To get a better understanding of Chinese economic policy, read James Fallows in the current Atlantic, which is subscription-only…

He gives a clear explanation of how the Chinese government controls the flow of Chinese trade surplus dollars back to the United States. Repeat: the govt does not just regulate this flow–it CONTROLS it. Completely. The on-off switch to the U.S. economy is under the thumb of the Peking government. That government has vastly more power over our economy than Ben Bernanke could dream of.

Of course, we take comfort in the fact that the Chinese could not disrupt our economy without disrupting their own. Fallows compares it to the “mutual assured destruction” that kept the U.S. and the Soviet Union from nuking each other.

I would find this situation a lot MORE comforting if I were not currently reading a biography of Mao (by Jung Chang and Jon Halliday) explaining how Mao was willing to starve his own people by the millions to achieve his economic and political goals.

Yes, Mao is long gone. But the regime he established rules yet. Not to say they are capable of similarly destructive policies–but they might be. Their priorities–their calculus of costs vs. benefits–could be far different than ours.

We do have a bad habit of assuming that people and leaders in different cultures want what we want.