Sizing up China

As Premier Wen travels around Asia these days trying to assuage fears about his country’s seemingly unstoppable rise to eminent world power, one wonders whether the other regional powers recognize China’s emergence as a threat or an opportunity. Probably they see it as a bit of both – and the ratios differ depending on who we’re talking about.

Japan is likely leaning toward the "threat" side. Though relations between the two are stable and getting warmer (after the end of the Koizumi era and the many Chinese protestations at his visiting the Yasukuni shrine), Prime Minister Shinzo Abe over the weekend nixed the idea of having an annual China-Japan-Korea powwow. On the plus side, the Chinese premier said he would visit Japan soon – something that hasn’t happened for a while. Japan has a more hardline approach to the North Korean problem than the Chinese, who are the closest thing the DPRK has to an ally; Abe’s suggestion of tying the issue of Japanese abductees to the 6-party nuclear talks has drawn calls of "that’s your problem" from not only China, but the rest of the region.

Nations around the world bristle at the continuing buildup of China’s military capabilities, which has sometimes run into dubious legal territory. But economic and military power go hand in hand with being a world power, and China will undoubtedly become a world power.

But China’s new clout offers much to other Asian countries. For one thing, all the foreign investment that has poured into the Middle Kingdom for the last decade is creating a bit of a risk for multinational corporations. Many are starting to diversify operations to countries like Vietnam and Indonesia to offset the chance of protective tariffs on Chinese goods and the rising price of Chinese labor. Of course, the upward trajectory of the RMB doesn’t help the country’s image as the world’s factory.

Another problem, commonly cited, is China’s chronic lack of talented workers, especially at the management level. Even though MBA programs are popping up in every city – many with foreign participation – the stark absence of creativity in the national public school curriculum means the biggest companies will continue to poach the best employees from one another in desperation.

Despite its shortcomings, China will not lack for foreign investment for some time. But its rise can also provide a boost up the global economic chain for its poorer neighbors.