WSJ writes that “as China surges, it also proves a buttress to American strength…Beijing feeds a giant appetite in the US for low-cost goods and borrowed capital”:
China is slotting itself into the global economic order that America dominates and largely created. As a critical link in this capitalist chain, nominally communist China helps enrich companies. At the same time, it supports a central feature of America’s superpower status: its gargantuan appetite for foreign goods and capital.
Though America is sometimes loosely called an empire, it defies the imperial economic script described by Lenin (who called imperialism “the highest form of capitalism”). The U.S. doesn’t seek vassal states as outlets for surplus capital. In an anomaly for such a powerful nation, America sucks in money from abroad. With its large national debt and trade deficits, the U.S. binds not by lending but by borrowing and by importing.
Its status as a “hyper-debtor” makes this “hyper-power” oddly reliant on weaker partners, says Niall Ferguson, a professor at New York University and scholar of imperial history. “If you are dependent on the willingness of others to hold your assets, there is a limit to how unilaterally you can act.”
China’s emergence as a major economic power is beyond doubt. Its $1.2 trillion economy, while far smaller than the $10.4 trillion economy of America and Japan’s $4 trillion output, is on track to catch up with Japan inside of two decades. Already, China’s growing economic weight, including a voracious consumption of crude oil, is giving Beijing commensurate influence in geopolitics — another power center for America to contend with.
Also undeniable is a painful loss of U.S. manufacturing jobs to a country where the average plant worker earns around $80 a month, less than an American on minimum wage makes in two days. Cheap labor pushed China’s trade surplus with the U.S. to $123 billion in a recent 12-month period, five times the gap a decade ago.
Curbing Chinese imports through tariffs or a stronger yuan would only drive up imports from other countries, contends Stephen Roach, chief economist at Morgan Stanley. The only real alternative, he says, is for Americans to spend less and save more: “When Americans get frustrated with China, they should look in the mirror.”