The Emerging Chinese Threat

China’s Political-Economic Future:
Is China’s Emerging Economy a threat to U.S. Primacy

Abstract

China’s impressive economic growth as a result of currency devaluation, artificial labor costs, and massive exports of cheap goods has created an unfair playing field for global markets and at the same time made the global markets largely dependent on China’s sustainability.  As China’s economy continues to prosper, their demand for finite resources will cause severe reaction to global price increases in commodities such as oil, steel, and food.  But, can China sustain its growth? Or will its rising food costs, restrictive population controls, and a massive inflation eventually slow this economic powerhouse?  I try to address these questions and several others in this paper.

US-China Political-Economic Future:
Is China’s Emerging Economy a threat to Primacy

Following the economic reforms instituted in China in 1978, the world has witnessed an incredible economic engine turning relentlessly in the East. With the introduction of China into the World Trade Organization (WTO) in 2001, global markets had access to the world’s most populous nation; a prospect that promised significant economic boosts not only to China’s economy but to other economies benefiting from China’s cheap exports.  Aside from these tremendous steps toward globalization and free market principles, China’s economic future is fraught with challenges that could help to ensure the balance of influence in Eurasia remains largely in America’s favor and ensuring America’s global primacy.

China is massive.  With a population of 1.3 billion and an area of 9,596,960 square miles (Factbook) it boasts the largest population and the 4th largest land mass on the planet.  Its economic growth has been unprecedented and by many accounts, largely unsustainable.  Several sectors of China’s economy, including massive inflation, artificial labor rates, devalued currency, substantial poverty and income disparity, declining workforce, negative birthrates, an aging population, and an increased democratic awareness among its people, cast dark shadows on its potential for a promising future and are bleeding into its foreign policy initiatives.  Indeed, the challenges China must overcome to ensure its political-economic model survives are somewhat mind-boggling.

China’s near-term foreign policy will be regulated largely on its domestic economic policies.  The paramount economic concern for China is inflation as cautioned by World Bank President, Robert Zoellick and echoed by Chinese Premier, Wen Jiabao (Kurtenbach, 2011).  Posting consumer price increases of 6.5% for 2009 and 6.2% for 2010, China is scrambling to trim back the flow of money.  As is the case with inflation, it is causing substantial increases in everything from food to fuel.  With a significant proportion of per capita income going to the purchase of food, consumer purchasing power of other goods has steadily decreased, causing China to become ever-more reliant on its export market to sustain its GDP.  John Stepak, Money Week Editor, nicely summarized the dilemma China faces stating:

The danger facing the country is clear. If it tightens too late, inflation takes off, and social unrest explodes, setting the stage for a hard landing. If it tightens too hard and fast, economic growth collapses, bad debts surge…(Stepak, 2011).

As will be asked several times throughout this paper, the question of “How does this

affect America?” will be addressed. Regardless of the direction China takes with its monetary policy, America may find itself back in a position of greater economic leverage in Southeast and Central Asia.  The doomsday scenario involving China’s inflation may result in future investments shifting away from China and placed in India.  Although not directly influencing American markets, a shift by foreign investors from China to India would have significant geostrategic implications on the balance of power in Central Asia, a key aspect to US Eurasian geostrategic initiatives.

Domestically, China’s inflation problem will have substantial effects on the Chinese population’s perception of its government.  As the cost of living continues to climb, the potential for massive public unrest exists and could severely hamper the growth of the Chinese economy, especially if wages are not increased to keep pace with the inflation rates.  What’s more, the Chinese economy is so dependent on the condition of the global market, current economic conditions like the one we’ve been experiencing the past couple of years have had a substantial impact on China’s growth.  With most Chinese citizens unable to afford the products China exports, the portion of GDP as part of domestic purchases remains extremely low considering the massive population and impacts China’s ability to hedge itself against external market conditions.

Several other economic concerns currently plague China’s future growth potential.  The reforms of 1978 implemented a very restrictive family planning law that has limited Chinese families to one child.  In an attempt to control an exploding population, the “One child” policy is now beginning to show its effects thirty years later.  Meant to last only one generation, Three generations have passed under a policy that has mandated a national negative birth rate which has resulted in a shrinking labor pool and an ever-increasing aging population.  Many of the nation’s working class have migrated to city life and careers, allowing China’s rural population to command higher wages, subsequently causing further increases in the cost of food (Stepak,

2011).

