In his conquistador age, King Philip II believed that the silver of Mexico and the gold of Peru would make the greatness of Spain. In this he relied, no doubt, on the wisest economic counselors of his day. In our similar age, Vice President Dick Cheney, holding similar views of oil and similar military advantage, has no similar excuse.
The merchants of Rotterdam knew that industry and commerce, not empire, are ultimately decisive. And China's bid for the American oil company Unocal confirms that they were right. As it happens, there is no Unocal pipeline through Afghanistan. But suppose there had been? How easily our strategic asset could have become the property of the People's Republic, painfully built and painlessly acquired.
Not that it would have mattered much. For the source of China's rising power -- its ability to buy petroleum and grain as well as to make cash bids for American corporations -- does not lie in the companies it controls but in the goods stacked high in the ports of Shanghai and Hong Kong. So long as we buy what they sell, this can and will endure. Meanwhile, American soldiers bleed for Cheney's philippics.
China today is attacked from opposite ends of our political spectrum: reviled on the left for low wages and outsourcing; feared on the right for rising military power. Occasionally, the two sides swap arguments. In a recent paper, Scott Lilly of the Center for American Progress warned that "China's geo-political ambitions...are clearly less benign than proponents of unbridled U.S.-Chinese trade would want us to believe." Meanwhile, former Reagan Treasury official Paul Craig Roberts writes that "the rise of Asia is coming at the expense of the American worker."
Let me offer a different view. China is far too clever to confront American power directly. Like Europe and Japan 50 years ago, China realizes that the clear path to prosperity lies in allowing us to provide global security at our expense. And our leaders have foolishly accepted this burden. It's this choice, and not low-wage competition, that's leading to our failure to create the new industries and jobs American workers need.
China remains poor, but China is not Haiti, nor even the squalid sweatshops of Saipan, beloved of Tom DeLay. Its cities are not slums. Yes, when measured in dollars, Chinese wages are low. But factory wages are higher than other wages, and the jobs they offer are desirable. Security fences do surround the country's special economic zones at places like Zhuhai, near Macau. But they face outward. They exist so guards can check the IDs of those who wish to enter; there's no control on those who might wish to leave.
The cost of living in China is unbelievably low, and apart from housing, it appears to be falling. A worker in Beijing (where female factory workers must retire at 50) re- ceives a full pension of $100 per month. But she pays just $10 to lease her (rent-controlled) three-room courtyard home in the old district. In Shanghai's Xiangyang market, surplus Tommy Hilfiger, YSL, Boss, and Gucci goods flood the stalls; vendors take what they can get. A silk polo shirt, listed at $90, sells for less than $10; cotton for half that. At a good restaurant near Fudan University a dinner of fresh fish, clams, mussels, shrimp, vegetables, soup, and beer costs $40 -- for 10. And that's fancy dining. Ordinary workers eat noodles and dumplings, tofu, soup, and rice for pennies.