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PUBLISHED : Sunday, 28 October, 2012, 12:00am
UPDATED : Sunday, 28 October, 2012, 3:10am

Why China is enslaving itself to the United States

A US poll named China the world's strongest economy. But without reforms its rise is an illusion

Asked in the Pew [Research Centre] survey, "Which is the leading economic power, the US, China, Japan, or the European Union?", 41 per cent of American respondents said China is the world's most powerful economy. Just 40 per cent named the US.

SCMP, October 24

The United States is the home of astonishing poll results, of course. A large number of Americans are likely to agree at any time that the moon is made of blue cheese. They'll bomb it if you call it a question of national defence.

However, the common belief China now has the larger economy, which Tom Holland noted in his Monitor column yesterday, is more than just woeful ignorance. As Tom said, it is symptomatic of the xenophobia American politicians routinely awaken at election time - our problem is China. Let's get China.

Let's get real. China is where the US keeps its modern equivalent of slave pens. Tens of millions of Chinese labourers work in drudgery at very low rates of pay to supply American consumers with an abundance of goods at ultra-low prices.

The chart shows just how low. Over the past 15 years the consumer price index, excluding durables, has risen by 52 per cent in the US, while prices of durable goods have fallen by 14 per cent. This is China's doing.

Do these consumers thank their virtual slaves? No, they accuse them of undermining the US economy by creating a trade surplus, forgetting this comes back to the US as a huge inflow of investment.

And why do these virtual slaves do it? They have little choice. About 150 million of them do not have residency permits in the places they live and so can easily be exploited. This people's republic makes very good use of its people. Very good use indeed.

Why, then, do American politicians not target these employers? The answer is they would too often be targeting American citizens. Half of China's exports come from foreign-invested enterprises. The figure is higher yet for consumer goods exports. Foreign brands control the workplaces even without ownership. No supplier to Apple or Walmart defies its key buyer.

Why doesn't the government of China do something? It is afraid to institute the financial reforms that would allow the country to build up its own brand names and technologies.

These reforms are first of all to open the capital account and allow investment inflows and outflows to find their course. They are, consequent on this, to remove the heavy hand of the bureaucrat from the allocation and price of the money that funds industrial effort.

No country can build an independent industrial base without pricing the effort in its own currency. China uses the US dollar as a surrogate currency for industry, as the yuan is still funny money for this purpose. As a result, it has also ceded control to foreigners.

However, such reforms would undermine the central control of the government in economic matters. The authorities have a choice to make: let their people go free and take the next step up in development or keep their hands on everything while selling themselves to foreigners. So far they have elected to talk the first, but do the second.

And the ludicrous thing is that 41 per cent of Americans think this skewed economic model has actually created the world's largest economy.



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I'm a businessman to me I always ask who is the customer? Customer is king. USA GDP is about 14T and 70% of that is consumer spending that is 9.8T vs china GDP is around 5T if I am not mistaken but consumer spending is probably around 25% so is around 1.25T. So who is the biggest spender and who is the customer? If I am not mistaken USA has a wealth of 62T ie around 200k per person, and china has around 8T wealth for 1.3b people and that is around 6k per person. So who is more wealthier? USA has so many household name multinational such as Apple, Microsoft alike how many household name Internatinal companies from China? Education systems and innovation is still much advance in usa plus its immigration policy is still attracting talents worldwide. in silicon valley it does not matter you are chinese, indian, russian as long as you are smart and hard working you will excel, you do not have this in china. You can be a senate or A politician or high rank government official in USA disregard your race and color. There is still a big gap between USA and china as USA stands for multicultural getting the best people from the world. My 2 cents....FYI, I came from the top hi tech companies in China, out top 5 IT companies combined market cap is still less than us$1B and is less than a 10 person Instagram.....my point is not how many people do u have but how good the people do u have...
A very strange argument. The basic truth is that the boards of American (and European etc) companies put their shareholders' capital where it will gain the best and fastest return. Deregulation allowed them to invest the capital, technology and know how in China. Ironically this has cost America (and Europe) tens of millions of jobs now exported to China. Many of the people who lost their jobs and their families are now on welfare and no longer paying taxes, so the only durable goods they can afford are the cheap ones made in China. Hardly a long term benefit. Consequently Western Governments have had difficulty finding the revenue to make ends meet so they borrowed. That and huge trade imbalances are the principal source of Western sovereign debt. QED.
To describe Chinese workers as 'virtual slaves' of America is ludicrous. They are citizens of a totalitarian system practising State capitalism which relies on low wages to grow its economy, and, by the way, they are financially a lot better off than when they were unemployed rural villagers. They don't need or deserve American sympathy.
China's major policies will not change, at best, only action in the economic and other aspects of some. Many generals in the army are in fact false Wenpin, gilded qualifications, true of highly educated people are rarely reused, particularly the army, armed police and the reformist military personnel will not be reused. Rebel, a decade is not a scholar, the Chinese old saying is very accurate. A pen, a barrel of a gun, this is the last trump card of the life insurance, Qin Shi Huang, Emperor Qin, Qing Dynasty, the Empress Dowager, and eventually military turn of events before the collapse. The Xi Tele of the imperial army, the SS, the Gestapo, the same is true. Therefore, China's political reform will not change, chipping away, reassuring, stable and morale, and pay close attention to engage in economic, engage in foreign dollars, Mark, to cope with international pressure. The war is also not a large scale, bluff, to divert attention, dark their treacherous. As for the alliance with Russia against the United States, not necessarily efficacious. Putin is not fool Weirenzuojia. Russia is a traditional European countries, and China is not quite in tune. Once Russia's enemies, China embattled. Beauty. Russian nuclear weapons of the world's first, followed by China, the United States. Russian and European military equipment and combat experience than China. United Nations international pressure, the day may not be better than in Europe. China's major policies will not change, at b
That same 41% may vote for the radical Republicans intent on applying the China slave model in the US. Fox viewers.


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