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China Is Biggest Winner in Beltway Hostage Crisis

David Callahan

China is likely to emerge as the biggest winner of the political crisis in Washington. And for a few reasons.

First, as has been widely noted, the crisis has interfered with the President Obama's plans for an "Asia pivot," whereby the United States raises its profile and influence in East Asia at a moment when China is increasingly asserting itself in that region. Specifically, the crisis forced President Obama to cancel a planned trip to East Asia and his appearance at Asian Pacific Economic Cooperation forum, leaving China as the dominant player there at a crucial moment.

Second, the crisis raises broad questions about the appeal of the American political and economic model. To the extent that America's pluralistic system makes this country so hard to govern, with potentially grave economic consequences, China's authoritarian model looks that much more appealing. The shutdown and debt ceiling crisis are just the latest evidence of democracy's limitations. The longer story here is the inability of the U.S. to respond to declining competitiveness, make crucial investments in human and physical capital, or maintain fiscal discipline. 

Third, and most disturbing, the debt ceiling crisis could strengthen China's leverage over the U.S. as one of the largest holders of U.S. federal debt (along with Japan). It was never a good idea to rely so heavily on foreign countries to finance the U.S. national government. But that's especially true if we show that we can't be trusted to pay our bills. Because then those foreign powers can start to place more terms on their borrowing and begin to exert influence over Washington. Being a big debtor is bad enough. Being an irresponsible debtor is far more dangerous -- especially when one of our main creditors is our top rival for political and economic primacy in the 21st century. 

During the Cold War, hardline conservatives would never have pushed the Capitol of the Free World into paralysis and increased Soviet influence in order to get their way on a domestic policy issue. Back then, the right frowned on any moves that signalled weakness abroad, in a dangerous world. 

Republican elders still share this concern, but that's not the case for junior Tea Party legislators.