Engagement with China: A Smithian Perspective :: Adam Smith Economics Essays

China seems to have been long stationary, and had probably long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation might admit of. A country which neglects or despises foreign commerce, and which admits the vessels of foreign nations into one or of its ports only, cannot transact the same quantity of business which it might do with different laws and institutions. Adam Smith, The Nature and Causes of the Wealth of Nations Book I, Chapter IX Introduction In today's post-Cold War world, U.S. foreign policy faces a plethora of uncertainties in the economic, social and political spheres. With the geopolitical order currently reduced to one major superpower, the new order is still quite amorphous. For such reasons, politicians, economists, military strategists and others in Washington have sought to answer the question, "Is there any particular country that has the potential to rise to the level of a regional, or even global, hegemon in the 21st century?" Evidence suggests so, and the country that has placed itself on the path of fulfilling that prophecy is the People's Republic of China. A 1994 World Bank study showed in 1980, the PRC accounted for only 3.6% of the world's gross domestic product and 0.8 % of its exports of manufactured goods. It estimates that, by 2010, the PRC could account for 15.5% of the world's GDP and 6.4% of its exports of manufactured goods (O’Quinn, 1997). Clearly, China is poised to assert much more influence on world affairs in the coming century. For this reason, foreign policy towards China has been debated under the realm of two distinct policies, engagement and containment. Engagement seeks to encourage China’s involvement in multilateral agreements and its membership in international organizations as a means of promote Beijing’s respect and adherence to international norms. Containment, on the other hand, adopts a more defensive approach. Its advocates point to the security risks inherent in accepting China into the international community. The policy proposes counterbalancing China in a method similar to that used with Russia during the Cold War. The challenge for the United States is to examine these two policies and determine which will be most effective in promoting U.S. interests vis-Ã  -vis an emerging China. In searching for answers, this paper will utilize arguments from a variety of scholars, most notably the famed economist Adam Smith, in an effort to focus on the strategy of engagement with the People's Republic of China.