Last Month, Yahoo Finance published an article titled, “IMF Bombshell: Age of America Nears End” by Brett Arends. He wrote, “According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.”
The article continues, “This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, ‘We are witnessing the end of America’s economic hegemony.’”
[Hegemony: Greek h gemoni , from h gem n, leader. The predominant influence, as of a state, region, or group, over another or others.]
In the 1890’s the United States of America overtook the empire of Great Britain as the world’s leading economic power. Since that time, for better or for worse, our dollar, our culture, and our military have dominated the world. I resist empires and empire builders. But consider, as Mr. Arends points out, that both Britain and America live under constitutional governments. They respect basic civil liberties and property rights. “The Age of China will feel very different,” he writes.
Victor Cha, senior adviser on Asian affairs at Washington’s Center for Strategic and International Studies, told me China’s neighbors in Asia are already waking up to the dangers. “The region is overwhelmingly looking to the U.S. in a way that it hasn’t done in the past,” he said. “They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony.”
“There are two systems in collision,” said Ralph Gomory, research professor at NYU’s Stern business school. . . What we have seen, he said, is “a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That’s very destructive.”
Look at the graphs on this link, particularly the Reserves of Foreign Exchange and Oil, External Debt, and Industrial Production Growth Rate.
How will this affect us in our quiet neighborhoods and peaceful homes? We are already seeing the rise in the price of everyday commodities from gasoline to bananas as China buys up world markets and competes for others (they have over 4x’s more people than America). Employers continue to lay off employees while out sourcing abroad (not just to China, but India and other developing countries.)
Without Chinese imports, what would we have to live without? Apple, Dell, Sony Ericson, garlic, ginger, many of our canned goods. Most of our clothing and shoes, toys, luggage, farm machinery, and furniture are currently manufactured there. It is almost impossible to boycott.
China has us between a rock (they carry most of our debt) and a hard place (they are building their massive military engine rapidly). China has been patient, and we have been asleep. Now the day of reckoning is coming. And there are no easy answers. Watch as Donald Trump (I am not endorsing him) discusses our situation with China. (BTW, when did tariffs become a bad thing rather than an economic protection? “Free Trade” was the biggest lie America swallowed when what we really wanted was “Fair Trade.”)
Mr. Arends asserts, “The rise of China, and the relative decline of America, is the biggest story of our time.” I’m reminded of an old pop song.