elections for the presidency in November 2004
convincingly against Senator John Kerry, the
Democratic contender. It was a victory not so
much for conservatism or the moral Christian
alliance, as for a decisive leader. But the US is
clearly geographically divided. At least there was
no repeat of the uncertainties of 2000.
Across the Pacific, China has maintained an
astonishing rate of growth. The Chinese way has
been to open the economy to foreign investment,
to join the World Trade Organisation and, with
the advantages of its vast supply of cheap labour
and lack of concern for the environment, to
become the ‘workshop of the world’ in many
branches of manufacture. As Japan and the West
outsource production and invest in China, the
rate of growth is continuing as the vast country
is perceived to be stable.
Stability is secured at the expense of democ-
racy. The Western clamour for reform soon sub-
sided after the Tiananmen uprising, China is too
valuable a trading partner. China is also appeased
by the Western rejection of Taiwanese independ-
ence, potentially the most inflammatory issue in
the eastern Pacific. The US has an undertaking to
defend Taiwan against an attempt by the People’s
Republic of China to take the island by force.
This provides the US with leverage and restrained
Prime Minister Chen Shui-bian whose party nar-
rowly defeated the more moderate Kuomintang
in the March 2004 elections.
In facing North Korea, a military state with
nuclear capability, the US has found in China a
useful partner counselling restraint on North
Korea’s leader. China has become a respected
global partner integrated in the world economy.
There are still huge problems. The glittering
wealth of Shanghai and coastal China contrasts
with the poverty of much of the hinterland. The
sector of state firms remains uncompetitive, but
progress has been achieved. Over the decade
employment in the state sector has been halved,
though it still accounts for a third of all urban
employment. The Chinese banking system sits on
top of a huge non-performing debt that in a
normal market economy would have led to a finan-
cial crisis. Corruption remains widespread, it
matters who you know.
The leadership papers over the contradictions
between the official ideology and realities. Thus
in the supposedly communist state privately
owned businesses increase year by year by 20 per
cent creating employment and drawing in invest-
ment. The leadership supports the private sector,
1
INTO THE NEW MILLENNIUM 945
Rwandan
genocide, 1994.
© Reuters/Corbis
