Enter the Dragon

I am very far from being an expert on China. This usually doesn’t stop me from leaping in with my thoughts though. So, I will here offer a few naive views on this country … mainly because the rhetoric is beginning to climb elsewhere. Many believe that, because of its geographic size, massive population, exploding economy, high repository of native intelligence augmented by a good educational system, and apparent national energy, China is destined to dominate the world (economically) in a matter of only ten to twenty years (see the CNBC article ). This may be so but, according to many pundits in the 1980’s, wasn’t Japan also going to dominate things … remember "Japan Inc." Like Japan, China may also suffer a few hiccups on its way to world domination.

Let’s look at a few statistics. China’s land area is 3,696,100 square miles versus 1,656,425 for the United States. China’s population is over 1.6 billion people versus the U.S.’s only around 309 million. However, the U.S.’s GNP is close to $13.8 trillion, currently growing at about 1% per annum. China’s somewhat suspicious GNP numbers are $4.2 trillion, growing at around 10% per year. More interestingly the GNP per capita in China is about $870 whereas, in the U.S. it is over $33 thousand … quite a gap. But just imagine what China’s GNP would be if the per capita number was even $10,000.

There are a number of things that worry me about this Dragon of the East. They are:

1 - The possibility of another Cold War. China has, for a number of years been building up it military capabilities (see the Guardian article) including the recent boast that it will be able to take out (U.S.) aircraft carriers. It will not be too long before U.S. military strategists will need to respond to these threats with significantly increased defense spending on our part … probably post-Obama. This Cold War will (does) include China’s causing mischief with surrogate states like North Korea, Iran and Venezuela,

2 - At some point in the not too distant future, I would expect China to annex some additional territory (as they once did with Tibet) like parts of Mongolia or even Taiwan. I’m not sure that the United States (or Russia) knows exactly what we (it) will do when this circumstance presents itself.

3 - China’s one-baby-per-couple policy has caused the birth rate in China to be reduced. However, the ratio of male to female babies is now about 6 to 4. This presents a dangerous demographic situation when all these males reach maturity. Certainly domestic crime rates or even military adventures seem far more likely under such a situation (see my tongue-in-the-cheek blog on this subject, Another Modest Proposal).

4 - Walmart has greatly helped China keep its economy and employment growing. However, it won’t be too long before we in the United States stop stuffing our house with goods made in China. Here, I am not criticizing the quality of Chinese products. I am more criticizing the penchant of the American consumer to purchase things that they truly don’t need. I kid my wife that the next time she returns from the Christmas Tree Store with a bunch of discretionary stuff, our house is going to explode. When this U.S. consumer buying mania abates, China will have more difficulty (unless it has its own explosion of consumerism) keeping its population employed. This is a situation that will auger (poorly) for increased citizen unrest.

5 - To me, China’s fatal flaw is its lack of democracy and political freedom. I know that we, in this country, feel superior to China because of this national defect on its part. However, what will happen if they decide to shuck these chains? I would both feel good but then know that the days of U.S.’s world dominance are surely numbered.

And when was the last time you saw a bald eagle flying off with a dragon in its talons?