The results of China’s population control aren’t limited solely to the number of people available to continue the nation’s robust growth.  It is also having a substantial effect on the tax base.  The average Chinese female fertility rate of 1.75, (Chang, 2008) although it could be as low as 1.4 for the decade between 2000 and 2010, falls well short of the 2.1 needed to sustain or stabilize the population. Unfortunately, these restrictive family policies have impacted Chinese females more than their male counterparts.  According to a scholarly journal by Mina Chang, the need of rural families to have male children is viewed as critical to the sustainment of the family’s existence and patriarchal dominance. Male children are seen as future providers for their elderly parents and grandparents.  As a result, orphanages are inundated with little girls and female infanticide is a stark reality.  The resulting gender balance could mean big problems for the continued ascendancy of China on the global stage.

Getting past the population problem will be challenging but the hurdles do not end there. As a participant in the WTO, China agreed to adhere to certain international rules consistent with free-trade principles.  According to Thea Lee of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), China’s government is not playing by the rules of the WTO, causing significant trade imbalances (Brown, 2011).  She goes on to say China’s artificially evaluation of its currency, egregious violations to labor rights, and an unwillingness to allow the same unfettered access to its markets that it enjoys of so many other nations is partly to blame for high unemployment in the US and around the world.  Myron Brilliant, Deputy Chief of Staff of the Chamber of Commerce, disagrees somewhat here by stating “China is good for America” but concedes China needs to abide by the rules it agreed to when it joined the WTO.

These sorts of statements are not unique to the US and the longer China ignores the international community, the more it stands to ostracize itself.  British Prime Minister David Cameron echoes the sentiments of many around the globe.  He believes a “dangerous tidal wave of cash” from one side of the globe to the other risks pushing economic growth back into reverse (Chapman, 2010).  In today’s economic climate, it is easy to assume diplomatic relations would also sour and potentially isolate China from foreign markets, especially western markets. China must either raise interest rates to stem the tide of borrowing or it must allow inflation to take hold, forcing it to raise the prices of its exports which will necessarily raise the value of the Renminbi.  In either case, China should start to expect reductions in its historic growth over the next decade. In an International Monetary Fund Working Paper, Kai Guo and Papa N’Diaye discuss in great detail and draw the conclusion that in order for China to maintain its impressive growth, China will need to focus more attention on the percentage of GDP from domestic consumer spending (Guo, N’Diaye, 2009).

So how does the US mitigate the growth of China and if it can’t mitigate its growth, what options does the US have to ensure regional security?  The answer involves food and energy. Already a major head-hurter for the Chinese government, China is importing a massive amount of wheat in order to feed its people due to overgrazing, over-logging and the substantial loss of groundwater (Pocha, 2006).  According to The International Institute for Applied Systems Analysis (IIASA) China has sufficient arable land to cultivate its need of approximately 500 million cubic tons of wheat per year, but it makes clear there is no guarantee China will do so (Heilig, 2004).  In the six years following Heilig’s article, China was importing millions of tons of soybeans wheat and corn, not only to feed its people but also to feed large-scale hog farms to meet the country’s increasing demand for meat (Wui Yap, 2011).  As shortages of food become

more prevalent, food costs necessarily go up and could eventually mean the beginning of an even larger problem of social revolution.

Liu Rui, Economics Professor at the People’s University of China, in an interview with the Associated Press (AP), discussed the disparity between the rich and the poor as indicated by the difference between civilian dinner tables and posited the very real danger of social unrest if the food crisis is not averted (Sloan, AP, 2011).  According to Karen Sloan of the AP, Chinese leadership is well aware of the dangers inherent of food shortages and has acknowledged the crisis in Egypt in May 2011 being caused, in part, to the high cost of food. Massive income gaps seem to be par-for-the-course in the communist model and so are, to the detriment of its leaders, revolutions.  If China does not get a handle on food prices, which is most likely a result of its inflation, there is little, if any, reason for the U.S. to fret over an emerging China.  China will fall victim to a self-induced diet.

America is not immune to hikes in food prices. It is expected overall food prices will rise between 2% and 3% in 2011(Andrejczak, 2010) [UPDATE: Actual Food at home Index rose 6.2% according to Bloomberg. (Scheuble, 2011)] which will further dampen America’s economic recovery.  But even in these economic times, the average American still has vastly more wealth than the average Chinese, making America much more capable of weathering food inflation.  As one of the world’s largest exports of corn, wheat, soybeans and other commodities, China’s holding of $1 trillion dollars in treasury bonds (debt) as leverage begins to lose some of its sting.  How would China react to massive starvation of its people?  Would it forgive the US of some of this debt or would it allow its people to starve just to spite the US?  Would the US continue to export to China if China is unable to pay its grocery bill? or would China begin chipping away at the debt it holds in exchange for food exports at a reduced rate?  The point is, all the talk about China demanding repayment due to a loss of faith in the dollar is premature when considering the ramifications that decision may have on commodities exports from the U.S.

