China is reportedly weighing a purchase of Italian debt, which would give it greater leverage in the global economy
Italian Prime Minister Silvio Berlusconi welcomes Wang Gang, the vice-chairman of China's main government advisory body, during a meeting at Chigi Palace in Rome / Reuters
It's not hard to understand why Americans might be nervous about news that China is considering buying up Italian debt, a potential first step toward bailing out the troubled European Union economies. There are immediate concerns, such as China's demand that Europe give up some the trade regulations that keep it protected from Chinese undercutting. And the story hits on a number of American anxieties, stated and unstated: that China's debt holdings give it a tool to use against us; the decline of the U.S. as the world's leader; the rise of China to displace us; Western financial weakness; the glimmer of doubt that maybe we got it wrong with the Western system of free markets and liberal democracy, that China got it right and will soon be leading the way.
But China, by buying up debt from Italy or elsewhere in the EU, might actually be doing far more to promote the Western-style free market democracy than to subvert it. An investment in Italian debt is literally an investment in the Italian style of governance, after all. More than that, it's an investment within a larger international system of free markets, global cooperative institutions, and inter-governmental organizations. Despite all the talk of the decline of the West and Western-style system, that fact that China -- the world's largest authoritarian state economy -- is even weighing sovereignty fund investments and World Trade Organization regulations is a nice little victory for Adam Smith, Woodrow Wilson, and other architects of the liberal international system.