China is indeed riding high. While the U.S. has yet to fully recover from a recession which “officially” ended almost two years ago and continues to struggle with 20% underemployment, China’s economy grew by almost ten percent and created more than 15 million new jobs just last year.
Beijing has unashamedly made an economic colony out of much of Africa, while American power is being frittered away through piecemeal attacks in Libya and an overcommitment in Afghanistan.
The yuan is weak because China wants it to be, fueling an export-driving boom that has taken China from a backwater to a major power in 30 years. Meanwhile, the U.S. dollar plummets because nobody in D.C. can implement a policy to make it do anything else — and the resulting inflation threatens us with a double-dip recession.
But there is more to the story.
Measured dollar-for-dollar, China’s GDP is less than half that of the United States’ — it’s only by measuring “Purchasing Power Parity” that the numbers are even close, even all the way out to 2016. Per capita, most Chinese are quite poor, making little more than $4,000 a year. Grade on the PPP curve, and your average Chinese still makes only around $7,500. Per capita GPD in the U.S. is a much-comfier $47,132.
America enjoys other strengths China lacks. “Soft power” might not win wars, but it does help develop and strengthen friendships. China can count its closest friends on the fingers of one hand, with three left over for making rude gestures: North Korea and Burma. If you judge a country by its friends… China comes up short. In trade, China’s “brand” is probably best summed up as “dirt cheap crap.” That’s not how this country or Japan came up in the world.
On our side, the U.S. enjoys close (or improving) relations with India, Thailand, Vietnam, Indonesia, Australia, the Philippines, Taiwan, South Korea, and Japan. And those are just our friends in China’s neighborhood. We used a policy of “containment” against the Soviet Union with mixed results day-to-day, but with phenomenal results when it mattered. The pieces for China’s containment are already in place.
And while it’s true that China has enjoyed the full fruits of capitalism, its economy still suffers from faux-communist distortions. From uninhabited, brand-spanking-new “ghost cities,” to a financial sector that would make Tim Geithner blush, Beijing is sitting on multiple power kegs while smoking up a storm.
Meanwhile the U.S. dollar is falling to new lows as the markets wait for Bernanke to get off his ass and do something – anything – that might address this debacle. I’m not holding my breath.