It seems today that a lot of news stories play on our fear. Our news covers everything from Al-Qaeda to diet pills, but lost in these stories is probably the greatest threat to American sovereignty — China.
It is my belief the development of nuclear weapons eliminated conventional warfare among first-world powers, and economic warfare has become the new way of doing battle. In the 1980s and early 1990s, the United States toppled the Soviet Union, but not with direct military conflict; it was through outpacing it economically with programs like Star Wars. When the Soviets could not afford to send in the tanks in Poland and Eastern Europe, the country collapsed on itself.
Now we face a new opponent, China. China has risen to become an economic power since it joined the World Trade Organization in 2001. China controls about 97 percent of the world’s rare earth metals, it is manipulating the Yuan (keeping it artificially low), and is responsible for numerous cyberattacks.
Why are these three issues about China so critical?
Let’s start with the Chinese control of rare earth metals. The U.S. Geological Survey recognizes 17 different rare earth metals, metals that are essential to making computers, TVs, and pharmaceutical drugs. The U.S. is a major buyer of rare earth metals, but we mined none last year. Although we complain about reliance on foreign oil, at least the U.S. produces some of its own oil.
About a month ago, China was engaged in a diplomatic standoff with Japan when Japan detained a Chinese fishing boat captain after he allegedly rammed a Japanese Coast Guard ship.
In response to his detainment, China aggressively enforced a rare earth metal embargo, which forced Japan to release the captain. Now China has quietly expanded its rare earth metal embargo from Japan to Europe and the United States.
As we move toward green technology, rare earth metals are going to be essential because they are a crucial component in almost any gadget that moves or sees or is guided by a computer.
These metals are also are necessary for developing battery-powered cars, which is crucial in the effort to ween us off the petrol engine.
China is also manipulating its currency to the detriment of the U.S.
Last month, Brazil’s finance minister declared there was an “international currency war,” as China has moved to try and replace the dollar as the standard international currency. Right now the Chinese strategy is simple, but deadly to the U.S. dollar — accumulating foreign currency reserves and sending money abroad (in the form of direct investment, aid and loans) has given China financial clout in the global economy.
In May 2009, the head of the People’s Bank of China called for an end to using the dollar as the world’s reserve currency in favor of a new currency to be created by the International Monetary Fund.
Replacing the dollar means the price of goods may go up and U.S. prestige will probably continue to dwindle. China currently holds the world’s largest foreign-exchange reserves.
With the expansion of the Internet and computer usage, it’s no wonder cyberattacks are being used against the U.S. What’s dangerous about this is how aggressive the Chinese have been in going after our state secrets. During the 2008 presidential campaigns, both sides were completely invaded by cyberspies in August, and the Secret Service forced all senior staff members to replace their laptops and BlackBerries.
In March 2009, Sen. Bill Nelson discovered his office computers had been hacked three separate times (all three hackings were traced back to China). Researchers in Toronto discovered that a cyberespionage ring called Ghostnet, centered in Beijing, had infiltrated 103 countries and more than 1,200 systems ranging from NGOs to the offices of the Dalai Lama. Chinese hackers are also believed to be behind the 2003 blackout that plagued the Northeast.
The U.S. needs to address these issues before we lose our standing as the dominant power in the world. First, we must either find new suppliers of rare earth metals or use diplomatic influence in the WTO to pressure China into expanding its rare earth metal supplies.
Next, develop sanctions and use political pressure in the WTO to prevent it from buying its own currency, which is artificially keeping the Yuan low. Finally, the U.S. needs to invest in network security and step up its own weapons for cyberwarfare to respond to Chinese invasions of privacy.
A version of this article appeared in the Oct 28 issue of the Collegiate Times.
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It's a whole lot of fuss over nothing really. China doesn't pose a threat to the United States. First because they buy our debt and hold the largest supply of U.S. currency abroad it is in their best interest for the U.S. to do well. It's not so much that we're competitors, they're hitching their wagon to us. Secondly China is by no means politically stable, even if they maintain their miraculous growth over the coming years, which there is no guarantee that they will, all of this growth has been accomplished at the expense of it's citizens. Many people in China haven't been paid their subsistence wages for 6 months - 1 year. These laborers are farmers that have been forced into a rapidly urbanized environment. Discontent amongst the Chinese is high and we are likely to see that anger manifest itself in the near future. That's without taking into effect the province of Xinjiang and the tinderbox situation that exists between the Muslims and the Chinese. Thirdly China's competitive advantage to the world is that it has cheap labor. As it's affluence rises it will have to pay it's workers more. We see this already along the coastal regions were outsourcing corporations first set up. As the wages have risen Corporations have moved farther inland to where the cheaper laborers are. China is running out of these poor areas and will soon lose these jobs to countries in Southern Asia.
