China: Insight of The Day

Much attention is being paid to the visit of the next Chinese leader, Xi Jinping, and the usual American leaders are making the usual American demands for the Chinese to raise the value of their currency (which they've been doing), to treat Western multinationals better, to allow more political pluralism, to treat the Tibetans better, and as Vice President Biden said, play by the rules of the international game.

There is zero chance that the Chinese are going to listen to much of this. They are more convinced than ever that their model of state-led quasi-capitalism is winning in the world and is superior to the American model. They are not going to allow much more pluralism or ethnic freedom because they are scared to death of losing control at a sensitive moment of political transition.

My insight is that the key to responding to the Chinese lies within our own mentality and our own actions. We need to recognize that we will improve our standing with the Chinese by reducing our fiscal imbalances, by demonstrating strength in some areas of manufacturing,by getting our act together and agreeing that alternative energies are a national priority, by innovating and creating new industries that the Chinese can't touch, and by persuading some of our companies to move some of their manufacturing back to the U.S.

If we could demonstrate strength in our economy and show that we have the capacity to act, that would be far more powerful a message to the Chinese than haranguing them about American values.