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Afraid of Confucius

May 10, 2010

Guy Sorman in City Journal:

Stefan Halper’s new book argues that the democratic, free-market model championed by the United States—sometimes known as the Washington consensus—is being replaced by a “Beijing consensus,” a combination of capitalism and dictatorship promoted by China. If he’s right, then America is losing the battle of ideas. Fortunately, he isn’t. The problem with Halper’s argument that a consensus has developed around the Chinese model is that there is no consensus and no real model.

Like most sensible China watchers, Halper isn’t worried about America’s trade imbalance with China or China’s massive purchases of Treasury bills. Through trade, Halper argues, both countries benefit. The same goes for China’s being America’s main lender: so long as China keeps buying T-bills, the U.S. can finance its deficit without reducing its standard of living, and China can keep American customers happy (since if it decided to sell the bills, the dollar would depreciate and reduce the comparative advantage of Chinese goods). As for military rivalry, Halper is right to remind readers that China’s army, even with an increasing budget, is no match for America’s. [More]

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