Saturday, August 11, 2012

Paper Tigers: An Examination of Continuing State Planned Economies OR – Why I'm Not Scared of China


Paper Tigers: An Examination of Continuing State Planned Economies
OR – Why I'm Not Scared of China
By- Travis Nemmer

If I had a dime for every time I heard from some American politician or self-proclaimed expert told me that we'd “wind up working for China,” that the People's Republic “owns the United States,” or, most odiously that “Hu's our Daddy,” I would give all that money back to the government to pay down our debt – then we'd all have nothing to worry about from Beijing.


Minnesota Governor Tim Pawlenty brought China to the forefront during his forgettable political campaign when he just noticed China's nearly ten percent economic growth and wondered why the United States couldn't replicate that growth. The answer is quite simple. China's growth was based on their unleashing the productivity of a country that, until the market-based reforms of Deng Xiaoping, still largely existed on subsistence agriculture. Rapid urbanization and industrialization was the backbone of the growth of China's economic bubble, similar to an American economic boom... nearly seventy years earlier than the American economic boom following the end of the Second World War. In short, the Chinese are beating us because we already have roads and plumbing.

Since we're on the topic of roads, I'd like to quickly address a point being raised by American sinophobes, regarding Beijing's continuing purchase of American treasury bonds. The Middle Kingdom's reticence to becoming reliant on foreign economies places them in a peculiar economic situation where they are not neither willing, nor legally able to invest foreign assets into their domestic economy. More simply, the Chinese Communist Party are not allowed to invest foreign monies into anything other than foreign economies. In the absence of any well developed European or Asian bond markets, the Chinese have nothing to do with their money except invest it back into the American economy. So... thanks guys.

What's more, China's growth has proven to be anything other than sustainable, as has been demonstrated by their recent decline of nearly 2.5 percent, a roughly twenty five percent reduction in just under two years. This promises to the the truest, clearest, and most present danger to the legitimacy of the Chinese Communist Party – whose widespread acceptance amongst the brugeoning Chinese Middle class in the face of aggressive censorship and rampant environmental and Human Rights shortfalls has been based on China's single party's ability to foment its own rapid expansion. As China's government encounters torpor, there can be little doubt that the rabid nationalism that feeds the Communist Party will soon experience the same. This is, of course, to say nothing of the growing hypocrisy that has come to embody the ruling elite in the Zhongnanhai, who have created what they call to be the last bastion of state-planned socialism, but has little to show the Chinese proletariat other than the acceleration of income inequality within the state. China's rhetoric of “rising together” has proven to be exclusive to an urban elite, continually at the expense of the same peasants that brought Hu Jintao's predecessors to power.

Historical Chinese policies will inevitably create problems for both the Communist Party. The One-Child Policy, put into place in 1978, is the most egregious of these policies. The United States is (rightfully) concerned about how to prepare for more geriatrics than ever before – China faces the same problem at an exponentially higher scale. China's growth is nearly entirely dependent on a robust base of young workers – insert your own cheap Nike joke here. This base of workers is liable to evaporate, as China's diminishing birth rate, another symptom of China's expanding middle class, will not be able to in any way sustain the economic growth upon which China depends. As a rather sensational people, us Americans liken our social spending program for geriatrics to an electrified train rail. If the United States is facing a little electroshock therapy, then China needs to brace for an expansion of senior citizens that is little short of a delayed atomic detonation.

China's own military expansionism which has also served as a poltergeist for many American reactionaries is just that, an intangible, unprovable poltergeist. China's much publicized advances in military aeronautics pose minimal danger to American air-superiority anywhere in the world. All the media attention given the new aircraft carrier rolled out by the People's Liberation Army-Navy ignored the fact that this was a decommissioned Soviet vessel, that sat for years in a Macao port as a floating casino. So please, forgive me if I'm not exactly terrified by the imminent danger of a floating relic from a time when Brett Michaels was a respected musician when the United States can hide behind the Seventh Fleet and the innumerable bases in Japan – a state serving a role eloquently described by General Douglas MacArthur as “an aircraft carrier that can't be sunk.” If anything, the continued growth and saber rattling fo the People's Liberation Army serves to do little more than rustle the jimmies of Vietnam and Burma, pushing them even closer to creating friendly agreements with the once-maligned United States of America. To realists, China's dominance of water encompasses their Olympic diving team... and not much else.

Not Pictured: Any strategic threat to the Western World.

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