China May Not Subsidize Us Much Longer
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As China becomes an economic giant, the world must consider the cause it is abetting. This story from The New York Times provides a strong hint:
“This illustrates the extreme importance with which China views its access to natural resources, especially things like steel and oil,” said Joshua Rosenzweig, a Hong Kong-based official with the Dui Hua Foundation, a San Francisco group that monitors human-rights issues in China. “These are things China sees as vital to its economic growth, which in turn is vital to maintaining stability. It’s clear that resource issues are seen as national security issues.” [read more]The government and corporations of the United States tend to view China as a growing resource and market for the United States. There is some economic truth to that. General Motors, a huge corporation with the government as majority owner, has just sold more vehicles in China than the United States. That's good for General Motors and the United States government. Is it necessarily good for the United States?
Many economists viewed the relationship of cheap imports and a potential huge market for selling our products as a win-win. China was "subsidizing" us. But were they? Or does China have an agenda that is not necessarily a long-term win for the United States? As basic and advanced engineering and production has moved from the United States to China, the core of the United States economy... its manufacturing... has be replaced by the so-called "service industry." For those who were not around in the 1960s and 1970s, service industries were based on the wealth created by manufacturing and before that, agriculture. Not exactly parasitic; not exactly symbiotic.
Things have changed. Manufacturing has shriveled. Manufacturing jobs have evaporated. The service industry has followed because that which was being serviced is disappearing. Now the hope is for service sectors such as health care to become the growth engine for our economy? But who pays for this growth? Insurance companies? Someone has to pay the premiums. The government? Someone has to pay the taxes... or lend the government money. That seems to leave China... to subsidize us. But how long will China want to "subsidize" us... or need us for their growth?
In 2007, I wrote this post [and several follow-up posts... see label CHINA] and published this image [click for larger view].Nearly three years later, the impetus toward these goals is intensifying and becoming apparent to many more around the world.
China has become an immensely important resource and market for the United States corporations and Federal government. U.S. consumers have benefited from cheaper goods, which is fortunate because more Americans have had to siphon funds from whatever assets they have in the absence of their formerly good paying jobs. The question is whether we can afford the next stage in China's development... the stage when the U.S. becomes an also-ran. But the real question is whether or not the U.S. will have any say in its long-term economic future. Our present policies and practices will determine that.
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