mainly because the world is, bit by bit, running out of the stuff: big oil discoveries have become rare, and when oil is found, it's harder to get at. But the reason oil supply hasn't been able to keep up with demand is surging oil consumption in newly industrializing economies - above all, in China.
Even now, China accounts for about only 9 percent of the world's demand for oil. But because China's oil demand has been rising along with its economy, in recent years China has been responsible for about a third of the growth in world oil consumption.
As a result, oil at $100 a barrel is, in large part, a made-in-China phenomenon.
Speaking of made in China, that brings us to a second issue. There's growing concern in this country about the effects of globalization on wages, largely because imports of manufactured goods from low-wage countries have surged, doubling as a share of G.D.P. since 1993. And more than half of that rise reflects the explosive growth of U.S. industrial imports from China, which went from less than 0.5 percent of G.D.P. in 1993 to more than 2 percent in 2006.
Last, but most important, is the issue of climate change, which will eventually be recognized as the most crucial problem facing America and the world - maybe not today, and maybe not tomorrow, but soon, and for the rest of our lives.
Why is climate change a China issue? Well, China is already, by some estimates, the world's largest emitter of greenhouse gases. And as with oil demand, China plays a disproportionate role in emissions growth. In fact, between 2000 and 2005 China accounted for more than half the increase in the world's emissions of carbon dioxide.
What this means is that any attempt to mitigate global warming will be woefully inadequate unless it includes China.
Indeed, back in 2001, when he reneged on his campaign promise to limit greenhouse gas emissions, President Bush cited the fact that the Kyoto treaty didn't include China and India as an excuse for doing nothing. But the real problem is how to make China part of the solution.
So what does all this tell us about the presidential race?
On the Republican side, foreign policy talk is all bluster and braggadocio. To listen to the G.O.P. candidates, you'd think it was still February 2003, when the national discourse was dominated by people who thought that American military might was sufficient to shock and awe the rest of the world into doing our bidding.
Memo: China has 50 times the population of Iraq.
The Democrats in general make far more sense. But among at least some of Barack Obama's supporters there seems to be a belief that if their candidate is elected, the world's problems will melt away in the face of his multicultural charisma.
Memo: It won't work on the Chinese.
The truth is that China is too big to be bullied, and the Chinese are too cynical to be charmed. But while they are our competitors in important respects, they're not our enemies, and they can be dealt with.
A lot of Americans, when they think about the next president's foreign-policy qualifications, seem to be looking for a hero - someone who will stand tall against terrorists, or transform the world with his optimism.
But what they should be looking for is something more prosaic - a good negotiator, someone who can bargain effectively with some very tough customers and get the deals we need on energy, currency policy and carbon credits.
Paul Krugman is Professor of Economics at Princeton University and a regular New York Times columnist. His most recent book is The Conscience of a Liberal.
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