After food, China needs far more energy to meet the demands of millions of new drivers each year and its massive industrial sector.  As the number of vehicles in China increases and the assumption China’s industry will continue to grow, China’s demand for world commodities like steel and oil will rise.  Already a major player in the New Great Game, China has a vested interest in the Caspian Sea and its oil.  However, as games often go, there are competitors seeking to siphon off as much of the energy from the area as possible and these competitors are major players on a global scale.  Russia, India, Turkey, The EU, Iran, and last but not least, the U.S. all have valid, very different reason for their interest in the Caspian, but a common thread through all players is the desire to tap into the Caspian’s $5 trillion potential (Lavelle, 2007).

China’s looming economic problems present some serious roadblocks to its sustainable development over the next 10 to 20 years and considering the magnitude of the issues listed throughout this paper, it becomes poignantly clear the direction China is headed when we considered the items not necessarily mentioned in this paper.  Based on the assessments made concerning China’s inflation problem, population demographics, and food shortages, there is good reason to believe China’s ascension as the next global superpower may never come to fruition.  For now, the U.S. should continue to interact with China to the extent America’s purposes are served.  However, there is absolutely no reason for the U.S. to kowtow to the Chinese because of what they ‘might’ become.  There is more reason to believe China will be the catalyst to their own demise than to speculate their demise would come by the hands of another power which means ultimately America needs to do nothing to mitigate the emerging Chinese threat.

Works Cited:

-Brown, Jeffrey (Jan, 2011). As China's Economy Grows, How Hard Should U.S. Push on Currency, Human Rights? Aired on PBS News Hour, January 20, 2011.  Retrieved from http://www.pbs.org/newshour/bb/politics/jan-june11/china_01-20.html

Chang, Mina (2008).  Tipping the Scale: Gender Imbalance in China. Harvard International Review, 30(1), 10-10-11.  Retrieved from http://ezproxy.libproxy.db.erau.edu.login?url=http:search.proquest.com/docview/230903439?acc ountid=27203

-Chapman, James (Nov, 2010). Tidal wave of cash risks us all: Cameron warns globalization will

'go into reverse' unless China corrects trade imbalance. Retrieved from http://www.dailymail.co.uk/news/article-1328327/Cameron-Globalisation-reverse-unless-China- corrects-trade-imbalance.html

-Guo, Kai & N’Diaye, Papa (Aug, 2009). Is China’s Export-Oriented Growth Sustainable? IMF Working Paper WP/09/172. Retrieved from http://www.imf.org/external/pubs/ft/wp/2009/wp09172.pdf

-Heilig, G.K. (2004): RAPS-China. A Regional Analysis and Planning System. Luxemburg, Austria. Retrieved from  http://www.iiasa.ac.at/Research/SRD/ChinaFood/concl/con_1.htm

-Kurtenbach, Elaine (Sep, 2011). China’s Inflation Rate eases as Economy Cools

Lavelle, Peter (May, 2007). Caspian Basin as aired on Russia Today’s series In Context.  May

19, 2007.

-Pocha, Jehangir S (Sep, 2006). China’s Dangerous Dustbowl: Overgrazing, logging, and Loss of Ground Water Turn Nearly a Million Acres Into Desert Every Year, Displacing Millions and Cutting Global Food Supply.  The Boston Globe online. Retrieved from http://www.boston.com/yourlife/health/other/articles/2006/09/18/chinas_dangerous_dustbowl/?p age=2

Scheuble, Kristy (Oct, 2011). U.S. October Consumer Price Index Report (Text).  Retrieved 27

April, 2012 from www.bloomberg.com/news/2011-11-16/u-s-october-price-index-report-text-

.html

Sloan, Karen (May, 2011).  Food Gap between China’s Rich and Poor a Problem.  Associated Press video posted to YouTube on May 11, 2011.  Retrieved from http://www.youtube.com/watch?v=DGz5GPE30DA

Stepak, John (April, 2011). What China’s inflation problem means for you. Money Week Asian

Economy. April 18, 2011.

