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EYES ON CHINA
Again
we quote from Stephen H. Dunphy, Seattle Times, 2/1/04:
“China is growing so fast that its trade surplus with the United
States continues to grow each month, On the question making it a political
issue that raises fears of trade restrictions. And a growing
number of white-collar jobs are heading for China, an unexpected development that troubles the promoters of
globalization.”
“One
of the big questions as 2004 gets under way is whether China is growing
too fast. It was a subject of a cover story in Business Week recently, and the New York Times
splashed the idea across the top of its Sunday Business section several weeks
ago. ...
China is in a much more
fragile state than either" [Japan or U.S.] "making
any economic dislocation all the worse for them - and for us.
This
is not to take away from China's extraordinary growth, its emergence
as a world industrial power called 'the most profound social transformation
in world history.
China devoured a third of the
world's steel production last year, single-handedly boosting the prices of iron
ore and nickel. It consumed more than
half of the world's cement. It accounted for a third of the world's GDP growth
in trade and more than half of its international direct investment.
China has its problems.
Growth is accelerating too
fast in several areas: real estate, some industrial production such
as steel. It produces
either runaway prices or overcapacity, neither of them good for the economy. ...
A bubble? Perhaps, but the signs so
far are of an economy that can sustain itself for the foreseeable
future."
All of the above is of real interest
to us on the Seattle waterfront. It is beginning to appear as if as
China goes, so goes the world. However, that depends on how the
political-economic experiment in China a
capitalist economy ruled by a socialist government
works out. If it means a socialist government takes as large a share of
capitalist profits needed for social welfare, it might avoid the inevitable
capitalist bugaboo of recession and depression. That is not guaranteed because economic pressures for capital expansion
have in the past such instances - as in Great Britain and the Soviet Union -
overruled the social welfare budget.
China is opening all its doors to
capitalism. It remains to be seen if it can maintain
socialist political control. It is interesting here to note that Lenin tried
a similar program in 1920 - the New Economic Policy. He said he could not
guarantee the outcome. It is likely Hu Jintao, China's President,
cannot guarantee the outcome in modern China.
However,
if you
think the China question is unsettling, try taking a look at the U.S economy which is
not good:
In an
interesting
article appearing in the Monthly Review (Dec.,
03), an article
by Richard B. DuBoff, Emeritus Professor of Economics, Bryn Mawr College,
provides a description of the decline in the U.S. economic power in major
sectors
around the world:
An idea of the decline of
American economic power can be formed from the following:
In 1950 the
United States supplied half the world's gross product, against 21 percent at present. Sixty percent of the world's
manufacturing production came from the United States, 25 percent in
1999. The U.S. share of exports of commercial services, the fastest growing part of the world economy, stood at 24
percent in 2001, while the European Union (EU) had 23 percent - 40 percent if
intra-EU exports were counted.
Non-U.S. companies dominated major industries in 2002, accounting for nine of the ten largest electronics and electrical equipment manufacturers; eight of
the ten largest motor vehicle makers and electric and gas utilities; seven
of the ten largest petroleum refineries; six of the ten telecommunications
companies; five of the ten pharmaceutical firms; four of the six chemical producers;
four of the seven airlines. Of the twenty-five largest banks in the world, nineteen were
non-U.S. banks, although the two largest were Citigroup (New York, UN, 2002). The European Union (EU)
includes all countries in Western Europe Except Norway and Switzerland; see www.eurounion.org."
foreign multinationals (three British, two German). Of the
top twenty corporations involved in cross-border M&A’s from 1987 through 2001 only two
were U.S. (General Electric and Citigroup); they accounted for 5 percent of the value of all M&A deals during
these years."
Non-U.S. companies dominated major industries in 2002,
accounting for nine of the ten largest electronics and electrical equipment manufacturers; eight of the ten
largest motor vehicle makers and electric and gas utilities; seven of the ten largest
petroleum refineries; six of the
ten telecommunications companies;
five of the ten pharmaceutical firms;
four of the six chemical producers; four of the seven airlines. Of the
twenty-five largest banks in the world, nineteen were non-U.S. banks, although the two largest were Citigroup and
Bank of America.
The data above is drawn mainly
from World Bank, Development Indicators 2003 (New York:
Oxford University Press, 2003); World Trade Organization, International Trade
Statistics 2002 (Geneva: WTO,2002); Fortune. July 21, 2003; Development, World Investment Report 2002.
(Note: There are other voluminous notes supporting
the above figures, too many to include in an article this size. If you wish to refer to them, check the Dec. 03 volume of Monthly Review.)
The
above is not just the speculations of a College professor. If we check with some of the leading U.S. financiers such as Warren Buffet, Chief Executive of Berkshire
Hathaway and Stephen Roach of Morgan Stanley, we find an even more pessimistic
outlook.
Buffet,
according to November issue of Fortune, he bet against
the dollar for the first time in his life." And, Our country's 'net worth', so to speak, is now
being transferred abroad at an alarming rate."
Stephen
Roach warns:
“The engine of the global economy, the U.S., is running not on gas but on
fumes, on little more than tax
cuts and borrowing”, he said at the recent
World Economic Forum in Davos, Switzerland.
There are
still other perils of economic misfortune. The well known "balance
of payments" in foreign trade, of immediate interest to shipping
industries, has been out of
balance for several years to the disadvantage of U.S. economy. The "balance
of payments" refers to the difference between imports and exports for any
particular country. If a country imports more than it exports to another country, it owes that country that many billions of dollars at the end of the
accounting period. The U.S. has been running up huge debts in the "balance of payments" for several
years.
This has not been an excessive burden because
those countries we owe on
balance of payments have been offsetting that by investing large amounts in the U.S. economy. This has a more or less balanced out in the past.
But what if those countries lose confidence in the U.S. economy? Or, what if
the other countries' economies go belly up? Then panic hits the fan
- and we face far more world wide devastating questions than Iraq, Middle East,
North Korea, missile defense systems, colonies on Mars or almost anything else facing us now.
The time has come to take a serious look at our
economic system. At this point it
looks like the present oligarchic, corporate ruled capitalist system is on its last legs. It needs to be
replaced with a system that reverses tax cuts for the rich replaced by its opposite, tax increases for the rich. It is said if we tax the rich they
will not have money left over to invest in new industry. No problem. If they prove their case for new investment, they could be
exempted from the tax.
With such a tax on the rich we could solve all the problems we face such as
poverty, health care , care for the elderly, unemployment, race relations, human rights, education, environmental welfare, and threats of war. Can you imagine? Living in a peaceful and prosperous world?
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