China’s stake in US growth and prosperity


There has been an inordinate amount of nonsense written about US decline, complete with Russian and Chinese designs to benefit from America’s embarrassment in Iraq. The reality could not be more different. Neither Moscow nor Beijing has the remotest desire to see the US withdraw from the region or lose power, for two reasons. The first is that America’s presence in the region ensures that little wars will remain little. The second is economic. America’s economy and particularly the appetite of American consumers for imports remains the locomotive of the world economy, most emphatically of China’s. China’s trading relationship with the United States is an irreplaceable pillar of national prosperity, and the means to generate the national savings China requires to establish what President Hu Jintao calls “the harmonious society”.

If, hypothetically, the Persian Gulf were to go up in flames and the price of oil were to double, the US economy would tumble into recession. China’s even more oil-sensitive economy would experience a double blow, in the form of higher energy costs and reduced exports to its major markets in the industrial world.

Spengler appears correct about China. China’s GDP growth is still 70% dependent on exports, and US prosperity and growth is critical to the stability and growth of those exports. If Bentonville gets a cold, China will get the Asian flu. We wonder if China’s self-serving and kind of phony GDP revision last year, and its pulling out all the stops to get to a 20 trillion yuan number this year, are evidence of its insecurity about just this dependent condition.

2 Responses to “China’s stake in US growth and prosperity”

  1. bird dog Says:

    We are codependent!

  2. Jonathan Says:

    Indeed. The Chinese obviously think highly of our stability and honesty, else they wouldn’t have lent us so much money at modest interest rates. They have a big stake in our continued prosperity. Nonetheless it’s always possible that someone will miscalculate. The comparison of modern China to Kaiserine Germany is apt.

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