Stewart, Heather (Feb, 2011). Record £9.2bn Trade Deficit Dents Hope of Export-Driven Recovery. Retrieved from http://www.guardian.co.uk/business/2011/feb/09/uk-trade-deficit-hits- record

Wei Yap, Chuin (Jan, 2011). Chinese Agriculture Imports See Sharp Rise.  The Wall Street Journal Online. Retrieved from http://online.wsj.com/article/sb10001424052748704754304576095220668417458.html

World Fact Book from the Central Intelligence Agency

Suppressing Blacks the Liberal Way

It is truly astonishing how the Democratic Party has managed to capture such a large portion of the black vote.  Although America has seen unprecedented economic growth in the past century, the black community remains a community where little improvement has occurred.  Election after election, black voters turn out for the Democrats.  Year after year, black schools continue to perform well below the national average, black crime as a percentage of the entire population far exceeds the percentages of crimes committed by other demographics, and incomes and employment remain lower than all other demographics with the exception of Latinos.  Additionally, black babies are aborted nearly five times as much as white babies, graduation rates are 30 percent lower than whites, and nearly 70 percent of black children grow up in a fatherless home.  There is little hope for our black brothers and sisters if this trend does not quickly turn around.

From my understanding, the black community used to be a proud, God fearing group of people.  They were (and very often still are)  resourceful, strong, determined, and deeply religious.  Even through their darkest days, and arguably the darkest days of our country, they turned their hearts and minds to God.  Today, many of them turn their hands to the government. I do not want to be misunderstood.  I am not suggesting other demographics do not look to the government for assistance.  They certainly do and in large real numbers. But, according to the Pew Research Center, as a percentage of their overall, individual populations, African Americans have the highest numbers.  As it relates to people's political identifications, there are more self-identified Democrats than Republicans receiving federal aid.  

This isn't accidental.  It is designed. 

It is no secret liberals are the party that advocates never ending increases to welfare.  Entitlement programs have grown exponentially, education expenditures have sky rocketed, and blacks continue to have the lowest graduation rates, and the highest unemployment.  Liberals claim they represent the poor and the oppressed and seek ever increasing taxation of the wealthy to fund programs intended to be temporary in nature; programs designed to give a helping hand, not a hand out. Regardless of how these programs were sold to the public, the consequences to various segments of the American population have been devastating.  They have created multiple generations of families who believe they are entitled to compensation from the government. Government pays and the people become complacent, lazy, and have little hope of a better life. Concept Conservative believes these facts demonstrate how Liberals want to keep the black population suppressed and reliant on federal aid.  When they campaign to increase funding for aid programs such as housing, food stamps, unemployment, energy subsidies, etc...they all but guarantee a huge voting block that will consistently turn out to cast a vote for the democratic candidate.  This concept is true for Hispanics as well.

Someone please tell me how liberal policies are helping black America?

Concept Conservative believes this trend is beginning to shift as more, younger black Americans are shifting their votes to republican candidates.  Even the candidates themselves are leaving the Democratic party for the GOP. Elbert Guillary of Louisiana released a video a couple of years ago that expressed the reasons for his defection beautifully.  Other prominent black are also moving to the right and siding with the GOP in hopes of correcting the damage liberal ideology has imposed on Black America.  Ben Carson, Allen West, Herman Cain, Sheriff David Clark, Candoleezza Rice, and many others have realized the devastating effects Liberal Policies have had and are promoting something better through conservatism and the Republican Party, the party that freed slaves and drove the nation into Civil War.  In fact, Democrats of the time were furious about Lincoln's abolitionist ideas because it would mean the end to free labor and a massive cut to their cotton and tobacco profits.  And yes, many many democrats fought for the Confederacy.

I recently read a shocking statistic in the National Review that in 2012 in New York there were more black babies aborted then there were live births. 31,328 innocent children were aborted compared to 24,758 births. How in God's name is this anything less than criminal?  These aren't thugs or gangsters. They are innocent babies.  Black leaders fain outrage over the deaths of black men due to police shootings, but say nothing about the numbers of innocent children being aborted. I can think of only term to describe this slaughter; GENOCIDE. I can think of no rational explanation for the silence of black leaders when it comes to the numbers of black children aborted every year in this country. It is a disgusting reality of evil that goes unspoken by the mainstream media because the horror of this statistic does not suit the Liberal Left's narrative of women's choice.  The Liberal Left's narrative of "Black Lives Matter" completely shuts down and loses its effectiveness when black abortion statistics are weighed against this slogan.  Do black lives really matter?  If they did, where is the outrage about the loss of innocent life.  You won't hear it and it is very sad.

