China is Becoming a Superpower, With Our Help

Quote of the day:
“China was in decline for 300 years and then around 1978 Deng Xiaoping said, ‘OK, let’s find something new.’ He reintroduced entrepreneurship and capitalism to a country that has had a long, long history of both. In China they save and invest more than 35% of their income; in America we save less than 2%. The Chinese work from dawn to dusk. When they come to work, they don’t say, ‘How many holidays do I get?’ They want to live like we do in America and they are willing to work hard, save and invest for the future.”
--James B. Rogers, in today’s Barron’s

Ok. Let’s all have a moment of panic about China.

AAAAAAleadpaintAAAGGGGGGjobsGGGGGHHHHHHbadpetfoodHHHHHHwewon’tbenumberoneHHHHHHtheydon’tspeakEnglishHHHHHHHHH!!!!!!

Good. Now that we’re done with that, let’s talk.

There’s been lots of attention over the last week to protests surrounding the Olympic torch route. Fervent Free Tibet supporters have been vocal and sometimes aggressive, not heeding the Dalai Lama’s call to keep the peace.

Simultaneously there have been strong protests against China’s ongoing human-rights abuses.

These protesters make very important points. China certainly does need to heed the wishes of the people of Tibet. And there’s no doubt their human rights record is spotty.

What concerns me is that these two valid issues are simply added to what some see as a growing list of reasons that China is a sinister menace. And while we engage in the latest anti-Chinese hysteria, the real, long-term ramifications of its emergence as an economic superpower are ignored.

Because of their rising power, they are able to buy American debt (that is, dollars). We get worked up about this and then use part of our home-equity loan to go to Best Buy and get a flat-screen TV, made in China. That home-equity loan might also be owned by China.

In other words, we fret and worry about China’s growing ownership of American assets and then we drive to the post office to mail a few to them. We borrow from them to buy their products.

China’s influence and economic power are growing. They will one day have more economic influence than us. Why? Because their population is more than three times ours.

Historically, the majority of China’s population has been agrarian. Now that has changed, and more than half live in urban areas. And as still more and more people get engaged in China’s growing commercial and industrial base, this trend will accelerate.

There’s no need to panic. There is a need to be aware of and to understand.