The Chinese Come Calling

What a hoot. The Chinese Communists
invaded Washington on Monday demanding not that we sacrifice our
freedoms but rather that we balance our budget. Creditors get to make
that kind of call. And the Marxists of Beijing, who have turned out to
be the world's most prudent bankers, are worried about their assets
invested in our banana republic.

"China has a huge amount of investment in
the United States, mainly in the form of Treasury bonds. We are
concerned about the security of our financial assets" was the way
China's assistant finance minister put it. Briefing reporters at the
U.S.-China Strategic and Economic Dialogue, he added, "We sincerely
hope the U.S. fiscal deficit will be reduced, year after year." Quite
sincerely, one suspects, given a U.S. budget shortfall this year that
is slated to reach $1.85 trillion.

Suddenly, it was U.S. officials who were
promising deep reform to their disgraced economic system rather than
demanding it from incompetent foreigners. President Barack Obama's
economic team of Clinton-era holdovers, who a decade ago had hectored
China on the virtues of fiscal responsibility, now were falling over
themselves to reassure the Chinese that their $1.5 trillion stake in
U.S. government-issued securities is safe, and that they should buy
more at this week's $200 billion Treasury auction. If they don't,
we're in big trouble.

U.S. Treasury Secretary Timothy Geithner
promised to behave, saying the U.S. is "committed to taking the
necessary measures to bring our fiscal deficits down to a more
sustainable level once recovery is firmly established." Now let's hope
that the Chinese Communists and their natural allies among
congressional deficit hawks will be able to keep him to his word.

And don't blame any of this on peacenik
liberals. The new conciliatory--nay, deferential--tone toward China
precedes the Obama administration, having begun in bilateral talks
during the last years of the Bush administration as the U.S. economy
began its ignominious downfall. It was George W. Bush's treasury
secretary, Henry Paulson, who set the course when the former Goldman
Sachs chairman realized how dependent were his Wall Street buddies on
Chinese goodwill.

But from all of this adversity may come
something good: recognition that the United States is not the
repository of all wisdom. Maybe the Chinese have found a model
different from ours that also works? Might there not be an Arab, Latin
or Indian one that also qualifies and need not be overthrown?

The tone of this week's talks, ironically
held at the Reagan Building and co-chaired by Geithner and Secretary of
State Hillary Clinton, finally signaled the end of the Cold War
assumption that regimes with labels like communist and capitalist
could not form profitable partnerships. On the contrary, as Secretary
Clinton noted, it is time to move from "a multipolar world to a
multipartner world." And President Obama in opening the conference made
clear that the partnership between China and the U.S. is decisive: "The
relationship between the United States and China will shape the 21st
century, which makes it as important as any bilateral relationship in
the world."

Mark it as a historic Rip van Winkle
moment. For those who recall the rhetoric of the Cold War, the idea
that we would someday be cooperating with Chinese Communists because
they had humbled us economically rather than militarily is a startling
turnabout. How did they get to be better capitalists than us, and being
that they are good capitalists, why are we still spending hundreds of
billions a year on high-tech military weapons to counter a potential
Chinese military threat when the weapons they are using are all
market-driven deployments?

A recognition that our tension with China
is not military in nature came at this week's conference in an
announcement by Adm. Timothy Keating, commander of the U.S. Pacific
Command, that agreement had been reached with his Chinese counterparts
on improving relations: "A statement was made by a Chinese delegation
official yesterday [Monday] that no country can develop sound policy if
they try and do so in isolation. And I think that's a great way of
addressing the sense that all of us feel, the desire, to get back
together again and discuss exercises, discuss personnel exchanges,
discuss responses to humanitarian assistance crises and the provision
of disaster relief."

Not bad for a start, and maybe we can help
solve our economic problems by selling our latest high-tech weapons to
China as we do to the rest of the world. Or better yet, we could do
some serious damage to our deficits, and our dependence on the Chinese,
by sharply cutting expensive weapons programs now that the Cold War is
finally over.