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ChinaThe Rise of a New PowerThe article I read was entitled "The Rise of a New Power: A Communist Economic Juggernaut Emerges to Challenge the West", written by Richard J. Newman and published in the June 20, 2005 issue U.S. News and World Report. The article examines China's growing and changing role in the world, and the struggle by the United States to reconcile itself with the changes.The rise of China as a major player in the capitalist world-economy is likely to become one of the most significant developments in the first half of the 21st century. After more than two decades of consistently rapid economic growth, in terms of GDP, China now accounts for 12 percent of the world output and will soon stand as the second largest economy in the world, behind the United States. China is currently the world's largest saver, and a major source of finance for the U.S. budget deficit.According to the article, China is "teaching the West something new, its economy, growing at 9 percent per year." The problem for the United States, however, is that the economic growth in China is based, in part, on a very large discrepancy in the amount of money that Americans spend on Chinese products versus the amount that the Chinese spend on U.S. products. Specifically, the article states that in 2004, "Americans spent $162 billion more on Chinese goods than the Chinese spent on U.S. products." An even bigger problem for the United States is that the difference in spending, which the article claims "has been growing by more than 25 percent per year." This, in my opinion, is one of the biggest threats to the United States and one that demands our government's immediate attention if the gap is going to ever move in the opposite direction.As China becomes more developed, and increases its ability to produce more technologically advanced products cheaper and more efficiently, a greater number of American companies are moving their manufacturing to China to take advantage of its cheap labor force. For instance, on the box that the laptop computer I used to write this paper came in, Apple Computer proudly state that it was "Designed by Apple in California." If you read the small print, however, computer was actually built in China. The problem that I see with this trend is that manufacturing jobs used to be the backbone of the United States middle class. Today, however, many, if not most, American companies are sending their manufacturing jobs to other countries in search of less expensive labor costs, thus creating and building a middle class in countries like China, where none existed before.As China continues to develop its ability to play a leading role in the manufacturing industry, its new middle class will grow and prosper as America's middle class suffers. The article states, "China's consumer class, is spending like lottery winners on everything from bagels to Bentleys and will soon outnumber the entire U.S. population." Stapleton Roy, the former U.S. ambassador to China, is quoted as saying that China's explosive growth "could be the dominant event of this century. Never before has a country risen as fast as China is doing."Our elected officials in Washington have not quite figured out how to deal with the newly emerging China. Not only is China one of the United State's largest world rivals, it is a communist country of which Americans have little understanding. And of course, what we don't understand, we sometimes worry about and fear. A strong communist rival brings back unpleasant memories of the former Soviet Union, and many worry that China is following on the same path. Unlike in times past, however, when other world powers had a weak economy, China has become "flush with cash for missiles, satellites, and other advanced weapons."Every businessman these days has a dazzling statistic about China, meant to stun the listener, and they are an impressive set of numbers. China is now the world's largest producer of coal, steel and cement, the second largest consumer of energy and the third largest importer of oil, which is why gas prices are soaring. China's exports to the United States have grown by 1,600 percent over the past 15 years, while U.S. exports to China have grown by a mere 415 percent.Sometimes I really don't understand the decisions made in Washington by our government officials. Why would we, as a nation, grant a communist rival the coveted "Most Favored Nation Trade Status," allowing China to import as much as they want of whatever they want, when China places tariffs and restrictions on imported U.S. goods. It is my belief that we should place the same restrictions on imported Chinese goods as China places on imported U.S. Goods.As the article states, Washington and Beijing have been "lobbing verbal missiles over China's fixed exchange rate, which makes Chinese products even cheaper than they'd be with a floating currency." What is at stake in this economically dangerous situation are U.S. jobs and prosperity. The National Intelligence Council, called upon to examine the matter, issued a report that raised the concern that by 2020, many of the most powerful companies in the world may be lured by China's recent and impressive growth into supporting their economy and governmental system. In fact, according to the article, Congress has actually formed a panel to monitor China's economic policies. Lawmakers are not taking the situation lightly, and one particular bill would assess larger fees on all Chinese imports. The amazing thing is that the bill has much needed bipartisan support, which does not seem to happen very often in Washington. Perhaps a few officials have read Ted Fishman's bestseller, China Inc., in which he writes, "It will not be Communist militarists that most threaten the U.S. standard of living, but a Communist-capitalist rival that is a much more formidable economic competitor."A trend that seems to be increasing in China that should create concern in Washington is the emergence in the country of the western-based insurance industry. "It will become the largest market in the world over a couple of decades," predicts Edmund Tse, a senior vice chairman with AIG. The economic growth and prosperity in China can be seen more clearly by examining the fast growing insurance market. It seems that in 1992, when AIG began to do business in Shanghai, the concept of insurance coverage was foreign to most Chinese. However, as the economy has changed, partly seen in fewer state pensions, and grown stronger, blessing citizens with more personal property, "people here are starting to realize, 'Hey, I have these things I could lose,' " says Chia Yan Chang, AIG's chief officer in Shanghai. "And it's not going to take China 30 years to catch up."One thing is clear; China will not change its behavior unless it is forced to do so. Therefore, persuading China to comply with its agreements will take a combination of economic and diplomatic pressure. In my opinion, China is not interested in competing with the United States on an equal footing. It wants to regulate and limit U.S. imports into China while it floods the U.S. market with Chinese made products. The article clearly states that there are still plenty of "danger zones" for western firms coming to China. As companies like Intel and Microsoft try to protect their cutting edge technology, they have made the decision to keep key research and development on U.S. shores. These and other efforts to keep information out of the hands of China are being made as the problem of intellectual property theft gets worse instead of better, according to a recent report by the American Chamber of Commerce in Shanghai, which represents U.S. business interests.The article asserts the proposition that if the goal of the Chinese government is to "create the Chinese century," the Communist Party will necessarily have to go away. The National Intelligence Council suggests that China may develop an "Asian way of democracy," that would involve elections at the local level and a looser central government. The article further suggests that the party is considered by some to already be irrelevant, quoting a former senior official at the Bank of China as saying, "I don't think communism really exists anymore. At a certain point, being a party member is a burden. If you're related to the party, you're not doing business." As the growing Chinese economy demonstrates, however, doing good business is what China has learned to do quite well, so "if you're not doing business, you're not cutting it in China.China is, quite simply, the biggest part of a new world emerging in the 21st century. The United States cannot switch it off, no matter how much it might like to. What we can do, however, is be better prepared. For Americans, this means a renewed focus on the core skills, such as science and technology that have propelled the American economy to where it is today.ReferencesA source on the World Wide Web:Viewed 1/6/06By Richard J. Newman (6/20/05) US News & World ReportThe Rise of a New PowerA communist Economic juggernaut emerges to challenge the west[Online] Available:http://www.usnews.com/usnews/biztech/articles/050620/20china.htm
