World Economics Thread

Rising China

Junior Member
:coffee::coffee::coffee:

America: a superpower no more
Decline is occurring more rapidly than we think. It's time to embrace a new agenda.


By Walter Rodgers
from the April 8, 2009 edition

Oakton, Va. - Two American icons, General Electric and Berkshire Hathaway, lost their triple-A credit ratings. Then China, America's largest creditor, called for a new global currency to replace the dollar just weeks after it demanded Washington guarantee the safety of Beijing's nearly $1 trillion debt holdings. And that was just in March.

These events are the latest warnings that our world is changing far more rapidly and profoundly than we – or our politicians – will admit. America's own triple-A rating, its superpower status, is being downgraded as rapidly as its economy.

President Obama's recent acknowledgement that the US is not winning in Afghanistan is but the most obvious recognition of this jarring new reality. What was the president telling Americans? As Milton Bearden, a former top CIA analyst on Afghanistan, recently put it, "If you aren't winning, you're losing."

The global landscape is littered with evidence that America's superpower status is fraying.

Nuclear-armed Pakistan – arguably the world's most dangerous country – is falling apart, despite billions in US aid and support.

In Iraq, despite efforts in Washington to make "the surge" appear to be a stunning US victory, analysts most familiar with the region have already declared Iran the strategic winner of the Bush administration's war against Saddam Hussein. The Iraq war has greatly empowered Iran, nurturing a new regional superpower that now seems likely to be the major architect of the new Iraq.

Sadly, what was forgotten amid the Bush-era hubris was that America's edge always has been as much moral and economic as military. Officially sanctioned torture, the Abu Ghraib scandal, US invasion of a sovereign country without provocation, along with foolishly allowing radical Islamists to successfully portray the US as the enemy of the world's 1.5 billion Muslims, shattered whatever moral edge America enjoyed before 2003.

Washington's uncritical support of Israel at the expense of Palestinians is perceived by much of the world as egregiously hypocritical. Consequently, America's collision course with Islam may be irreversible. Muslims believe Islam never lost the moral high ground – and they won't readily relinquish it for Western secularism.

Even politically conservative journals such as The National Interest recognize something has gone wrong. In a recent issue, Robert Pape opined: "The self-inflicted wounds of the Iraq war, growing government debt, increasingly negative current-accounts balance, and other economic weaknesses have cost the United States real power in today's world.… If present trends continue, we will look back at the Bush administration's years as the death knell of American hegemony."

Now, as a massive retrenchment of the US economy is under way, it is time to shake the mental shackles of the superpower legacy and embrace a more peripheralist agenda. That need not mean isolationism or retreat. It would still require maintaining substantial armed forces with a qualitative edge, but using them only when there is an affordable and persuasive American national interest. Iraq never fitted that description.

The price tag for the wars in Iraq and Afghanistan wars is in the trillions. Sun Tzu, the ancient Chinese military commentator, prophetically observed 2,500 years ago, "[W]hen the army marches abroad, the treasury will be emptied at home."

It remains a lingering American myth that US troops and warships can go anywhere and pay any price. Not so. The modern Chinese have discovered a better way. The Washington Post reports that the Chinese went on a shopping spree recently, taking advantage of fire-sale prices to lock up global supplies of oil, minerals, and other strategic resources for their economy. That amounts to a major economic conquest – without using a single soldier. By contrast, American efforts to secure oil have looked clumsy.

Iran also is achieving serious regional hegemony, without armadas, using proxy guerrilla armies to dominate its near neighbors. Its rebuffs to President Obama's recent outreach speaks to Tehran's growing confidence in its ability to manipulate its home-field advantage – stage-managing events from Afghanistan to Lebanon, all the while thumbing its nose at both the American and Israeli "superpowers."

Last August's Russian invasion of Georgia was a painful reminder that Russia has what its leadership calls "privileged interests" on its periphery. Yesterday's superpowers have been replaced by regional hegemons, as the globe is being carved up into more-defensible spheres of interest.

Americans need to acknowledge that war, like politics, is the art of the possible, and both have their limits. The Bush administration was unable to deliver its promised democratic remake of the Muslim Middle East.

