Chinese Defense Minister Cao Gangchuan (L, Front) holds a welcoming ceremony for visiting U.S. Secretary of Defense Robert Gates (R, Front) in Beijing, capital of China, Nov. 5, 2007. (Xinhua/Li Tao) (whj/wcy)
The rise of China is hardly a secret, but because it is a complex economic that is constantly evolving, it gets less attention than hot-button issues. Absent a real crisis between the two, the relationship is more about the flow of capital and the nature of global business than it is about heated battles inside the Beltway or on Main Street. And while the rise of China and America’s increased dependency on Chinese loans to fund its deficits certainly generates anxiety, it’s mostly amorphous barring some specific issue to focus it.
How that relationship came to be is the subject of my new book, Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends On It. While this economic fusion has taken more than two decades to evolve, with the crisis of the past year, it has become both a tighter embrace and one more fraught with tension. It’s to the credit of both governments – for now – that those tensions have not boiled over.
For their part, the Chinese are concerned about the viability of the American economic system and about the long-term value of their more than $1 trillion of investments in American bonds. They are also dependent on the market even a recession-mired America offers, with exports to the United States still near $300 billion a year. Americans are worried about the effect of lower-cost Chinese labor on U.S. jobs, even though most of the lost jobs were lost long ago and have as much to do with the corrosive effects of technology on labor as they do with cheap production in China. Meanwhile, China offers turbo-charged growth for American companies, as the Chinese government turns to companies like Caterpillar and GE to help with the industrial build-out and as Chinese consumers buy more goods – even a bankrupt GM sold 1.6 million cars in China this year, more than in the United States.
For now, the relationship between the two economies is symbiotic, and is providing a degree of stability to both societies. In the absence of Chinese money, the Obama administration could not be spending its way out of recession, and without American companies operating in China and without Americans purchasing Chinese goods, China wouldn’t have the money to lend and spend. But no country likes to see its sovereignty eroded and its ability to be master of its own fate undermined – and that is precisely what the economic relationship between the China and the United States does to their respective governments. National sentiment in both countries is also strongly suspicious, and that is likely to intensify. read more at RiverTwice Research…
4 Responses to “Superfusion: How China and America Became One Economy”
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October 31st, 2009 at 4:43 pm
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October 31st, 2009 at 10:04 pm
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November 2nd, 2009 at 8:00 pm
Hello from Russia!
Can I quote a post “No teme” in your blog with the link to you?
November 2nd, 2009 at 8:10 pm
Yes, no problem. – Randal