On May 17, Henry Kissinger, mentor of the ruling US neocons, met Chinese president Hu Jintao in Beijing. Also present were hardline foreign minister Li Zhaoxing and Xiong Guangkai, deputy chief of Chinese People's Liberation Army (PLA). China's Premier Wen Jiabao was absent. Hu said the US-Chinese ties would prosper if both nations "understand and handle their disputes and concerns." What are their disputes and concerns? America is in debt. The dollar is kept buoyant by China and Japan which hold huge dollar reserves invested in US securities. American jobs are outsourced. And US soldiers are bogged down in Iraq. Meanwhile, North Korea mocks President Bush. It represents a real nuclear crisis, unlike Iraq with its fake nuclear crisis manufactured by America. And America continues to pretend that North Korea is independent of Chinese control.
China prospered because of corrupt US administrations that subverted America's security. Now China has the North Korean dagger at America's throat. America belatedly harps on China's record on human rights. It criticises the artificially deflated Chinese yuan that allowed Chinese products to flood the US market. For decades US firms happily denied jobs to Americans by exploiting slave labour in China. Now America worries!
Defence Secretary Rumsfeld affirmed America's right to use nuclear weapons against hostile nations producing weapons of mass destruction. He meant North Korea. Either it's bluster or dangerous desperation. America has no answer if China starts launching conventional wars through proxy nations controlled by the PLA.
But according to Strategic Forecasting Inc, China is vulnerable too. To fulfil WTO commitments, China, by December next year, must open up to foreign banks. Foreign banks would attract the bulk of China's private savings now funnelled forcibly into Chinese state banks. Chinese banks give bad loans to state owned enterprises employing 60 per cent of China's urban work force. Half of China's GDP is spent this way. If these loans stop there would be widespread unemployment and social unrest. China's government could collapse.
If China walks out of WTO, foreign investors would leave en masse. The conflict of interest between China's liberals and corrupt hardliners seems unbridgeable. A power struggle could emerge. America waits. In this context, South Asia stands poised between both powers. Blind dependence on either would be dangerous. To insulate South Asia from a Sino-American cold war, India and Pakistan should sink differences and create a union. Only then could they safeguard themselves.
(Puri can be reached at email@example.com)