China's Soft Power Is a Threat to the West

The Communist Party leaders manipulate their currency to keep the prices of their exports artificially low. The fact that they recently allowed their currency, the renminbi, to appreciate slightly is evidence more of their knack for public relations than of a real change of heart. They are known for using every trick in the book when buying commodities or signing pipeline deals, with participants talking of aggressive and pushy tactics. Meanwhile, these free-market privateers unscrupulously restrict access to their own natural resources. They denounce protectionism, and yet they are more protectionist than most fellow players in the great game of globalization.

'21st-Century Economic Weapon'

Beijing recently imposed strict export quotas on rare earths, resources that are indispensable in high technology, where they are essential to the operation of hybrid vehicles, high-performance magnets and computer hard drives. Some 95 percent of metals such as lanthanum, neodymium and promethium are mined in the People's Republic, giving Beijing a virtual monopoly on these resources. It clearly has no intention of exporting these metals without demanding substantially higher export tariffs. In fact, China apparently wants to prohibit exports of some rare earths completely, starting in 2015. Concerned observers in Japan have described the valuable resources are a "21st-century economic weapon." The Chinese have dismissed protests from Washington and Brussels with the audacious claim that World Trade Organization (WTO) rules allow a country to protect its own natural resources.

China, a WTO member itself, is now playing a cat-and-mouse game with the organization. Despite several warnings, Beijing still has not signed the Agreement on Government Procurement, and it continues to strongly favor domestic suppliers over their foreign competitors in government purchasing. To secure a government contract in China, an international company has to reveal sensitive data as part of impenetrable licensing procedures and even agree to transfer its technology to the Chinese -- often relinquishing its patent rights in the process.

China, for its part, is waging a vehement campaign in the WTO to be granted the privileged status of a "market economy." If it succeeds, it will be largely spared inconvenient anti-dumping procedures in the future. But do China's Communist Party leaders seriously believe that the rest of the world will actually reward them for their dubious trading practices?

The answer is yes, and they have good reason to be optimistic. When it comes to diplomacy, Beijing knows how to win. Whether it's at the

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