During a recent symposium on regional strategy sponsored by the Heritage Foundation of the US, Japan's Okazaki Institute and the Taiwan Thinktank, former Japanese ambassador to the US Hisahiko Okazaki warned that if China gobbles up Taiwan, it will control shipping routes in the West Pacific and South China Sea, thereby challenging US dominance and threatening the strategic positions of the US and Japan in the region.
Okazaki was spot on about the strategic and security significance of China's expansion, but he didn't go far enough. China's economic expansion may be a more important variable in strategic relations in the western Pacific and the rest of the world than its military expansion.
The Asian Wall Street Journal said in a front-page report on July 31 that China's expanding economic and trading power is not only giving both developing and developed countries a headache, but also giving rise to questions in the US such as "How can a tax cut help our economy when it will be spent in stores importing goods mainly from China?" Businessweek magazine has also reported that a massive inflow of low-price Chinese products is crowding out both US-made products and those from other countries.
Japanese products have long been known for their high quality and pricing. After more than a decade of economic malaise, Japan's markets are now filled with cheap products from China. Many small and medium-sized businesses in Japan have been forced to invest and manufacture in China. The capital and technology drain to China has not only compounded the Japanese economy's downturn, but has also made the country increasingly dependent on China. It has also worsened deflation in Japan. Both the US and Japan are feeling the heat of China's economic fever.
Taiwan has also suffered a great outflow of capital and skilled personnel to China. It is also trying to get out of the vortex of the Chinese economy.
If China had a free economy and if it had been selling its products throughout the world based on competitive pricing, no one could have any objections. China's economic power, however, has been built by sacrificing human rights, freedom, democracy and the environment. Even though China is a member of the WTO, it has not implemented many of the WTO's rules. Many WTO rules covering fair competition are simply sidelined by Beijing. This is a case of unfair competition. The expansion of such an economic power is worrying.
Since China's military expansion is more visible, one can defend against it by setting up various security mechanisms. However, the pressure of China's gradually growing economic power can kill those who are not perceptive, just as slowly heating a pot of water kills a frog placed inside it. If no forethought is given and no prevention made today, one will regret tomorrow.
The US, Japan and Taiwan have cooperative mechanisms on regional security issues, but on economic security, the three countries have similar problems and yet lack channels to jointly solve them. The three countries should set up joint discussion channels to strengthen their economic cooperation and work toward a US-Japan-Taiwan free trade area. If official channels cannot be established, then a mechanism such as trilateral strategic talks should be immediately expanded to include economics. Economics can no longer be excluded from regional security concerns.
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