Monday, June 09, 2014

"China Won't Be A Big Threat To America's Global Power"

Background
Defying pedestrian thinking, Forbes (June 6, 2014) published Loren Thompson's thoughtful précis, Five Reasons China Won't Be A Big Threat To America's Global Power

Doctor Thompson is no ordinary blogger. He is the Chief operating officer of the non-profit Lexington Institute. He has taught at Harvard University's Kennedy School of Government.  And, as Deputy Director of the Security Studies Program at Georgetown University, he taught graduate-level courses in strategy, technology and media affairs. 

Disagreements
Molten Eagle disagrees with all five of Dr. Thompson's supposedly threat-diminishing rationales.  Rebuttals for only the first 4 are given below, because the 5th, Military weakness, ignores the same Chinese advantages Loren ignores in the first four. In each of these contexts readers may agree that government continuity. steadfastness and patience are actually huge advantages for China.

  • 1. Geographical constraints
    "Unlike America, which spent much of its history expanding under doctrines such as Manifest Destiny, China’s potential for territorial growth is severely limited by geography. ...China’s disputes with neighbors over the disposition of minor islands and reefs underscores how little real potential Beijing has for growing its territory the way other powers have."
M.E. rebuttal:  Thompson's comparison gives little weight to China's impressive planning and current overcapacity for vertical expansion (cities built for population growth), which reserves arable land for agriculture. He then ignores the impact of another argument (see Demographic trends next) --- attrition of China's aged population strengthened by decades of limitations on family size. 

  • 2. Demographic trends.                                                                                                           "The current fertility rate of 1.6 children per woman is well below the level of 2.1 required to maintain a stable population over the long run. ..."  In the years ahead, a growing population of old people will undermine efforts to stimulate internal demand while creating pressure for increased social-welfare spending.                                  'within a few years, the working age population will reach a historical peak and then begin a sharp decline.'  The vast pool of cheap labor that fueled China’s economic miracle has already begun disappearing, driving up wages and leading some labor-intensive industries to move out. "
M.E. rebuttal:  Thompson's argumentnot only tends to contradict a conclusion of his first bullett, it ignores the massive debt payments owed China by the U.S. Treasury, and a host of countries worldwide benefitting from China's attractive construction projects. Example gratis.



  • 3. Economic dependency.                                                                                                          "But even if the low-cost labor that made this possible wasn’t drying up, the reliance of an export-driven economy on foreign markets makes China’s prosperity — per capita GDP is below $10,000 – much more vulnerable than America’s.  China has sold over $100 billion more in goods to the U.S. so far this year than it has bought, but that longstanding boost to the Chinese economy won’t persist if the labor cost differential between the two countries keeps narrowing or Washington decides Beijing is a real danger to its interests.  China is so dependent on offshore resources, markets and investors to keep its economy growing that it can’t run the risk of really scaring its trading partners."
M.E. rebuttal:  On this reason, our objection is largely a matter of degree, but that degree is rather huge.  China's average construction wages, for instance, would have to triple to lose competitiveness with welfare driven Sweden, and quadruple to approach non-competitiveness with similarly driven Norway, Canada, Germany and Japan.  For reference



  • 4. Political culture.                                                                                                         "Because the Communist Party monopolizes power in China, there is little opportunity for fundamental reform of the political system.  Party officials at all levels routinely leverage that monopoly to engage in epic corruption.  ... [New York’s Tweed] ...was driven from power through democratic processes, whereas China’s political culture offers no such solution."
M.E. rebuttal:  Democratic processes in the U.S. have yielded dramatic policy reversals ushered in by new administrations almost every 4 to 8 years.  The result has been patently wasteful of public treasure and lives, but has encouraged fraud and abuse in management of government programs (e.g. TARP, NASA, DOD, VA healthcare, Solyndra...)..  In these contexts, as well as in the certainty of criminal punishment in China, continuity. steadfastness and patience are actually advantageous.

Submarines are always silent and strange.

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2 Comments:

At 10 June, 2014 10:19, Blogger Contrary in Texas said...

Back in the 70's Japan was in a similar mode of business success and expansion. Japanese were buying real estate from California to New York. There were news stories that proclaimed that Japan would take over the U.S., if not the world.

Now look at them.

 
At 10 June, 2014 15:14, Blogger Vigilis said...

Let's remember just 2 key difeerences, however.

Japan is an island nation with a parliamentary government. China is a landed nation with abundant natural resources and a yet vibrant "command economy".

 

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