Recently I heard my mother make two remarks which I will never forget. The first was with the inauguration of our new president when she said proudly, " I never thought I'd live to see a black man become president". And more recently, " I never thought I'd see the country in the condition it is today". I grew up proud and full of admiration for the country, my home America and how now the dream that all men are equal and should be judged accordingly seemed to becoming a reality, but after reflecting on several of our actions and in-actions in past decades, and seeing the country allow itself to become so disillusioned and compromised, I have a very different impression today.
The number one problem that our country now most focus on is our failing economy which is vital to us all and take concrete actions. Our current economic mess was not the making of the current US administration, but the culmination of past administrations, primarily through the Bush eras. President Obama made a promise of change "real" change in many daily operations and running of his office, including that of both dealing on the international stage as well as on the domestic, especially in dealing with our financial woes. His main theme and ideology of "change" continues to ring in my ears, as well as in the thoughts and aspirations of the American people, and in the people of the world - but so far little change has really become reality let alone being openly and forcefully discussed.
I am not an economist or politician by any means, but am an ordinary US citizen who teaches university and has been exposed and lived in many diverse countries of the world, including Asia, the Middle East, Latin America, and Oceania. However, I do feel I have the right and obligation to share the common opinions and attitudes that many of my fellow "average citizens" have concerning this situation, since we all have a stake in our futures and should therefore have a say in how our democratic systems are run.
In my opinion one of the major factors for our failing economy as well as many other western economies is simple, it is China. According to statistics from Chinese sources, primarily Xinhua new agency along with other sources, China's trade surplus with the US alone in 2006 was in excess of USD 200 billion exporting to the US six times the amount they received, and with the European Union for the same year USD 175 billion. Many people around the world are amazing, astonished in fact, by China's economic success and are even envious without understanding the reasons and reality which surrounds this accomplishment.
Along with my keen interest in following the "rise" of China, I have also lived and worked in China on several occasions and have traveled extensively throughout the country during the past 25 years. I have a fair understanding of of the Chinese people and why China, even though there is great discrepency in wealth between many regions and people, is so powerful today while we are caught up in a downward spiral.
China is a country of 1.4 billion people, roughly four times that of a comparable sized US. Therefore it has an enormous work force at hand, which includes roughly 56.2 million living above the poverty line set by the World Bank of USD $1.25 per individual, but less than the low income level according to a report by the Rural Survey Organization of National Bureau of Statistics, China, 2004 This all accounts for a system which employs people on a daily manufacturing or industrial wage of USD 0.57 in rural areas to USD $1.84 in more developed regions with no working rights, guarantees, or protection. In addition to the current 109 million manufacturing workers in China, and a surplus of 200 million in the agriculture sectors, 500 million peasant workers are anticipated to migrate to the cities in search of employment in the next two decades. This insures a cheap and accessible pool of workers who will continue to work under such conditions for China.
Chinese companies such as State owned Anshan Iron and Steel Group benefit from huge government subsidizes and land deals, access to undercut energy and capital, and lucrative tax breaks. No wonder the US has lost over one-third of its manufacturing jobs in the area during the past decade. Furthermore, this company has since attempted to buy into US Steel Development Company to further undercut and control the American market, gain access to vital technology, and influence decision making in the US. Another incident of Chinese intervention was in 2005 when China National Offline Oil Corporation was attempting a merger with Unocol Corporation, an American Oil Giant, but was rebuked by members of the House Armed Service Committee and legislators as an attempt to compromise US National security.
In contrast to the US, China protects all its markets and heavily regulates what can be produced and sold on its domestic market from basic supermarket products to luxury high end products of all types. Foreign access is extremely limited and are virtually barred from all products entering the Chinese market. When Chinese products exceed limit or are over produced they are flooded on an awaiting foreign market at below market prices further undercutting our economy's ability to survive. China certainly plays by its own rules and the world continues to play along.
