November 11, 2008
PJB: China’s Path to Power
By Patrick J. Buchanan
For decades, before a heedless congregation, some of us have preached the old Hamiltonian gospel.
Great nations do not have trade partners. They have trade competitors and rivals. Trade surpluses are superior to trade deficits. Tariffs on foreign goods are preferable to taxes on U.S. producers. Manufacturing, not finance, is the muscle of the nation.
Economic independence is vital to political independence.
Following Hamiltonian precepts, the United States grew from 13 rural and agricultural colonies into the greatest industrial power in all history, producing 42 percent of the world’s manufactured goods. We were the awe and envy of mankind, the self-sufficient republic, maker of half of the armaments produced by all the nations in World War II.
That is the America we grew up in — that has now vanished.
Chrysler, Ford, perhaps GM, may be dying. Manufacturing has sunk to 10 percent of U.S. employment, a level unseen since before the Civil War. Europeans and Asians are to assemble in Washington this week to impose upon the United States a New World Economic Order like the one we imposed on them at Bretton Woods in 1944.
Such are the fruits of free-trade ideology.
Across the Pacific, a nation that studied how America rose, and watched as America declined, chose a different path. China adopted and pursued a China First policy of economic nationalism.
In July, Charles McMillion of MBG Services testified to the U.S-China Economic and Security Review Commission on China’s progress.
Beijing began its astonishing rise by devaluing its currency 45 percent in 1994, slashing the prices of exports in half and making imports twice as expensive. As America threw open her market and invited China to come in and capture it, China had erected a Great Wall around her own.
Results: China’s worldwide trade surplus in manufactures, $31 billion in 2001, hit $401 billion in 2007, a 1,300 percent increase, and may reach $500 billion in 2008. China has shoved Germany aside to become the world’s greatest exporter and now leads the world in the export of manufactured goods to Japan and the European Union, as well as the United States.
While running trade deficits with Asian neighbors like Taiwan, to tie them politically to Beijing, China is running record trade surpluses with the European Union and the United States, making America and the West as dependent upon China for our manufactures as we are on OPEC for our oil.
Chinese auto production has quintupled since 2001. She now produces more cars than Germany and may exceed the United States in 2009. While Chinese auto exports are still heavily in parts, finished cars are coming soon to a dealer near you. The Chinese will likely run the sword through the last standing member of America’s Big Three.
Before 2004, China’s manufacturing trade surplus with America was largely in textiles and apparel. But, since then, China’s rocketing trade surplus in electronics, computers and parts has far exceeded her surplus in textiles and apparel.
China’s trade surplus in computers and components rose from $8.1 billion in 2001 to $73.5 billion in 2007. In cellular phones and parts, her worldwide trade surplus grew from $3 billion in 2003 to $50 billion in 2007, and may reach $60 billion by year’s end.
China still imports commercial airliners. But she now has a large and growing trade surplus in airplane parts. This follows the pattern in textiles, computers and autos. First, the Chinese learn by assembling parts in factories in China. Then, China begins to produce the parts. Then, China produces the finished products and goes out to capture the world market, while protecting her own by keeping her currency cheap.
On items the Commerce Department categorizes as advanced technology products, America began running a trade deficit for the first time early in the George W. Bush years. China now exports to us four times as much, in dollar value, in ATP items as we sell to Beijing.
As America mothballs the shuttle, relying on Russian rockets to get our astronauts back up to a space station we built, China is putting men into space and heading for the moon.
Since America ushered China into the World Trade Organization in 2002, Beijing’s growth rate has been four times that of the United States, accelerating from an average 10 percent of gross domestic product to 12 percent in 2007.
With her immense trade surpluses, China’s reserves have surged from $200 billion in 2002 to $2 trillion. Awash in dollars, Beijing now waits patiently, writes McMillion, to cherry-pick the crown jewels of America’s industrial empire — “patents, talents, natural resources, brands” — at fire-sale prices in the global crash.
As America plunges into recession and our industry hollows out, while China is still growing at 9 percent, as the 20th century’s greatest creditor nation now borrows from Beijing to pay for booster shots for its sick economy, may we hear once again the Bush-Clinton refrain about how the terrible danger we all face is from “protectionism.”
