The blogosphere was all a-twitter today with news from the International Monetary Fund that the Age of America will end in five years. Yes, prepare for your inevitable servitude to Chinese businessmen as, in five years, they
overcome us as the preeminent power on Earth. We've only got five years left of being successful and safe. The coming Age of China will bring all sorts of new realities to the world, according to the commentators, including the United States going the way of the Soviet Union, the British Empire, and the Dodo. How very silly.
First of all, people who lament the rise of other economies around the globe in relation to our own begin with the flawed perception that there is a finite source of wealth in the world and that as others get richer, we get poorer. This is absolutely not true; just because the once-called "Third World" is rapidly gaining on us in economic progress does not mean that we must begin to decline as a result. Yes, it changes the way that markets and economies operate and require some readjustment, but the idea that just because China is rising economically that we are going to be worse-off is ridiculous. It does put us at a disadvantage insofar as we are no longer able to project our power as easily as we used to in certain parts of the world-- but that change is a result of them getting stronger, not us getting weaker.
Second, projections of China's rising power are
grossly exaggerated. Overlooking the massive fact that
hundreds of millions of Chinese still live in feudal poverty, their economy is built on severely unstable foundations. Eager to increase their power, wealth, and prestige, the Communists have cut all sorts of corners to inflate their economy and over-invested in property and infrastructure. Take, for example,
this episode concerning China's poor investment in high-speed rail (something to note from those in the United States who lament our lack of high-speed rail in relation to our Eastern friends): highlighting the corruption and shortsightedness of the Communist Party, the Chinese have invested $300 billion in an intricate high-speed rail line. The New York Times and President Obama
gushed over the Chinese investments in airports, electric cars, and bullet trains, citing them as an example for America to follow. The problem? No one is riding the trains and the airports are empty. The government is $270 billion in debt over the bullet train investment, and they have had to lower the speed of the trains by 30 MPH due to safety concerns that came up because of how haphazardly this was done. It is a train wreck that they will never be able to pay for (note to those supportive of Obama's investment in high-speed rail: Japan and Thailand saw their trains bankrupted too after investing in it).
Like their investment in trains, China's economy will soon wreck as well. Their excessive investment in unused infrastructure, the bureaucratic corruption of their government and businesses, and the abject poverty that 95% of their population lives in will lead to a collapse. It's a paper tiger dangling over a flame. At any rate, hopefully their growing middle class and increased access to sources of non-censored information will lead to political reform in the country. In the mean time, American politicians should stop looking at the Chinese as a model for anything (especially infrastructure investments) and pundits should stop decrying the decline of the United States before an ascendant China. They have a long, long way to go.
Whistling past the graveyard?
I agree that the "threat" has been somewhat exaggerated, but it is there. Also, that "poverty" serves China very well...they have decades of very cheap labor to look forward to, and they are now the world's workshop. Can they keep the lid on? I don't know.
What I do know is that it is not healthy for the United States or other advanced countries to so heavily invest in China. This is essentially a fascist country with fascist goals, and strengthening them imperils us. And, it almost goes without saying, we sure could use some of those manufacturing jobs right here in the good ol' USA. Our economy has been excessively fragile (e.g., capital searching for something productive to invest in) for decades now. Services, the Internet, real estate...all have had bubbles that ultimately damaged the American Dream. There is no substitute for actually making products that are useful.
Yet another lesson "free trade" libertarians need to learn.
It reminds me of the panic over "Japan, Inc." in the 1980s. I must say, though, that I sort of wish that the United States would lose the "top superpower" spot--it'd really reduce the temptation to intervene in places like Libya.
Various analysts have been saying that China's economic collapse/major dip and/or the social/political instability was just around the corner for twenty years now.
Hasn't happened. The heirs of Mao the mass murderer seem to have hit upon a winning formula of sorts.
Good post, however my less developed conservative brain is excellent at detecting threats.
Many of my friends consider China to be a paper tiger, but the fact remains that they will have a surplus of 50 million young men with no female counterparts and those young men are approaching military age. I find that to be the most arresting figure in this discussion.
Much better a successful China than one starving and desperate. If they were using the same economic model they had been, roughly like North Korea's? Where would the world be today?
However, when people say we ought to imitate the Chinese model -- good grief.
But I sure hope that economy doesn't collapse. Part of their economic problems would be related to ours. They (bizarrely) have every incentive to help our economy chug along and be successful. They are heavily invested in the US. It is a great argument for peace that we are such a good market for their goods. They need us.
One thing that really struck me during my trip to China a couple of years ago is that the regime seems to be putting vast sums into new construction and virtually nothing into maintenance. Thus the cities demonstrate a remarkable contrast between glittering skyscrapers (with very interesting architecture) and crumbling ruins, in many cases right next door to one another. The massive construction brought on by the Olympics was also striking; today there's practically no use for all the new structures that were put up, most significantly the National Stadium (affectionately known as the "Bird's Nest").
What friends who go to China on business note is the shocking air quality. The high-rise luxury hotels that ought to have glorious vistas out the windows have no visibility because of the smog. And everything is filthy because of the particulates raining out of the sky. I asked a visiting Chinese economist why the regime didn't spend some of the vast hoard of our dollars they hold on our pollution control devices. He seemed wholly surprised at the suggestion.