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Fourthly China's one child policy has resulted in a younger generation that is significantly smaller than the older one. This older generation is set to retire soon resulting in a labor shortage in the hundreds of millions. This new generation is entirely comprised of only children that are overwhelmingly male. In addition to the obvious social problems from an unbalanced gender ratio, these only children are called "Little Emperors" in China. They're spoiled, unwilling to work in teams and unlikely to accept the conditions that their parents did, which goes back to my second point.
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Fifthly China's environmental record is one of the worst on the planet. For all the credit environmentalists give it for green energy China is one of the biggest polluters on the planet. The air pollution is so bad that 20% of the smog in L.A. is from China. L.A. conversely is polluting the water's so bad it's killing the Chinese fishing industry. China's fishing industry is also being killed off by their large dam projects. These projects have destroyed local economies forcing the unemployed into subsistence wages in Chinese factories. The dams also reduce the river's ability to handle pollution, the major rivers in China have mountains of garbage at their mouths. The Chinese government's carelessness is killing the local population and to a greater extent causing health problems globally. These lax environmental standards are also part of China's cheap competitive advantage and as the government is forced to change them industries will locate elsewhere.
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Sixthly China isn't viewed well by it's neighbors. Many people speculate that the U.S.'s role as sole superpower and ideological center will give way to a U.S. vs China global mentality. Even if China manages to be the rallying source of anti-U.S. sentiment in the world the rest of Asia, sans N.Korea and other despotic regimes, will not follow them. China is the big player in Asian politics sort of similar to Mexico's relation to the rest of Latin America. While some authoritarian governments like Laos welcome China's influence and trade the rest of southern Asia view them as a threat. The rapid buildup in the Chinese military has resulted in several Asian nations including Vietnam to turn to the U.S. for military hardware to counter China with a buildup of their own. In this microcosm many nations thought to be China's ally have instead chose to side with the U.S. My seventh point is that switching to an international currency isn't anything new. The Bretton Woods agreement established gold as the international currency and the U.S. did just fine economically. The only reason we stopped using it, was Richard Nixon decided to stop using it so he could more easily pay for Vietnam. We likely wont switch though because American currency is the hard currency of choice for almost every other third world nation, some like Ecuador even us it as their primary currency.
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Eighthly the Chinese economy can't grow without energy and they can't get enough to sustain their growth. Regardless of what you think about our Middle Eastern involvement, we control the vast bulk of the known energy reserves in the world. Though they hate us there we control Middle Eastern oil and without access to it China is struggling to find enough fuel to power it's economy. Ninthly the U.S. doesn't allow for foreign leaders to threaten us. If China posed any threat we'd send in the CIA like we did to keep Tiawan independent. Brave agents killed many Chinese to ensure Tiawan's sovereignty. Sure Cuba was a mess up but I encourage anyone that doubt's the CIA's effectiveness to check out this article. http://en.wikipedia.org/wiki/Central_Intelligence_Agency#Mission-related_issues_and_controversies
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Pretty sad when we have to worry about a dirt-poor third world nation with the per capita income of Botswana. We need to fix our own nation first. They aren't crashing into airplanes into our buildings. Let the Chinamen and the other little asians deal with their part of world and let us deal with ours.
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The U.S. is manipulating the dollar to the detriment of...the world and its citizens. One main reason for us wanting to invade Iran to control its government is they dropped the dollar when trading oil (we hate that). This hurts our exportation of inflation to other countries. I agree, get rid of the dollar as the world's reserve currency, bring back gold and take the power away from Bernanke and give it back to the people.
Also, economic sanctions only hurt the people of the country we are sanctioning. It does little to dissuade the leaders who will still be able to live life comfortably (See north korea or Iran currently or Iraq in the 90's which lead to the starvation of hundreds of thousands of people).
In short, quit fear-mongering and appreciate the cheap products that the hard-working Chinese have provided us with. They make our lives better and our dollars help increase their standard of living, sweatshops included.
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Those "wonderful" cheap product from China are destroying our nation. Since China was granted most favored nation status, the United States has lost over a third of its manufactuirng jobs, which has hollowed out our middle class and is turning our nation into a third world sewer. Germany has the lowest unemployment in the developed world because it manufactures and imposes 20% VAT on any and all wonderful Chinese goods that anyone tries to sell in Germany that might threaten their important manufacturing base. Learn from the Germans.
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Every freshman economics student learns that a nation's GDP is made up of consumption, investment, government spending and exports minus imports. When imports from a place like China,overwhelm exports, GDP, GDP Per cpita and the nation's standard of living go down. As we import goods from China, if we don't export something else to them, we diminish our economy. Imports to China have simply and in larger amounts every year, exceeded our exports to them. The US gets no value out of the increaingly richer Chinese consumer why we become ever poorer.
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