The New York Times
May 29, 2005 Sunday
Late Edition - Final
SECTION: Section 4; Column 1; Editorial Desk; Pg. 10
LENGTH: 752 words
HEADLINE: The China Scapegoat
   The most important diplomatic relationship in the world is between the U.S.
and China. It's souring and could get much worse.
    Alas, the U.S. is mostly to blame for this. And the biggest culprit of all
is the demagoguery of some Democrats in Congress.
    There are plenty of legitimate reasons to be angry with China's leaders, but
its trade success and exchange rate policy are not among them. The country that
is distorting global capital flows and destabilizing the world economy is not
China but the U.S. American fiscal recklessness is a genuine international
problem, while blaming Chinese for making shoes efficiently amounts to a
protectionist assault on the global trade system.
    In fact, China's pegged exchange rate has brought stability to Asia, and the
Chinese boom has tugged Japan out of recession and increased prosperity
worldwide. In recent years, China has supplied almost one-third of the growth in
the global economy (measured by purchasing power), compared with the 13 percent
that came from the U.S.
    Moreover, the U.S. has a history of offering Asia economic advice that
proves awful. U.S. pressure helped produce Japan's disastrous bubble economy and
aggravated the 1997-98 Asian financial crisis. So when American officials urge
an adjustment in the yuan exchange rate, the Chinese should keep a hand on their
    Over the last five years, President Bush has done an excellent job in
managing relations with China -- it's one of his very few successes in foreign
policy -- but lately he has engaged in protectionism. This month he reimposed
quotas on certain Chinese textiles, and the Treasury warned China that it had
better adjust its exchange rate or else.
    Mr. Bush abandoned his principles because he was under attack from Democrats
waving the bloody shirt of lost jobs. Sure, China's cheap yuan has cost us
manufacturing jobs -- but it has also led to a flood of Chinese capital to
America, keeping interest rates low. If we blame China for lost American jobs in
making shirts, we should credit it for new American jobs in banking and
    Americans are also unfair in accusing China of not stopping North Korea's
nuclear program. The reality is that the North Koreans don't listen to the
Chinese about anything, and many on each side look down on the other. Privately,
some Chinese dismiss the North Koreans as ''Gaoli bangzi'' or Korean
hillbillies. And fortified by a bit of liquor, North Koreans denounce Chinese as
unscrupulous, money-grubbing traitors. Whenever I meet North Koreans, I tell
them that the Chinese government doesn't like me -- and my status soars.
    China has been pushing hard in the last two years for a negotiated solution
to the North Korean crisis, and it at least has a coherent policy on North
Korea. That's more than you can say for the Bush administration.
    One of the biggest risks for U.S.-China relations is the -- very outside --
chance that President Bush will order a military strike on the North Korean
nuclear complex at Yongbyon. Most experts say that the resulting radiation
leakage would probably not harm nearby countries, and in any case South Korea
and Japan would be more at risk than China. But any hint that radiation had
reached the Chinese coast would provoke anti-American fury across China.
    There's a third big danger for U.S.-China relations, and this one is Beijing
's fault: China's schools teach hatred of Japan, resulting in last month's
street demonstrations in which Chinese protesters screamed slogans such as '
'Japanese must die.''
    The next act in the drama will unfold at sea. Japanese ships may start
exploring disputed waters for oil and gas in the late summer or fall, perhaps
with military escorts. China's leaders will then be under tremendous popular
pressure to send China's own military vessels to block what Chinese will see as
an armed Japanese incursion. And then Japan will ask the U.S. for help under the
U.S.-Japan security treaty.
    In the past, President Jiang Zemin protected the U.S.-Chinese relationship.
But many Chinese scorned him as ''qin Mei,'' or soft on the U.S. The new
president, Hu Jintao, seems much less likely to go out on a limb to preserve
good relations with the U.S.
    So it's time for Americans to take a deep breath. Poisonous trade disputes
with China will only aggravate the risks ahead, strengthen the hard-liners in
Beijing and leave ordinary Chinese feeling that Americans are turning into
China-bashers. Sadly, they'll have a point.
LOAD-DATE: May 29, 2005