■"China at G-7 Meeting for First Time: U.S. Sticks With Patient Approach on Currency Issues," by Paul Blustein, Washington Post, 2 October 2004, p. E1.
■"China's Land Grabs Raise Specter of Popular Unrest: Peasant Resist Developers, Local Officials," by Edward Cody, Washington Post, 5 October 2004, p. A1.
■Economic Freedom of the World: 2004 Annual Report, by James Gwartney and Robert Lawson, Cato Institute (2004).
Great quote in Post article on recent G-7 meeting which China attended for first time (though it's still a "G-7" meeting, if you get my drift):
"For these meetings to regain any relevance, they need to bring in China—the single most important engine of growth and agent for change in the global economy," wrote Daniel H. Straszheim, an economist at an advisory firm bearing his name, in a note to clients yesterday. "The strong demand an upward march of many commodity prices is largely China's doing . . . Every major company in the world, wherever headquartered, now sees China either as a threat, an opportunity or both."
That's basically what I learned in my "economic security wargames" with Cantor Fitzgerald back in 2000, and now that understanding is permeating down to the average investor through conduits like Straszheim. That love-hate thing is basically the difference I describe in PNM as existing between Wall Street and the Pentagon, with the former seeing the opportunity (mostly) and the latter the threat (overwhelmingly).
Of course, the idiocy is the notion that you have to choose. China is both, and because it's both it cannot be easily pigeon-holed, any more than the peacefully-rising United States at the beginning of the last century.
That is what China most obviously resembles: the U.S. rising in the late 1800s and early 1900s, which is what gives you newspaper stories like the second one above ("land grabs by government" versus "angry peasants). I mean, really, who has "peasants" anymore? That alone tells you it's a blast from our past (though we called them "slaves" and then "sharecroppers").
America has the hardest time with China's distinct yin-v.-yang realities, but again, if we'd just look into our past more, we'd recognize a lot of our previous struggles. America had it's amazing "island at the center of the world" that was totally unlike the rest of the U.S., and that strange island, seemingly with its own peculiar rule set (hell, Manhattan still seems rather foreign today!), generated enormous amounts of connectivity between America's heartland to the rest of the global economy. Frankly, that's what Hong Kong does for China today, as odd as that particular fish seems in that large pond. Most of the FDI that flows into China comes through Hong Kong (or similar Singapore—the "Kevin Bacon" of the FDI world in Developing Asia), and that flow allows China to change at a pace that's both amazing in its speed and somehow still far too slow for some observers. This is how Cato can list Hong Kong as the world's freest economy (#1) and still chide China for being a mostly unfree one (#100). Hong Kong is basically China's cannibalizing agent: a yin that seeks to piece the yang.
And you know what? It will, given enough time and stability. It's not a binary choice, but an historical process. We went through it, and so will they. So it's a matter of living with China, and learning to love it over time.
Actually, that's a decent description of our newly adopted daughter in many ways. Vonne Mei Ling is one very intense cannibalizing agent in our family, altering everything—typically for the worse at first, but ultimately to the better over time. It's easy to resent all the change force upon you in the early part, but you just need to remember what the long-term payoff is.
I now have a Chinese daughter. Ain't easy, but getting easier. Love her now more in the abstract (much like American corporations love the fabled Chinese domestic market: "If I could sell one pair of shoes to every Chinese . . ."), but it becomes more real with each passing day. She's not a yes or a no, a keeper or a return, an opportunity or a threat. She is a process, a connection to larger things, a future worth shaping.
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