Thus, another unpleasant truth: The Western democratic model has no appeal to much of the Arab world. Nor is democracy an attractive model for huge swaths of the rest of the world, such as Russia and China.

It's time to lower our geopolitical sights and end America's unrealistic crusade. We shouldn't expect "them" to want to be like "us."

It took years for the US to recover its moral authority after Vietnam. It will be an even harder comeback this time.

Walter Rodgers is a former senior international correspondent for CNN.
 

bladerunner

Banned Idiot
:coffee::coffee::coffee:

[. The modern Chinese have discovered a better way. The Washington Post reports that the Chinese went on a shopping spree recently, taking advantage of fire-sale prices to lock up global supplies of oil, minerals, and other strategic resources for their economy. That amounts to a major economic conquest – without using a single soldier. By contrast, American efforts to secure oil have looked clumsy. [/U]


It took years for the US to recover its moral authority after Vietnam. It will be an even harder comeback this time.

Just because its downsizing does not mean it isn't the pre imminent country in the world.

It is still the first country that other world leaders look to for consultation etc etc. and is the preferred destination for the worlds millions, to make a new life..

A lot of the countries China has procurred resources in are highly unstable. A change of govt for one that renounces those resource deals and what does china have? ............ nothing, diddly squat:(
 

Autumn Child

Junior Member
Overall USA is still strong, learning from its errors and the world economy being in the "trough" phase of the business cycle does not mean the USA is declining as a superpower. Once the US fixes itself, it will once again prove itself to be a superpower. If the recession continues for another year or more, China's growth won't sustain itself for very long and will too fall into a technical recession.

I agree that US will be leading power for a decade or so, but I think most experts agree that the US is a declining power. Power is created from dependency and right now less and less country (tough still alot) are absolutely dependent on US for its wellbeing.US global share of economy, political and military strength is also declining due to other regional power taking up more of the global share.

By the way, could you care to explain what the "technical recession" that you say China will fall into? Would you care to elaborate?
 
Well, one of the biggest threats to China's continued growth and development down the road is the socio-economic, "time bomb," of its rapidly aging population, in part due to the success of the One-Child Policy. Much of China's growth in the past decade has been driven in part by the huge influx of young people looking for work and moving into the cities. However, as this group of people age and hit retirement age, this will put a huge burden on the rest of Chinese society in terms of social security, health care, and welfare.
 

Autumn Child

Junior Member
I know western nations got alot of combat experience, but they also have alot of combat experience back in the korean wars and vietnam wars. like i said again and again...i know the western nation are powerful now. All I am saying is that they are declining power if you compare it in term of global share. Regional powers like the BRIC countries are getting stronger relatively to the stagnating western nations. Its inevitable, it seems like nations are still trapped in the down and up cycle. China is also not immune to this cycle. Its just that China is on the rising phase and it may/probabaly decline again somewhere in the future period that no one can predict at the moment.

Aging population is a serious problem in China. There are potential remedies such as opening immigration and providing incentive for immigration. Another solution is providing incentive for birth and if that does not work, the government may even use other techniques such as forcing people to have second child if they reach certain income level.

You still did not explain how China can have negative growth in the near future. I am not saying its impossible for China to fall into recession, but I am curious how others think how China can spiral into recession. Give me cause and effect in details. brief example: loose monitory policy leads to mortgage buble which lead to credit crisis and finaly leading to global recession, etc.
 
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This aging population issue is one where Western countries are dealing with now. The issue doesn't seem to be affecting the US and Western Nations that much, with alot of immigration from Africa, Middle East and Asia just filling in the gaps. As Western countries still look more attractive to migrate to.

Well this occurs on a substantially smaller degree for most Western nations, mainly resultant from the post-war baby boom. In China you have an extreme case because the One Child Policy was instated immediately after Mao's campaign of actively encouraging Chinese to have more children, so you have a series of rather small generations following a very large one. However, for many European nations this is a reason for their stagnant growth rates. Immigration actually brings a host of issues with itself.
 

