The Other Face of China
The energy world has been preoccupied with China's rapid growth in oil demand and the impact this has had on markets for the last year or two. This phenomenon is not unique to oil, with the prices of many commodities having shot up dramatically on the back of Chinese demand. But this week we had two reminders of another face of China, the political one often obscured behind its economic dynamism.

First, as a New York Times editorial yesterday pointed out, one of the main architects of China's recent growth died without fanfare, under house arrest. Nor did China's current leaders want Zhao Ziyang to be remembered with a state funeral, giving in on this only under pressure, because he chose the wrong side of the Tiananmen Square protests in 1989. So even as the world rushes to invest there, China is still waiting for its Gorbachev.

Another sign of China's less commercial face turned up in a Defense Department planning document describing the country's diplomatic and military efforts to shore up its energy supply lines, as part of a significant naval buildup. Now, this sort of thing is subject to multiple interpretations. One of my favorite books last year, The Pentagon's New Map, makes a strong case that China is likelier to be a great partner for the US in extending and solidifying globalization's benefits in Asia, rather than an adversary with which to start a new Cold War. Are their current actions just an expression of understandable insecurities, or do they portend a future conflict? I'd rather stay on the optimistic side of the fence, for now.

It's also worth recalling that history provides numerous examples--some quite recent--of countries that built huge fleets but failed to create a great navy, something that requires generations and a lot more than just ships and men. The very name of the "People's Liberation Army Navy" might offer a reassuring hint along these lines.

The takeway is that for all our current focus on trade and investment, we can't lose sight of the fact that China is a country, not just an economy, and a big, complicated one at that. It is likely to be at least as important in this century as Japan was in the last, but let us hope more along the lines of Japan in the second half of the Twentieth Century, rather than in the first.