Tuesday, November 15, 2011

Is China Really That Big Of An Economic Threat To U.S. Interests?

Why Predictions of a Red Planet are just a little unwarranted

A few weeks ago, I posted a blog entry about new possible revenue models for modern journalists. Well, The New York Times managed to come up with an idea I didn’t, and admittedly, it’s a pretty ingenious one:

They leased four pages of their print space to another newspaper.

Of course, it wasn’t an American newspaper. Come on, that would just be silly. Instead, they gave China Daily, one of the largest (and by the way, state-run) papers in China four pages to editorialize like a mother in the Business section of the Nov. 11, 2011 edition of The Times. Not surprisingly, the four page spread (which included a plug for the Nook version of the paper, in case you were wondering), was a big, fat wad of propaganda, telling readers that WTO deals between the States and China were beneficial to all of us big-shouldered Americans.

Well, reading through that gobbledygook got me thinking about just how much economic sway China is going to carry over the U.S. in the decade ahead. Now, depending on who you ask, this means that either China will ultimately falter due to being unable to overcome thousands of years of extreme regionalism, or they will develop malware programs that will takedown all of our military satellites and subsequently proceed to beat us likerented mules until we accept the yuan as our official currency. Apparently, there is no in-between opinion on the matter.

The problem with all of this economic hype surrounding China is that pretty much all of it is undue. Yeah, they are making a lot of money these days, but there are so many misperceptions out there - including some downright HUGE ones - that most Americans think the Chinese are on the fast track to steamrolling the planet like in “Red Dawn” or something. The reality is, China is nowhere near as economically, militarily, or infrastructural-y sound as the press would lead you to believe. Time to set the record straight about U.S./China financial relations, don’t you think?

For starters, all of that stuff you’ve been hearing about the U.S. owing an infinity amount of money to China? Well, believe it or not, China actually owes more money to the U.S. than the other way around. You see, all of that technology and infrastructure-building tools the Chinese have today? Pretty much all of it was either directly donated to the country by the U.S., or leased out to the country by U.S. holdings. And that’s not to mention the fact that the Chinese economy is more dependent on U.S. investments than vice versa - all it would take would be el presidente gaining some huevos and declaring a trade embargo on China, and the Chinese economy would collapse like a game of Jenga during a caldera eruption.

Yes, it is true that China is becoming a more technologically advanced nation, and wages are beginning to go up in the country. The thing is, if you compared the Chinese middle class with the American middle class proportionally, only about 1 percent of the entire Chinese population is even close to bringing in the same amount of income the aggregate American household does. That means that China has an estimated technocracy of about 10 million people compared to an estimated technocracy of about 40 million here in the U.S. Sure, we’ve all seen videos of Shanghai and Hong Kong, and if the 2008 Olympics were any indication, China is a country armed to the teeth with about 900 million math wizards prepared to bury us alive at Hu Jintao’s first command. The reality, however, is that the average Chinese person is still remarkably impoverished in comparison to U.S. statistics - despite all of the nonstop rhetoric about “a rapidly industrializing” China, the aggregate worker in the country still makes only a fraction of what the aggregate American worker makes annually.

All I can say is, their crossword puzzles are WAY harder than the ones we have in the States.

The thing is - and this is sort of the big story people really aren’t talking about in the media - is that China really hasn’t figured out how the whole “democratic free-market” thing works quite yet. Yeah, they have the Internet and cable TV, but Google is edited by the government and citizens aren’t allowed to watch “Back to the Future” because it gives them the wrong idea about time travel. This may come as a surprise to some people, but the transition from Mao’s Communist Wonder Land  to globalized super-democracy really hasn’t been that smooth of a ride for China. For one thing, there’s this problem with overpopulation  - if you think what the U.S. is experiencing right now with the great baby boomer extinction period going on, just WAIT a good 20 years down the line when approximately a quarter of China’s population will hit retirement age. Not surprisingly, health care in China is pretty lacking. . .which really isn’t helped by the insane pollution levels within the nation’s people clogged mega-cities, many of which lack common modern infrastructure like automobile-accessible roadways and potable drinking water.

If China’s urbanized areas seem just a little backwards, than the countryside might as well be a full century behind the rest of the modern world. And then, there are the numerous autonomous regions within the country, filled with alienated, isolated communities that are practically unconnected to the rest of the nation, socially or financially - and a lot of times, they sort of have a penchant for kicking the government’s ass every time they send troops to crack down on their protests.

Don’t let the rumors of a democratizing China fool you: despite the leaps and bounds the country has made financially over the last twenty years, most of that revenue is going to the central government and NOT private enterprises within the nation. And, if you didn’t pay attention in high school, the Chinese government has been historically pretty crappy at maintaining the best interests of its people.

Yeah, they have an expanding military. Yeah, they have an expanding space program. They have a lot of government controlled industries that appear to be growing, but these aren’t exactly the models of efficiency we’ve been lead to believe they were. And irony of ironies? Confronted with a majority population that lacks even primary school education, a lot of Chinese companies have resorted to outsourcing  jobs to southeast Asia to stay profitable. 

The kicker - and the part of the story that you definitely WON’T be hearing the next time Fox or CNN runs a special about the looming specter of Chinese economic dominance - is that the country has a MAJOR problem ahead regarding energy needs. As China gets more technologically advanced and more people are able to partake of normal Western stuff like watching TV and driving cars, the country is headed towards an energy crisis that makes the absolute WORST the U.S. has encountered seem like a day at the beach by comparison. As industry increases, you need more and more oil, and since China doesn’t have the petrol hook-up like the States does, the nation is almost completely dependent on gasoline sucked out of sub-Saharan Africa to meet its ever-increasing consumption needs. And oh yeah - SHHHH! - there’s kind of an unpublicized cold war going on  in the Dark Continent between the U.S. and China over oil reserves. But, uh, we’ll get to that one when we get to that one, I guess.

And that’s not even taking into consideration just how bumpy Pacific Rim economics can be (just ask Thailand, who got a taste of the worldwide recession ten years in advance), not to mention stiff competition from Japan and South Korea, two highly technologically adept markets that a.) have WAY more experience/success with free trade and democratic governance and b.) nowhere NEAR as many internal and infrastructural problems that China has. And that’s coming from a country with half of its Diet on trial for political malfeasance AND a freaking leaking nuclear reactor, for crying aloud!

So, with all of this stuff taken into consideration, is China really the economic juggernaut so many people are making the nation out to be? I hate to be a naysayer, but all signs point to overrated,  if you ask me.
Yeah, they’re making some progress, but they have way too many internal problems they have to address (which they won’t), assess (which they definitely won’t) and remedy (which won’t happen ever) before I would call them a sustainable financial empire.

And oh yeah! Their newspapers definitely need some work, too. . .


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