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China: Already on Top?

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"The Communists have taken over the World Bank!"

So far, this phrase hasn't appeared on Glenn Beck's infamous chalkboard. I'm still waiting for Beck or Rush Limbaugh to make a big stink that the World Bank's chief economist is from Mainland China. Justin Yifu Lin has been in his position for more than two years and the right-wing crazies have been largely silent. Maybe they're too busy attacking their fantasy version of President Barack Obama -- the Muslim/elitist/socialist-in-chief -- to pay much attention to what's going on in the real world.

Of course, Justin Yifu Lin is not your typical communist. Born in Taiwan, he was an outspoken nationalist in his student days. That was before he defected to the Mainland in 1979. In the 1980s, he earned his PhD in economics from the University of China and then studied at Yale. On his return with the first such degree granted to a Chinese national since the Cultural Revolution, he was instrumental in guiding the market transformation of the Chinese economy. Now he's based in Washington, DC, where he's applying his experiences to transitional economies around the world.

Lin is an advocate of China's "tinkering gradualist approach." He has criticized the IMF's shock therapy approach as "shock without therapy." And he's agnostic about what kind of government is best for implementing economic reform. "I think that we do not know what kind of governance structure is the best in the world," he told Evan Osnos of The New Yorker. "If you look into Japan, and also Germany and the U.S., they are all so different."

The coverage of Lin's appointment in The New York Times and The Weekly Standard stressed that Lin was the first chief economist not from Europe or the United States. He was also the first appointment from a "developing country" (this word choice seems odd: if the world's second largest economy is a "developing" country, then perhaps we've outgrown this particular nomenclature). But the decided lack of controversy surrounding Lin's installation at the World Bank suggests that an even more radical transformation has taken place. China has become such an indispensable world power that its penetration of the top levels of international financial institutions is, basically, a non-story.

It gets more interesting. Earlier this month, Forbes magazine released its list of the most powerful people on the planet. At the top wasn't Bill Gates or the Google boys or even Obama (who was head of the class last year). It was Chinese leader Hu Jintao. "Unlike Western counterparts, Hu can divert rivers, build cities, jail dissidents and censor Internet without meddling from pesky bureaucrats, courts," observed Forbes wistfully. For all its criticism of big government, the Forbes crew clearly yearns for a leader with a firm hand.

China's international influence is measured not only by its presence -- in the World Bank, on the Forbes list -- but also by its absence. Obama recently toured Asia in a sweeping arc around China's borders to India, Indonesia, South Korea, and Japan. The agenda was all too transparent: encourage our friends to buy weapons, sign up for missile defense, and keep an eye out for a restive China. Loose talk of China's ambitions for a blue-water navy has encouraged Asian allies to huddle closer and boost military spending, although China's naval intentions are more likely defensive, as Foreign Policy In Focus (FPIF) contributor Greg Chaffin points out in a Focal Points blog post. Meanwhile, Washington cozies up to Russia with a new plan to cooperate on a system to protect against long-range missiles, which conspicuously leaves China out in the cold.

Still, China is too important to ignore, so the Obama administration is trying to have it both ways. The United States, I write in With a Lot of Help from Our Friends, "has pushed through a large arms deal with Taipei but also restarted military dialogue with Beijing (China canceled military exchanges in response to the Taiwan deal) and possibly space cooperation as well. The administration has intervened in the South China Sea dispute but also indicated that it might lift the 21-year-old arms embargo by selling C-130 transport planes to Beijing. The United States realizes that it needs China -- to influence North Korea, to maintain economic growth, to balance Russia and India and even Iran."

This have-it-both-ways attitude extends to the global economy. In Seoul at the G20 summit, the United States failed to force China to raise the value of the yuan or to agree to limits on trade surpluses and deficits. "The artificial setting of a numerical target cannot but remind us of the days of a planned economy," said China's top negotiator at the G20, tweaking his capitalist interlocutors. At the same time, Washington can't afford to alienate the largest holder of U.S. treasury bonds. Any serious attempt to pull the global economy out of its rut must involve China, if not as a partner than at least as a willing participant. This need for Chinese support extends to the key demands of economic justice activists, namely a financial speculation tax and controls on excessive speculation in commodity markets, which FPIF guest columnist Sarah Anderson spells out in Fighting Finance from Below.

So, like Sarah Palin, China is suddenly everywhere. It's just a matter of time before Hu Jintao will have his own reality show (Hu Jintao's China) or appear on Dancing with the Stars to whirl Snooki around in a foxtrot. And when that happens, it won't seem out of the ordinary. That's the true mark of hegemony: to slip into power by invitation not intervention. In the end, the strategic competitors simply shake their heads. "China," they'll say, "Can't live with it, can't live without it."

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