Chinese President and Chinese Communist Party (CCP) head Hu Jintao is in Seattle today and tomorrow, visiting Boeing and Microsoft on his way to a White House meeting Thursday with President Bush. It’s not clear which side of the continent will be the more important stop for Hu.


Boeing, of course, did a lot to make China’s current emergence as a world economic leader possible, pushing the U.S. government hard first to back Permanent Most Favored Nation status in the ‘90s, then to work to admit China to the World Trade Organization in 2001. And Boeing was among the first U.S. companies to agree to offset sales deals that transferred sensitive military technology (and U.S. jobs) to China, a trend that has resulted a decade later in Motorola and other U.S. companies doing original R&D work on Chinese soil for a military carefully modernizing to counter U.S. technological superiority. As for American manufacturing jobs migrating to China, well, it seems like most of them have. China is now the world’s undisputed manufacturing center.




But it is the Microsoft connection that is particularly interesting, and not just because civil libertarians and human rights groups object to companies like Microsoft, Google, and Yahoo capitulating to Beijing demands that their software in China incorporate Chinese state censorship programs. China business expert Ethan Gutmann, author of Losing the New China (essentially a memoir of U.S. corporate practices in Beijing), identifies Microsoft as one of the more influential U.S. companies now in China. “In terms of the Internet, foreign corporations are making the human rights situation worse. The problem is not censorship but surveillance equipment,” Gutmann says, leading to Internet self-censorship, powerlessness, and fear among Chinese hoping to challenge the totalitarian practices of their government. Cisco Systems is the biggest purveyor of such equipment, but Microsoft is also suspected of colluding with Beijing on this issue.


On the other side of the country, President Bush is expectedly to talk with Hu mostly about trade issues. America’s trade deficit with China is enormous; moreover, China now owns a sizeable, and growing, portion of our country’s national debt, meaning that it controls a good chunk of the record deficits Bush has run up — and any further debt he might wish to create. If Bush really wants to invade Iran, for example, he will undoubtably need the money from somewhere — and China, which has large oil contracts with Iran, is not likely to look favorably on having that oil essentially seized by America. That, as much as the likely-to-be-precipitous impact on oil prices, is the real economic danger of Bush’s latest military obsession. China not only controls American debt, but can also easily modify the spigot of Chinese-made consumer goods pouring daily into America. The average American home has literally thousands of Chinese-made goods in it. Imagine what would happen in this country if Wal-Mart’s import costs suddenly tripled.


But what Bush and Hu almost certainly won’t discuss is the totalitarian nature of the Chinese government itself, for sheer scale the worst human rights abuser in the world. Microsoft, Google, Yahoo, and others are helping to bring that repression into the 21st century. Gutmann believes that while foreign business entered China a decade ago with the best of intentions for being a democratizing force, that idealism has been replaced by cynicism, and the foreign investment has meant an influx of cash and technology — and new power — for the CCP. The 1989 pro-democracy movement of Tiananmen Square is scattered and all but dead; after seeing how its corporations operate first hand, remaining reformers no longer hold up America as an ideal (remember the Goddess of Democracy?). Falun Gong, the meditative practice whose mixture of poor provincial and university-bred practitioners Beijing finds threatening enough to have Falun Gong banned and aggressively repressed, charges that the Chinese government operates concentration camps and slave labor camps with its political prisoners. They’ve produced eyewitnesses to prove it. Tibetans and China’s numberless other ethnic minorities are as poor and repressed as ever; China’s enthusiastic rhetorical support for the “War on Terror” is a direct extension of its contempt for the Uighur and other Muslim minorities in the west.

Foreign investment has brought undisputed wealth, and income stratification, to China’s coastal cities and provinces; the interior, however, remains mostly poor, and Gutmann believes the interior may actually have a negative GDP. Moreover, as with rural areas around the world (only more so), people are leaving. In the largest mass migration in human history, an estimated 700 million people –- nearly half of China’s population — is expected to move from west to east, from country to city, in coming years. It is a virtually limitless supply of cheap labor. And even if only a fifth of the country rises to the middle class, that still equals the entire population of the United States — an irresistible new domestic market for foreign corporations. Little wonder that when American corporations first deal with the Beijing government these days, they are often, in Gutmann’s words, “too obsequious.”


Some of this would have happened regardless of what America did; the Chinese were experimenting with enterprise zones for foreign investment as early as 1980, and China, Communist or not, has a reputation for some of the best entrepreneurs in the world. “I have a lot of faith that the Chinese enterpreneurial spirit can overcome anything the government does,” comments Gutmann.


Human rights, however, is another matter. China’s was the only authoritaraian government challenged by the wave of 1989 revolutions sweeping the world to have survived it, and it is stronger for the experience. Beijing these days is anything but Marxist; Guttman identifies it instead as “proto-fascist.” In the U.S., it is primarily ethnic Chinese, evangelical Christians, and hard-line conservatives — not liberals — who agitate over China’s horrific human rights record. Bush, like Clinton before him, has paid the issue lip service but has otherwise done nothing. Given China’s economic leverage over the U.S., it’s not entirely clear at this point that he could do anything if he wanted to.


But American business, Gutmann believes, can, and should. “We have to look over the policy of engagement again,” he says, and refuse to do business in any area that abets repression. That means companies like Cisco should stop training Chinese police. It means Microsoft, Google, Yahoo, and others should stop aiding censorship and surveillance and stop giving the government user information on the Internet, potentially the strongest democratizing force in China. And on R&D, Gutmann believes {U.S.] “government intervention is sorely needed over any police or military applications” being provided by American corporations.


The militaries of both China and the U.S. are eying each other as likely future adversaries, and planning accordingly. The “War on Terror” has masked a U.S. drive to create large military bases that surround China on all sides, and China is focusing its new technology on anti-satellite weaponry and other developments meant to exploit what it believes to be the Pentagon’s weakest links. In the long run, Gutmann believes that democratic reform within China is all but inevitable. The question is whether it will come before, or after, a war with the superpower it is attempting to replace.