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Thanks for getting your site back up. I was starting toget withdrawal shakes.
Another fine article Mr. Buchanan. Yes the future for the US looks bleak. Partly because the media has confused the public with a plethora of drivel spouted by young bimbos like the one you confronted this morning on Mornining Joe. As you and Joe so correctly pointed out it is absolutely imperative for the future of the nation to save and maintain our auto industry. Young and beautiful? Christia Freelan (sp?) spoke with complete authority on something she knew absolutely nothing about, but she did at least seem to convince Mika to take her side. Why is that so?
Well my observation over the past decade convinces me that it is the result of the “stupid white male” syndrome. I have to admit I watch way too much tele but years ago I noticed that almost without exception most TV commercials employ a white male doing something or saying something stupid, only to be corrected by a (fill in one of the following; black, woman, hispanic, gay on any combination). After years of this brainwashing the general public automatically discounts the white male, especially old white males. Hence as you saw with the campaigns the use of women like Nicole Wallace and Carly Fiorina and of course your girl Sarah Palin. Well and maybe, to some extent, why Obama won.
Unfortunately this US is in for a long rough ride and at some point will look to old white men that have the experiance and wisdom and have paid their dues to bail the country out. Men such as you.
Pat has nailed it on this one.
There is something more that needs to be considered when examining China’s rapid growth - its lack of a true middle class.
In the 90’s China placated Washington’s fears with the vague promise to reform to a democracy. Once they gained access to our market and experienced the rapid growth of capitalism, they instead fell back in love with communism.
Perhaps they were loathed to admit that communism had failed and seized the opportunity to resurrect their lost pride. Whatever the reason, while they waved the red flag, they failed to understand that the reason capitalism works is because under a democracy a middle class can grow.
A middle class, or more accurately, the producing prosperous, is the hinge pin of the self-sustaining economic cycle. It both creates the wealth and buys the products.
China’s reticence to let go of power and allow a true middle class of freethinking individuals is endangering its own future and the investments of all of the Wall Street China-believers.
China is dependent on our middle class. Unfortunately, for all the American middle class is eroding. Without manufacturing jobs, we no longer produce and our buying power dwindles.
Both China and the US need to sustain a strong middle class in each country or there will be no Global economy.
Before you get too worried about China…
As a follow-up to my last comment read this from Machine Design Magazine and see the soft underbelly of too-fast growth with no real foundation:
http://machinedesign.com/ContentItem/73266/LelandTeschlersEditorialManufacturingWoesintheNews.aspx
Things is go’n to get interesting - real interesting.
Despite continued political repression, the stance of US elitists, politicians, and many in this country remains unchanged. They dismiss the reality that China, a growing economic powerhouse and our future rival, appears bent on realizing economic growth while maintaining a one party authoritarian Communist system of government.
It is easy to see the Chinese are taking full advantage of our derailment and focusing on leading the world in the next century. They pity us as a country and civilization in decline as they head toward supremacy. They fully intend for their one party Communist authoritarian rule to become the predominant worldview in a hundred years. And we will help them accomplish it.
China acknowledges that they have learned all of the processes and steps in the realms of manufacturing, business, science, and technology from us. We have flooded our best universities with their students and mentored them in our offshored operations. This rush to turn over our knowledge and manufacturing to China is simply resulting in them taking both from us.
And what they can’t get legitimately they simply steal as the following article clearly points out: http://paleoconservatist.blogspot.com/2008/11/china-stealing-usa-technology-and.html
The USA is becoming a case study in how to take a world class country and turn it into a second world/second rate country. We can blame the Chinese all day long but the responsibility for our own actions rests with us. We are the ones to blame for our own stupidity.
Well, well, now China is lecturing us on economics…
http://www.ft.com/cms/s/0/48ac15fc-c1bc-11dd-831e-000077b07658.html
It looks like the parasite latched on to the wrong part of the host - now their sucking wind.
Maybe they depended on a strong American middle class more than they realized.