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The China syndrome

Chinese diplomacy is much more complex now that we’ve normalized trade with the superpower.

It seemed like such a cut-and-dried case. In the water, a sailboat always has right-of-way over a power boat because it’s far less maneuverable. Similarly, a large U.S. prop plane is flying along over international waters when a fast and maneuverable Chinese fighter jet bumps into it, and they both crash-land. China blames the United States for being too aggressive. The United States analyzes the situation and realizes that it did nothing wrong. Yet China detains the American crew for several days, steals all secrets aboard the plane, and demands an apology from the United States.

What’s wrong with this picture?

Several analysts have attempted to explain the Chinese attitude, and have developed a kind of consensus about how to understand this bizarre incident. The upshot is, the Chinese are feeling their oats because they now realize that they’re the number-two power in the world. Russia may still be the United States’ number-one threat because it has thousands more ICBMs pointed at American soil than China, but China’s perception is correct. It’s more important for the United States to have good relations with China than with Russia. China knows this and is acting accordingly.

What has changed since the last incident with China is the normalization of trade between the two countries. China is now a very important trading partner, and President Bush will do everything he can to keep it that way. That includes basically allowing China to keep American hostages and steal important U.S. technology. That’s about as deeply as analysts have dug. I want to dig a bit further.

All this is relevant to our readers because trade with China is basically an IT issue. Back when China just exported fine art and clothing to America, it was not such a big deal to have a get-tough trade policy with the Asian superpower. But now that China is emerging as the next India, Singapore, and Malaysia all rolled into one, the fortunes of Cisco, Intel, HP, IBM, and the like very much hinge on free and open trade with it.

I have read dozens of press releases in the last year touting new construction of semiconductor plants in China. And the buzz has it that there are nearly 1 billion highly-educated programmers in training to whom to farm out software development. Expect more H1-B demands coming from that sector as well.

While this is good for the executives and investors of companies with heavy interests in trade with China, it may not be good for you or me. First, it will tighten the labor market, both by exporting software and hardware business abroad and by importing Chinese talent to displace American IT workers. Second, doesn’t it make you a little nervous that the largest army on Earth (line them all up and you could circle the globe at the Equator) will soon have all this technology at its fingertips?

James Mathewson is editorial director of and ComputerUser magazine.

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