By Franz Schurmann

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Question: Why is such a large American naval combat squadron sailing into Hong Kong on February 8 and anchoring there for five days until February 12?

Answer: To show that America and China will work politically and militarily together to insure peace and prosperity in East Asia.

Prediction #45: Disturbing clouds of political instability are looming up in many parts of the world. But because the world's economic center of gravity has shifted from the Euro-Atlantic to the Asia-Pacific region the Asian-Pacific great powers -- America, China and Japan -- have made peace and prosperity in the region their main policy priority.

As a result more and more signs of pro-active working together among the three will appear as the year 2000 moves along.

• Basis for the Prediction:
  

  The Hong Kong-based South China Morning Post recently revealed that on February 8 a large American naval squadron led by a nuclear-powered aircraft carrier will arrive in Hong Kong and anchor there for five days. American public opinion still sees Sino-American relations as tense at best and hostile at worst. So what's going on here?

  When NATO planes last May bombed the Chinese Embassy in Belgrade killing three journalists relations plummeted to their lowest level since the Nixon breakthrough to China on July 15, 1971. Because the Soviet Union then was their common foe, America and China forged secret intelligence ties during those breakthrough days. Military ties came later with normalization of relations in 1979. But after the Belgrade bombing China cut them.

  Even though President Clinton last fall openly championed Chinese membership in the World Trade Organization (WTO), that was not enough to restore military ties back to their former levels. When last December an American warship was allowed into Hong Kong harbor only a second level Chinese naval officer went on board to greet the Americans.

  Now, not only have military ties been restored fully to their former levels but other events indicate the relations may become even closer and more comprehensive than before. Defense Secretary William Cohen is scheduled to visit China later this year as is the top American military commander in the Asia-Pacific region Admiral Dennis Blair. Blair's predecessor, Admiral Joseph Prueher, is the new American ambassador designate to China. The recent visit to Washington of a senior Chinese general, Lt. Gen. Xiong Guankai, in part involved working out the details of those trips.

  But two other events, concurrent with the release of information about the Hong Kong naval visit next month, shed light on what is going on behind the curtains. China's top military figure, General Chi Haotian, made his first visit to South Korea. But he started his voyage in London where Britain's highest officials accorded him top honors. Then he spent five days in Moscow where both sides lauded their strategic partnership. Then he went to South Korea where President Kim Dae Jung also accorded him highest honors. In Seoul he was taken to look at one of the Samsung corporation's semi-conductor plants.

  The other event was the breakdown of cooperation on Iraq among the five permanent members of the UN Security Council. That cooperation dated back to late 1990. Despite a lot of friction, till now the quarrels had always been patched up. This time the new Russian president Vladimir Putin said "nyet." And China and France backed him.

  Chi Haotian's trip sent a clear message to the powers. Britain is America's closest ally. So Chi's trip showed respect for the Anglo-American alliance. In Moscow both Chi and Russian defense minister Sergeyev voiced their opposition to American hegemonism. But, as the Jamestown daily "Monitor" wrote, China apparently rebuffed Russia's efforts to create a Russian-Chinese-Indian axis while "remaining mindful of the need to maintain Beijing's extensive economic dealings with the West."

  But the signals from the South Korea trip were the strongest. With the evident success of former US defense secretary William Perry's trip to North Korea last year China and America seem now to be working closely together to assure stability on the Korean peninsula. As NCM Asia analyst Terry Lee sees it, America now appears to be tilting towards China and away from Japan.

  Some history can help answer the question "what's going on here." In World War II America waged war on two big fronts: the Euro-Atlantic and the Asia-Pacific. But when the Korean War began American strategists decided to fight a war in the Asia-Pacific against the hostile great power China but in the Euro-Atlantic to discourage the equally hostile great power, the Soviet Union, from attacking through deterrent arms buildups. In short, while willing to fight in Asia they did not want a war in Europe.

  In geopolitical terms this policy bifurcation recognized that West Europe was much more vital to America economically and culturally than East Asia. So in the 1950's and 1960's West Europe flourished while East Asia witnessed a second war in Vietnam as well as revolutionary and counter-revolutionary turbulence all over the region.

  Now the situation has been reversed. A year ago it seemed the Asian financial crises that began in July 1997 had had a devastating effect on the region. Now, NCM Asia economic analyst Julian Do, who has spent several years doing business in Southeast Asia, describes them as a "hiccup." To paraphrase T.S. Eliot, East and Southeast Asia plunged into the financial crises with a lot of whimpers but have now come out with a big bang.

  The first contemporary big bang arose back in the early 1990's when Harvard economist Jeffrey Sachs proclaimed a big bang in the transformation of the Russian economy. That big bang soon enough turned into a big bust. But Asia's take-off from the financial crises looks a little bit like the one astrophysical theory proposes for the origins of our universe. And it's big.

  The biggest of the bangs are coming out of China. It's not China's great production feats that are making the bangs. Given the deflationary mood in the country its 7 percent growth rate is not so impressive as it might have been. But what is impressive is the speed with which China is opening its markets to foreign firms. External investment is pouring in including from Taiwan whose businessmen now see the Mainland as their main market.

  Japan too is finally moving out of its slump that began in 1992 when the "bubble" economy burst. Tokyo too has lifted a lot of restrictions on foreign firms and they are feverishly buying up Japanese stocks. Most important are the constructive ripple-out effects on the rest of the region. South Korean industry is booming. So are the economies of Thailand, Malaysia, the Philippines and even, to some extent, conflict-ridden Indonesia.

  By contrast Europe is looking more and more troubled. The biggest trouble comes from its great power to the east, Russia. Even as Chechnya has become a big sore spot Kosovo, Bosnia and Serbia still lack stability. Then there is the growing possibility that the touted Israeli-Arab peace accords may not come about. That will create even more uncertainty.

  But a lot of Europe's troubles have internal origins. The euro currency looks ever more feeble. In fact the British are now talking about a euro referendum in the UK. If it takes place the outlook is that the voters will reject both the euro and Europe.

  Unemployment remains high in the core European countries. The growing strength of right wing movements in France, Austria, Switzerland and other countries does not bode well for European stability. ETA's resumption of terrorist bombing in Spain is ominous

  West Europe is awash with cash and prosperity but has long since dropped out of the innovation races Americans and Asians do so well in. A lot of European cash is now flowing into East Asian markets. And the recent meeting in Tokyo of the European-dominated G-7 recognized that the Asia-Pacific has replaced the Euro-Atlantic as the economic center of the world. America historically had a foot in both regions. But now it's shifting its weight towards Asia and away from Europe.

  Last spring the American-dominated NATO fought its first war in Europe since the end of World War II in 1945. On the other hand since the end of the Vietnam War on April 30, 1975, America has not carried out any hostile action in the Asia-Pacific theater.

  And this new reality accounts for the ever closer cooperation between the American and Chinese military establishments, symbolized by the coming American naval visit to Hong Kong.