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Thursday, April 27, 2006

Ostracism or Trade? How Best to Deal With China

In my recent post on Keith Locke and nuclear power, I was drawn into a debate on trade with China in the comments box.

At one point I wrote

"I view trade with China today as completely irresponsible and morally reprehensible."

Dave Christian replied

Oh dear. I expected better of you. The living conditions of Chinese people will improve if we refuse to trade with them? The Chinese government will change it's policies for the better if we refuse to trade with them? Or should we just invade and kill them in large numbers to improve their lives? Your case would be helped if you could give ONE example from history where a trade embargo (alone) had a positive influence upon the target country. Or is it just that you have never heard of comparative advantage and think cheap production of goods is somehow cheating us of something.

I think Dave's comment deserves a comprehensive response.

Just to clarify. I am an advocate of free trade. I am a dyed in the wool Adam Smith fan. I believe free trade will benefit Kiwi and Chinese alike-economically that is.

There is only one valid reason to interfere with the free flow of goods and services. There is only one reason why a government may legitimately block trade. That is, on the grounds that national security is at stake.

Clearly if we were at war with China, Australia or the Malagasy Republic, it would be perfectly legitimate for the government to ban trade with the enemy nation.
In fact it would be treasonous if they did not.

What if we are in a pre war state? What if we had good reason to believe that another nation had designs on our sovereignty, or on that of our allies? Would it then be justified to ban trade with that nation?

It is highly possible that in the next 20 years, China will go to war with our ally, the USA over our friend, Taiwan.


I don't relish that prospect, but it certainly considered as a real possibility by many responsible military and strategic thinkers.

Should we be aiding, in any way, the strengthening of the Chinese economy to make China's victory more probable in such a war?

Should we instead ostracise China, increase our trade with Taiwan and by so doing, decrease the chance of war?

Ostracising rogue nations is far more moral and more likely to achieve real change than "building bridges" for the tanks to roll across.

The socialists understand this very well. They didn't advocate increasing trade with South Africa to bring down Apartheid. They worked tirelessly to ostracise South Africa and they were ultimately successful.

Now some socialists are trying to do the same to oust Mugabe in Zimbabwe. Even though it was they who helped install him in the first place!

How does the US government try to tackle the mafia. Do they engage with them? Do they encourage their business enterprises in the hope they will mend their ways?

No, they work hard to cut off their funding in every way possible.

The answer to dealing with evildoers, whether it be the Chinese Communist Party, the mafia, the local teenage gang, or a naughty child, is not to engage with the destructive or attention seeking behaviour.

The answer is to ostracise. Leave the evildoer to stew in his own juices. Withdraw your support. Evil cannot survive, but by leeching off good. The Chinese Communist Party would implode very quickly if the West refused to deal with them until they disbanded the Communist Party. .

Do I believe this will happen, Dave? Not on your nelly. Economic integration between China and the West is now so extensive, that barring miracles, nothing will reverse it. I do however think we should do everything possible to slow down the progess of the Chinese Communist Party.

If nothing changes, does that mean that China will eventually strike out militarily, with disastrous consequences for our region? Unfortunately, I think that is a very strong possibility.

I hope I am wrong.

9 Comments:

Blogger Oliver said...

That's rather concerning that you call opponents of the apartheid regime 'socialists', Trevor. Did you personally think that the apartheid regime was better than the existing goverment in South Africa?


There is only one valid reason to interfere with the free flow of goods and services. There is only one reason why a government may legitimately block trade. That is, on the grounds that national security is at stake.

Damn right! Presumably that includes foreign ownership of strategic areas of the economy, Trevor? The first time I've agreed with you.

5:41 PM  
Blogger STC said...

Evil cannot survive, but by leeching off good

Was that a religous statement, Trevor?

5:48 PM  
Blogger Trevor Loudon said...

Oliver-yes I have blogged against the sale of the Lyttelton Port Co to Chinese linked Hutchison Whampoa. However if it was a Taiwanese, Australian or British Company, I wouldn't have had a problem. It is which foreign country that is involved that may be problematic. In general I'm very pro foreign investment and priate ownership.

STC no, just the frustrated poet in me coming out.

7:35 PM  
Anonymous belro said...

Foreign ownership is not a problem, if you can enforce the company to act according to local laws, and defend your legal system if the act of enforcing laws causes lawlesness or war.

Think about it. They exchange an income stream for a capital outlay. surely whoever is selling the assets must value the capital more than the income?

Another damn great reason not to have SOE's.

10:19 PM  
Anonymous Anonymous said...

Oh what crap. you have no evidence whatsoever for this "yellow peril"/ Tomorrow when the war began scenario. None whatsoever. Sad really.

3:20 AM  
Anonymous Anonymous said...

Once againg you leave behind free markets for conservative rubbish. You argue that the Left knew that boycotting South Africa would be a good thing, etc. But in fact that helped keep the Nationalists in power in SA longer. Free trade is the best means of changing regimes not trade boycotts --- of course we see how well that worked in Cuba where the US boycott is now almost half a century old and Castro still lingers on. Banning trade or restricting trade is not liberalism, it is not libertarianism, it is not free markets. It is socialist interventionism.

I can't wait until you write one of your scathing personal attacks on yourself.

9:10 AM  
Blogger sagenz said...

Trevor, I would argue that the benefits of trade and integration into the world economy make military action by china less likely rather than more. WalMart can buy products from anywhere in the world and chooses china because it is cheapest. the reverse does not apply to the goods china buys from america.
In years to come china will make a choice between invasion of taiwan on point of nationalist principle and suffering sanctions or continuing to integrate peacefully with the world economy. imho the correct strategic policy is being followed. china has far more to lose. It is only a matter of time before the naomi kleins start to pressure chinese manufacturers of exports to US to improve human rights in china as a whole. That is a long term non violent strategy. Far better than provoking an ostracised nationalist china to undertake military action because it has nothing to lose.

9:02 PM  
Anonymous Peter said...

Trevor, You say that it is ok to ostricise China to bring down their communist government, for reasons of national secruity, but what about ostricising a country to bring down an evil dictatorship for the sake of the opressed people?

For the New zealand government to openly state that they wont trade with china because they are a security risk would probably increace the risk of war, however I would not have a problem with it on matter of principle, especially if It would help the case of the Chinese people victum to the communist government.

9:22 PM  
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6:24 PM  

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