Posted on 05/02/2003 3:22:21 PM PDT by kattracks
Ex-president Bill Clinton predicted this week that either Communist China, which helped bankroll his 1996 reelection campaign with hundreds of thousands of dollars in illegal contributions, or the European Union, would replace the United States as the world's number one power within the next 30 years.
"In all probability, we won't be the premier political and economic power we are now," Clinton told the Washington Post in an interview from Mexico on Thursday. Saying the shift would occur within "a few decades," the ex-president cited the growth of China's economy and Europe's already formidable economy as factors that would doom continued U.S. supremacy.
Clinton said the question of whether China or Europe would replace the United States depended on how their respective governments invested in military might. While Europe's defense investment has been minimal since World War II, China now has the fastest growing military budget in the world.
In 1996, the Clinton administration approved the transfer to Beijing of key missile guidance technology which enabled China to hit most major U.S. cities with its intercontinental ballistic missile fleet.
Clinton offered his prediction to the Post in an attempt to clarify comments he made to an Australian audience in February, where he warned "This is a unique moment in U.S. history, a brief moment in history, when the U.S. has preeminent military, economic and political power. It won't last forever. This is just a period, a few decades this will last."
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Have you been to China before?
Yes.
Why aren't these same people all talking about it being India's century etc etc? In their minds there is something mystical and magical about China.
You are leaving out a whole lot of stuff that can seriously alter the landscape.
Companies buy from China because of a game of relativity with other Asian countries as well as the US. Within the current framework China is cheaper. Emphasis on the 'within the current framework'.
What if the current framework changes?
1. The Chinese currency is seriously undervalued. What happens if the price gets corrected, even 5 years later? The price of goods (to the US importer) jumps about 40%+
2. What happens if we sign free trade deals with all of the Asian competition, such as Korea, Singapore, Taiwan, etc?
As it stands, trade is taxed by the exporting country, then you have all kinds of other things to spend money on ie govt related obstacles, then you have shipping, and import tax, and all other kinds of tax on the US company.
If Congress passed one law giving tax benefits to country X, Y, or Z, China would lose out.
In short though, between 30% and 75% of the wholesale cost of a product is in the form of govt regulation, taxation etc. And that is not all the US govt. In other words, a $10,000 product would actually cost $17,500 to purchase and import.
With a FTA, such as the one we are going to sign with Singapore next week, most of those barriers go away.
If the competition has an FTA with the market, but China doesn't who wins? Given the right conditions, not China.
Just those two things alone, 1. the currency pressure to revaluate, and 2. shifts in the global system can throw a real wrinkle into China's plan. Just with those two things though, China has serious upward pressure on them, and the other Asian countries have serious opportunity for downward pressure. Labor costs are a very small part of the system. In this scenario the competitive advantages might be too much for corporate America to pass up.
Just figure this: what is the difference between a 40% increase in the prices of Chinese goods (to US importers) and a (lets just estimate) 25% decrease in the prices of products from elsewhere in Asia?
So, in other words, I would venture to say, that Wal Mart, and most likely quite a few others will start to shy away from China over the next few (5) years.
You probably were one of those in the late 80s/early 90s who thought Japan would overtake us, weren't you? You really believe in a managed economy, don't you? If so, the losers club welcomes you.
Brilliant! And if they become us, how great would that be? Many, many problems solved!!! Did you also forsee the fall of Japan, in the early 90s, due to crony capitalism? How many were predicting the century of the Rising Sun ?
I absolutely couldn't agree with you more. Free markets all around!
Nor our biggest actual advantage, (comparitavely) free markets and the right to property.
Since the end of WWI, at a minimum.
America is none of that. Our greatest treasures are the Declaration of Independence from Jefferson, and the example of Washington who refused the crown and left office after 8 years. Washingon did as much for our behavior as Jefferson did for our intellect.
That we've never succumbed to tyrannts is our greatest advantage.
Hopefully you're not in a leadership position.
My guess is they'll also throw in that the Chinese are also quite intelligent. Of course, they'd need to expalin why they've been so ineffective thus far.
That's because they hoodwinked our socialist press with their "crony capitalism." Our stupid socialists, actually believed Japan's form of managed economy would outperform free markets. Of course, they believed that about New Zealand and Sweden as well. When will they learn?
Of course a socialist like Clinton wouldn't realize that, now would he?
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