I wrote in a previous article discussing government waste, program funding, etc... Education funding in our country has sky rocketed in the past decade.  Shouldn't there be measurable improvement in the graduation statistics among black teens?  Shouldn't there be improvement for all ethnicities?  My wife and I recently passed through Washington DC and saw a road sign statistic that stated 57 percent of all Capitol area teens drop out of school. 57 percent! So much for the liberal, fallacious argument regarding the need for increased education funding. A Heritage Foundation report reported the government's statistic that spending increased nearly 150% from 2002 to 2012  and there has been nearly no improvement in minority education statistics.  I wonder if it ever dawned on our liberal elected officials that maybe the problem wasn't a lack of money.  Maybe it's a problem with discipline and lack of respect for authority in these adolescents.  At some point, we have to stop making excuses for the poor judgement and decisions these young people are making and hold them as well as  their parents accountable...including deadbeat fathers.  Sure there are laws on the books to support single parents but offenders very often navigate around their moral obligations and the law.  

The plight of Black America continues to be, in part, a result of abysmal home life situations.  Is there a correlation between the lack of fathers in the home and the amount of crime committed by black males? There are some studies out there that suggest so. The lack of fathers in the home has a detrimental impact to the lives of children regardless of race.  Unfortunately, many of these children do not know who there father is or have fathers serving sentences in prison for violent crimes.  Still others have dads that would otherwise be interested in participating in their up bringing but are often relegated to being a source of financial support by the court system. No matter what kind of spin the Left tries to put on the statistics about the role black fathers have, or don't have, on their children, the indisputable fact is that nearly three quarters of all black children grow up without a father in the home; and that is being linked to many of the problems in the black community.  

A quick read of The Color of Crime reveals drastic differences in the amounts of crime committed by various races.  Blacks are seven time more likely to commit a violent crime and kill more whites than whites kill blacks. They have killed more people than any other race and are only 13 percent of the population.  They commit the most racial violent crime.  The list goes on and on.  But you won't hear the media tell you this.  You have to look it up.  Do your homework and discover these tragedies for yourself.  Everything you see on TV is designed to keep you in the dark.  It is designed to tailor your understanding to precisely what the media wants you know.  Liberals don't want black communities to fully understand how badly their policies have failed them decade after decade.  But, the tide is turning.  The black giant is awakening, slowly but it is awakening and it poses a serious threat to the Democratic Party as more and more black communities are realizing they are victims of a failed ideology and are beginning to revolt.

All of these statistics teach us about the differences between our races.  As it relates to black statistics, Liberals would have everyone believe their circumstances are a result of Conservative policies to make the rich richer at the expense of the poor.  Liberals demonize wealth and perpetuate animosity toward those who are job creators and are wealthy instead of encouraging the masses to work hard to reach for the next rung in the ladder.  Instead, generation after generation of black Americans are raised to believe they will never have the same opportunities as whites, and will always have to struggle because of their black skin.  Concept Conservative takes exception to this. Many believe, including Concept Conservative, these awful statistics can be reversed.  

It starts with equal opportunity.  Not equal outcome.

Here is the hard facts about opportunity.  And this is true for all us.  Opportunity is a chance.  Not a guarantee.  Nothing about life is guaranteed.  Happiness is an ideal in which all have the right to pursue but not necessarily obtain.  Opportunity also comes to those who are most prepared to receive it.  A solid grasp of the English language, good diction and communication skills, being well groomed and having a neat appearance help.  HUMILITY, gratitude, respect, and decency are huge traits Opportunities often require.  Pull your pants up, take the lower paying jobs, learn skills and then move into the next, higher paying job.  THAT IS HOW IT IS DONE!  You have to work for opportunity.  It doesn't just happen.  

There are many who will view this article and call me a racist, a bigot, prejudicial, etc...  They are entitled to their opinions about Concept Conservative.  However, they are not entitled to their own facts.  Facts are funny things.  The reality is Concept Conservative is trying to send a message of awareness to combat the Liberal media and Liberal Left's efforts to dumb us down.  Our objective is to teach, to inform, and wake people up.  It is not about setting one race against another or about who is better or worse. It is about how we can ALL be better.  

You may not like facts and no one likes to read bad things that hit close to home but ignoring the problem usually makes it worse. Get educated and take a serious look at who is representing you.

Concept Conservative believes in you, believes in us, and believes in the American Dream for everyone.