Another important aspect involved in all this, is the blatant control and manipulation of the Chinese Renminbi / Yuan which continues to stay in effect in contrast to empty promises made by the Chinese and continues to be in stark contrast to western currencies which adjust to the world market. This manipulation keeps the currency artificially high to insure that its products are accessible and affordable in foreign markets while foreign products are not only restricted as mentioned from entering the Chinese market, but when gain access, are also unfairly priced to keep consumption and attraction insignificant to the Chinese consumer.
These are several of the key issues which have forecasted China's rise by some to become the world's largest economy by 2026. These policies are also in direct contradiction to world opinion, and action which should be taken, is not. China deals with any government any regime rogue or not regardless of their policies at home including North Korea, Burma, Sudan, Democratic Republic of Congo, and Iran to name a few. They will go in and offer friendship, meaning "gifts" to their elite and governments building new home tracks for government and military personnel complete with recreation centers and other "necessities", while the people of these countries often starve, are forced into child slavery, live below acceptable standard conditions with no running water or sanitation facilities, and have no basic human rights or hope for the future. This is done in the name of their so called "non-interference policy" and of course to buy influence and have access to needed energy and material rights to keep their economic engine running.
While China can not be blamed for all our current economic woes, it does continue to play by its own set of rules in contrast to accepted international law and standards, and definitely lacks morals and principles in its quest for dominance, and is a major threat to our economy and national security in the foreseeable future.
If change is the order of the day, let it now begin with China. President Obama needs to protect our economy and the EU should follow in suit. We really need to open our eyes to the situation which is very clear upon us. We need to also protect our economic interests and to rebuild our economy in conjunction with all countries including China, but on an equal and just playing field, not by the very one -sided system which has been in place now for many years and has helped to cripple our economy and national security. The US and the EU need to now stand up make hard decisions in which the people may have to make more sacrifices, but which in the long run will be worth the effort and sacrifices made by all.
Oh, but yes, what about retaliation by the Chinese, they have 1.2 trillion of our deficit, which is now their asset. It is also interesting to note that the Chinese do not use this money to help the impoverished millions in the western and other regions of their country to lift them out poverty, but do use a portion to continue to modernize and develop its military capabilities, and the rest is used to hold the US hostage to its demands and continued unjust trade policies. When will we learn and show some backbone?
I have heard commentaries stating that China needs the US more than we need China, and I believe most would agree. Even though China could in fact play hard ball with this new acquired asset of US cash, they most likely will not, since we too can also make things much harder in the long run for the Chinese.
As I stated before, I am not an economist nor politician, but here are a few steps if needed to be modified and amended, believe should be taken by the US and EU governments, and possible others, to resolve the threat we now face in regards to the unequal and unfair trade balances with China and to restore our once vibrant and lively economic sectors.
1) Establish a clear deadline in next couple of years for China to let its currency be truly convertible and float at current market rates with no government interference.
2) China to remove all existing trade barriers in conjunction with the free access it has in foreign markets overseas.
3) To the extent that China's companies and industries are allowed to set up operations in western countries, if national security is not at risk, it will employ a reciprocal approach with companies/industries wishing to enter its territory.
4) Immediately stop its dumping policy of undervalued goods into foreign markets. If not punitive tariffs will prevail.
5) If foreign countries wish to establish themselves overseas (China) they will be subject not to a free ride, but will be required to pay a special overseas based tax(es) to the home country to be put back into the economy at home. Basically making it less appealing to operate off-shore.
These are steps which may have been discussed, but seemed tabled, indefinitely. The US and EU among others, need to wake up to the situation and the threat it currently faces which will only increase in their economic sectors and take the firm action needed while being able to also make the sacrifices needed to get their economies back from the brink and again have strong and equal trading, production rights, and security for all their citizens.
If a small child makes threat against his parents saying if he doesn't get his way, watch out, what action does the parent take? The same applies to China. If it makes its' usual threats, let it be done, and the US, EU, and others, should not be driven into submission from taking actions which need to be taken to save our economies and countries from collapse. This would be real change in the right direction.
Kai Lamborn
Final copy written in the Sultanate of Oman on October 12, 2010
I am an US national citizen who has been developing and teaching EFL programs at overseas universities throughout the world for the past 23 years. Currently at Buraimi University in Oman.