Rising China

Junior Member
:china::china::china:

A country with 5000 years of history can stand on her own again without depending on trade and investment from Europe and U.S. If ones have lived in Asia for a long time, ones will know how Chinese across Asia manage to conduct their businesses and manage to thrive in the worst unimaginable economic conditions. Chinese people prove it again that their businesses can thrive and grow in Africa and Central or South America.

"After the 80's S & L scandal, the US tightened the financial rules and showed the world how good Americans are in tackling with their own financial crisis. We even have "real" hearings to expose the misdeeds of the politicians - the Keatings Five, some were put on notice and some were shamed...Then, the US was the model of the world.

The current US induced world financial crisis, truly shows how corrupt and hollow its financial system is. China for the first time, is able to see up close how the US financial communities, in cahoots with corporate shrills, media, analysts, consultants and credit agencies worked together to commit fraud and sold to the world tens of trillions of Cds, derivatives and worthless financial papers touted as AAA investments. They see the fallacy of the US economic model, and deep down inside China no longer trusts the US anymore. All the economic models we touted to the world, China now thinks they are probably all B.S. Fool me once shame on you, fool me twice shame on me.

It is wishful thinking to assume that China will or continue to hold US dollar as a major reserve currency. While still playing along with the buy short term Treasury game, China will, and is determined to minimize their dollar reserve and assets. China now sees the Feds (a private banking cartel not even own by the government) as hell bent in printing trillions of money out of thin air, and this will dilute all their dollar-based investments. Like any shrewd businessman, China will take whatever steps to minimize its damage, even cutting their losses and move forward if push comes to shove.

China has been closed to the Western world for thousands of years, then China traded only with their neighboring countries and survived. China slowly opened up to the Western world in the 70's, without the so called dollar reserve the Chinese survived then, they can survive even better now. The Chinese people can endure hardship many more times than the whole Western world combined, they are the most productive, adaptable and hard working people on this planet.

China export products ranging from low tech trinkets to high tech goods. They have millions of factories that can make useful consumer goods and sell to the rest of the 4-5 billion people that the Westerners don't bother to deal with. China can trade with the rest of the world without even have to sell to the US market, or even have to use the US dollar for transaction. They just need a little time to focus and change their course of action on how they want to conduct business.

The Chinese are traders since the beginning of time when communication was almost nil, they definitely can lightspeed their trading with rest of the world now, with them making almost all of the hi-tech gizmo on this planet. Besides the Western world, China trades in the trillions (in currency swap/barter/construction agreements) with countries in the S. Asia, E. Asia, Central Asia, Korea, Middle East, S. & Central America, Africa, Pacific Islands, etc. China's economic might probably is the largest on this planet (under the radar). China probably now owns tens of trillions of wealth not counted in the Western monetary standard. China can indefinitely utilize resources from this planet, and produce very low cost "goods" to sell to the world...they do not need to print money to survive.

The Western view of discussing whether China will hold or not to hold US dollar reserve, or whether China needs America, is really not that important in the big picture. The Chinese do not think like the Western thinkers who normally follow a certain economic model (liberal Keynes and conservative Friedman etc. ..) China with painful lessons learned through thousands of years of famine, strife, civil wars and invasions will always outthink their opponents when it comes to survival. Preserving their internal social order and looking out for her people will be China's main concern here...even at the expense of dumping all the US dollars. "
 

Hendrik_2000

Lieutenant General
Look like the era of blank check is ending. slowly but surely China is weaning away from dollar dependence

China has 'canceled US credit card': lawmaker

WASHINGTON, April 30 (AFP) May 01, 2009
China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday.
China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.

But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.

Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.

"It would appear, quietly and with deference and politeness, that China has canceled America's credit card," Kirk told the Committee of 100, a Chinese-American group.

"I'm not sure too many people on Capitol Hill realize that this is now happening," he said.

The Republican lawmaker said that China was justified in concerns about returns from finance giants Fannie Mae and Freddie Mac, which were bailed out by the US government due to the financial crisis.

Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.

"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.

"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."

With China's economy also hit by the global economic crisis, Premier Wen Jiabao has openly voiced concern about the status of his country's investments in the United States.

China has also floated replacing the dollar as the key international currency with a basket of units bringing in the euro, sterling and yen.
 
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