For several years now China has been steadily gaining on the U.S. to become a major economic rival. A recent Foreign Policy blog posting by Joshua Keating entitled, “Did China’s Economy overtake the U.S. in 2010” ( http://blog.foreignpolicy.com/posts/2011/01/14/did_chinas_economy_overtake_the_us_in_2010 ) suggests that the Chinese economy overtook the U.S. economy in 2010. This is much earlier than what previous estimates had indicated. One interesting thing that was not mentioned in this article, however, is the growing amount of U.S. debt that China has purchased: China now owns, by some estimates, roughly 8% or near a trillion dollars in US debt; this is the largest single foreign holder of U.S. debt. With these statistics taken into account, it puts China at a major strategic advantage, economically. The industrial revolution that put the U.S. in it’s position at the top, is the very same industrial revolution that the U.S. (and Canada) has freely given to China. The cheap products we find at Walmarts etc. are the new riches of China; and the specter of the vanished western industrial base. The west is effectively transferring to China, the very economic power base that put it on top in the first place: the industrial revolution. So long as cheaper consumer products are available in China, Western manufacturing bases will vanish one after the other. U.S. gains in cheap consumer goods comes to the detriment of the U.S. as an international powerhouse. What was the major strength of the U.S. economy has, over the past 20 years vanished due to the ideas espoused in Neoliberal/Neoconservative ideologies and Globalization. Is it too late for the U.S. to reinvent its manufacturing base; or will countries who make the products cheaper like China, Mexico, and India take the lead in the world economy of tomorrow? Chances are, the U.S.’s decline will be long lasting and permanent if they choose not to recognize their grandest mistake. Once these “countries of tomorrow” make their big gains, what is holding their currencies from increasing to meet the U.S. currency in value? Where will the U.S. find its cheap products then? What will U.S. currency look like as their debt continues to grow to feed its hunger for the cheapest goods around?
-Justin Allen Philcox