Inside the glass house: by Thalif Deen

8th April 2001

Will detained plane affect plain sail of China-US trade?

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NEW YORK— The stand-off between China and the United States over an American reconnaissance plane detained after an emergency landing on Hainan Island last week is reminiscent of the Cold War confrontations of a bygone era.

The rhetoric is virtually the same, only the adversaries are different: the "sneaky Russians" have now been replaced by what American hard-liners call the "inscrutable Chinese".

Besides demanding the release of the 24 American crew members, the US is also seeking the return of sensitive surveillance equipment carried onboard the EP-3E Aries II aircraft which was on a routine aerial surveillance mission over the coasts of southern China.

But one comedian wondered last week why the Chinese would ever want to keep the spy plane for themselves: aren't all electronic equipment in the United States "made in China" anyway?

The right-wing Republicans are already threatening to penalise China even if the crisis is resolved: deny Chinese entry into the World Trade Organisation (WTO), deprive them the privilege of hosting the 2008 summer Olympics and cut off trade ties.

Besides the negative political fallout, the current confrontation could have a devastating impact on the thriving two-way trade between the US and China estimated at over $160 billion.

In the field of consumer electronics, the "made in China" joke is more of a hard reality. 

If you walk into any electronic store in New York, chances are that more than 80 to 90 of the products on sale are either made in China, Taiwan, Korea, Singapore, Malaysia or Thailand.

Perhaps the ultimate irony is that more and more Americans are now saluting their national flag which carries the label: "made in China" or "made in Taiwan".

For a long time now, American jobs have been exported overseas because of cheap labour in Third World countries. The Americans call them "sweatshops".

The result: A tidal wave of inexpensive consumer products which keep flooding the multi-billion dollar American consumer market every year.

A cut-off or even the downscaling of trade between China and the US could hurt both countries.

Last week the US put on hold a proposed $27 million contract for 480,000 black berets for the US army. Among the bidders, China had the inside track on the contract.

Currently, China is the world's third largest economy, ranking behind Japan and the US. 

In terms of international reserves, China accumulated a hoard amounting to a hefty $162 billion last year, just behind Japan with $338 billion. 

In constrast, US reserves last year averaged only about $55 billion, even though the American economy has remained more vibrant than that of the Japanese or the Chinese.

The disputed island of Taiwan, another potential flashpoint for China, had the world's third largest stockpile of international reserves amounting to $106 billion.

By way of comparison, Sri Lanka's international reserves averaged about $1.5 billion last year. The wide gap indicates the magnitude of the world's giant-sized economies.

As one of world's five major nuclear powers with a veto-wielding permanent seat in the UN Security Council— along with the US, UK, France and Russia— China is an Asian superpower in its own right.

But in the world's arms bazaars — where there is a thin line of distinction between friends and enemies— China has been on a shopping spree building a massive arsenal of weapons despite the fact that the US has refused to sell state-of-the-art armaments to Beijing.

The Chinese weapons have come not only from Russia but also from some of America's staunchest allies, including Israel, France and Britain.

The right-wing Republicans have argued that these weapons —airborne early warning systems, aircraft carriers, submarines and anti-missiles systems — threaten US strategic interests in the region and possibly the US itself.

A country with over 1.3 billion people, China has the world's largest military with a total strength of more than 2.5 million.

Back in 1994 and 1995, the US Naval War College conducted two computer simulations of battles in Asia between China and the US in the year 2010.

"To everyone's surprise," the New York Times reported, "China defeated the US in both."

According to the Times, the Central Intelligence Agency (CIA) too conducted its own simulation of a battle set in the year 2005 — and China won that too. Simulations, of course, don't prove anything. But what the US has to figure out is: Is the Chinese threat real — military or otherwise?

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