Chinais not falling anytime soon
Ido not agree with the article. The author has adapted an alarmist toindicate that China is collapsing actually this year and next year.His predictions seem not to have come to fruition as the year 2014ends. The thing is, some of the issues indicated are valid and true.Earlier this year, I watched a feature documentary on BBC on China’sghost towns. This alone captures and confirms the worries expressedby Schuman that China has made unnecessary investments that do notgive expected returns. In one of the investments, the Chinesegovernment sought to recreate Manhattan in China filled withskyscrapers along the Conch Bay district in the port city of Tianjin.Although the business district was completed in 2010, it has failedto attract enough business and most of the skyscrapers remain emptygathering dust (Zhou 2014). Does this main that China is on the vergeof collapse? I believe not.
Chinatoday controls majority of the global trade and has dethroned the US.It is common knowledge to Americans that many American companies haverelocated to China. From toys to even some processed, the businesshas relocated to China. Some components of the iPhones and even thefavorite flat screen TV in your house have been sourced from China.Nearly every other country in the world is relocating labor intensiveindustries to China to take advantage of the huge governmentsubsidies and cheap labor and skilled manpower (Forsythe, 2013). Wholoses? The rest of the world loses given that the approach China hastaken though it might not agree with traditional economic theorieshas given the country the needed comparative advantage for the timebeing.
Myhypothesis in all this in China’s interest in short term economicgains has been simply to challenge the US. China understands that asan upcoming global power has often been overlooked and its communistpolitical system looked down upon. I believe that China is doingeverything in her power to set the record straight that she canprosper with her communist policy though she has greatly adaptedcapitalistic policies that allow people to own property and runbusinesses. I am forced believe that Chinese leadership might bepursuing selfish interest for the leadership to make to the book ofrecords as having dethroned the US as the worlds super power and theworld largest trading nation. Apart from targeting Americanmanufacturers to relocate to China, the country has also beentargeting American allies and foes at the same time.
Thesecond scramble for Africa is underway. Previously, the US has beenthe main trading partner with Africa. As of 2011, US-Africa tradestood at $125 billion before it dropped to $99 billion in 2012 andfurther to $85 billion in 2013. Interestingly, Africa-China trade hasbeen on the rise surpassing US-Africa trade in 2009. As of 2011,China-Africa trade stood at $166 billion, in 2012 it stood at $198billion and $210 in 2013 (Forsythe 2013). China has also managed tosell the idea of mammoth real estate investment and infrastructuralprojects to several developing countries around the world especiallyAfrica (Dews 2014). Other than this, China has been very keen ongaining more control on the world’s natural resources. While the USis occupied in fighting terrorism and investing so much in it, Chinais on a growth path. The huge military expenditure in Iraq andAfghanistan are simply lost resources that could have been investedelsewhere. The total cost of the two wars is expected to be $4-6trillion. On top of that add another $700 Billion sunk by thegovernment in financial bailout in 2008/09 crisis (Chaziza 2014).That is a huge amount of money by any standards.
TheChinese population affords the country to be a bit wasteful in herinvestment to cater for her huge population that now hinges on 1.3billion. The Chinese government has viewed as attracting foreignlabor intensive firms as the best way to cater to its hugepopulation. China is avidly pursuing urbanization to salvage herrural population from cyclical poverty. With the middle classpopulation in China now estimated at 350 million and growing, thereis growing market for the real estate market though at the momentsupply outstrips demand. In such a situation there are bound to belosses in form underutilized capacity. These are the valid economicquestions that Schuman raises in the article. However, he exaggeratesthe situation and ignores the current global fascination with cheaperChinese products which will spur growth in the country further.
WhatI agree with Schuman is that China will not last forever as a superpower. History and economic theory indicates that economies gothrough economic cycles of characterized robust growth, recessionsand recoveries. The same case has happened to past super power suchas the Greek Empire, Roman Empire, Egypt and others. I believe thatthe current US reliance on the Chinese economy both in trade andforeign debts (treasury bonds) cannot allow the US to watch the Chinafail. Currently China holds over $100 billion worth of Americantreasury bonds (Zeng 2014). I believe that if China fails US willfail because of too much interdependence. Any military confrontationbetween the two would be mutual destruction. However, for the timebeing and the near future, China will establish herself as anoutright global super power in spite of her unconventional economicpolicies.
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202014. Web. http://www.gloria-center.org/2014/09/ten-years-later-who-won-the-iraq-war-the-us-or-china/
Dews,Fred. (2014). Facts about China`s Investments in Africa. Brookings.May 20. 2014. Nov
Forsythe,Michael. China Eclipses U.S. as Biggest Trading Nation. BloombergNews. Feb 10
2013.Nov 20. 2014. Web.http://www.bloomberg.com/news/2013-02-09/china-passes-u-s-to-become-the-world-s-biggest-trading-nation.html
SchumanMichael. Why China Will Have an Economic Crisis. Time.Feb. 27 2012. Nov 20
Zeng,Min. China Plays a Big Role as U.S. Treasury Yields Fall. WallStreet Journal.July 16
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Zhou,Xin. China Builds Its Own Manhattan — Except It`s a Ghost Town.BloombergNews.June
272014. Nov 20. 2014. Web.http://www.bloomberg.com/news/2014-06-26/china-s-manhattan-project-marred-by-ghost-buildings.html