The great fall of China

LA Times ^ | December 30, 2007 | Walter Russell Mead

[kabar]

Once we allowed them to join the WTO, we had no choice since that is part of being a member.

[aruanan]

The article’s claim that goods are cheaper in places like Mexico is not necessarily accurate.

What the article said was, "For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States."

[Cringing Negativism Network]

China is a first-world, rich superpower.

We need to come to terms with that fact.

Pretending it’s some poor backwater, is just not reality anymore.

We’re becoming the poor backwater, as China takes our jobs, our manufacturing know-how, and our national treasure.

You do know, we’re in debt to China. Massively.

Right?

You do know, Chinese consumers own more cell phones, than we do?...

You do know, China’s technology manufacturing, now has passed our own?

China is becoming the new Soviet Union. A very rich, very large, very intelligently run Soviet Union. They understand our system, and our vulnerabilities in profound depth.

We are by contrast, virtually clueless, with regards to China.

The cold war with the Soviets, alleged ended. Why? Because we had the more productive manufacturing and technology sectors. We out-produced the Soviets.

China has that equation, exactly reversed on us.

China will not go broke. We will...

Unless we stop pretending China is something, it is not. And start to honestly, and with considerable resolve, start to insist on complete reciprocity.

We cannot afford, to continue giving away the farm.

We are almost out of farm.

[RedStateRocker]

“when you are strong, appear weak, when you are weak, appear strong. When near appear far away, when far away appear near”
Sun Tzu, ‘Art of War’.

[fish hawk]

And of course you are an expert on both countries economies, and have all the data etc. to prove your point.

[Kozak]

China is of course a power on the rise. However they have lots of their own problems. One big one is as Mark Steyn has pointed out they are going to start getting old, before they get rich. That one child policy is coming back to bite them.
Watch em yes. Panic no.

[Cringing Negativism Network]

We need to change the dynamic.

Nixon, IHMO, should have insisted China must open their markets, as a condition to opening bilateral relations.

Remember the old dream: One billion consumers, all you would need to do, is sell each one, a pair of shoes...

Well, we didn’t. All we did, was buy. And buy. And buy.

We bought those shoes.

China, now owns the shoe factories.

We buy the cameras, and the computers.

China, now owns the camera factories. And the computer factories.

We buy the ... well, we buy everything.

China, now owns our money.

[fanfan]

Ping

[Brad from Tennessee]

[. . .With poor air quality, acute water shortages, massive pollution in major watersheds and many other environmental problems, China needs to make enormous investments in the environment to avoid major disasters. Globally, it will be much harder to get China — and India — to make any sacrifices to address problems such as global warming.]

There are environmental horror stories coming out of China every day. The questions is if and when these issues might affect China’s economy. A totalitarian state—like the Soviets did—can ignore a genuinely poisonous environment longer than a democracy.

[RedStateRocker]

Doesn’t it amaze you the number of people who claim to know anything about the peril that China represents yet have not even read writings of Mao, the Art Of War, or the Analects of Confucius?
It would like someone claiming to know ANYTHING about ‘terrorism’ without having read Mao’s red book and the writings of Che.
We’ve got our panties in a wad over tenth century dimbulb Muslims, a threat we could wipe out in a week and yet are in denial that we are feeding a large, wise, crafty, and very, very patient empire that can wait 100 years to become the sole superpower in the world.

[BIGLOOK]

Interesting times....ping.

Check you investments, the bull in the China shop takes on new meaning.

[Cringing Negativism Network]

You so nailed it.

[Zhang Fei]

There is more bad news. U.S. businesses and entrepreneurs hoping to crack the Chinese and Indian markets must come to terms with a middle class that is significantly smaller than thought. Investors in overseas stocks should take note. Companies with growth plans tied to the Indian and Chinese markets could face disappointing results, and the high prices of many emerging-market stocks depend on buzz and psychology. Investor sentiment on China and India may now be significantly more vulnerable to future bad news.

I think the level of interest in China's domestic market (except among the biggest multinationals* - and a few smaller but intrepid pioneers), whose reputation and brand names precede them) is overstated. I don't think there are all that many illusions about China's market size among Western marketers. Even the revised Purchasing Power Parity (PPP) numbers are, in my view, overstated. You can't buy crude oil with inflated PPP dollars, only with actual dollars you get from selling your goods overseas. Marketers are probably more likely to use nominal (foreign exchange) dollars - which measures the actual amount of money they have to buy foreign goods - in their calculations of China's market size. Besides China's allure has little to do with its domestic markets and everything to do with its potential as a one-stop production base.

* The American names in China's domestic market are P&G, McDonalds, Colgate Palmolive, Buick, KFC, Pizza Hut, American Standard, Wal Mart, WD-40 and SC Johnson. Period. As a market, China has potential, but the nominal (as opposed to PPP) incomes are too low for them to be attractive to many Western businesses.

[DB]

It is not.

[Cringing Negativism Network]

Fine.

Enough ranting for me, for one day. Someone else will have to be Paul Revere for a while.

You go on thinking like Neville Chamberlain... :)

[tanuki]

Thanks for posting. This is a fascinating article. And the writer is correct-we should be more worried about the rest of the world lagging behind us than about China mobilizing against us. The only cure for instability is prosperity.

[RightWhale]

That one child policy is coming back to bite them.

The World Bank was one of the main actors in that policy.

[DB]

I own half of a small tech company here in the US and we sell a fair percentage of our equipment to China. We have been for nearly 10 years.

[DB]

Calling me names won’t change the facts.

[Constantine XIII]

In Soviet Russia, Americans take jobs from YOU. :D

Nice post, btw!