May 4, 2007

China, India. How real the Economic Threat to America

‘… that brings me to China, a country which sometimes attracts more superlatives than commonsense evaluation …’
Margaret Thatcher in an address to the American Enterprise Institute 1998.

It seems that the use of such adjectives to which she referred, have not abated in the years since. We cannot and certainly must not doubt the dynamism of the Chinese and Indian economies but we can question the degree to which these two nations in fact, pressure the United States and the West economically.

Consider that:
  • China and India are very poor countries whose combined population of over 2.2 Billion consists of some 1.5 billion earning less than $US2 a day.
  • In terms of World Trade India remains a minor player contributing less than 1 per cent with China’s share at just 6 per cent.
  • In terms of the value of final goods and services produced (Gross Domestic Product) the United States figure is just shy of six times greater than China and over 16 times greater than that of India.
  • How often do we here about India’s booming I.T community, the call centre operations, software Engineers and Programmers. In reality, total number of I.T. related jobs in India is less than 1 million, representing a meager 0.25 percent of their total workforce.
  • India remains the single largest nation of illiterate people in the world.
  • They may call it the workshop of the world, but China manufacturing sector is representative of less than 10 per cent of the worldwide total and around half that of the U.S.
  • China’s banks boast an unacceptable amount of bad loans.
  • Both countries are burdened by an excessive sum of commercial regulatory structures.
  • In the long term, China’s present system of Government will be an economic liability.
  • Corruption within officialdom remains rife in China and does environmental degradation.
  • Social unrest, although contained, is rampant with police records revealing a seven fold increase over the past decade.

The economic gap between the U.S. and these two emerging nations’ remains vast. Perhaps we should be more concerned with China’s rising military capabilities. Margaret Thatcher went on and in quoting Peter Rodman who completed a survey entitled, China and America in the Twenty First Century said,

“China’s military build up … is troublesome {although} it starts form a low base … {Its} new weaponry will be sufficient in the near term to raise the risks and inhibitions to an American President who contemplates intervening in a future crises in the Taiwan Strait or South China Sea. China is also doing serious R and D into high tech ‘information warfare"

Moreover, I might add, anti missile capabilities.


Anonymous said...

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Justin said...

Very insightful post. Definitely there are huge structural inefficiencies built into their Communist system. However, China is dangerous as a neo-fascist state, like the ones in WW2, essentially creating slave labor and suppressing dissent in the cause of national power. My own thoughts on the subject:

Ottavio (Otto) Marasco said...

Thanks Justin. Appreciate your commentary and concur with remarks about china as a new-facist state and the risks in terms of this. I will follow the URL and look forward to exploring your blog.

Anonymous said...

I am not sure I agree with you on these points esp the one about India having the largest number of illiterate people in the world.thats crazy!India is known for being the largest country with the most number of English speaking graduates.Also you cannot compare dollars to rupees.Its not fair.Do you know how badly the $ has slid against the Rs ?
I am sure you have done your research but there is a lot amiss.

Ottavio (Otto) Marasco said...

Lot-to-say: Your comments are noted and welcomed. Thanks for coming by, please visit again.

Chaar said...


You could make it more insightful by answering the following:

1. Why then is the "threat" word even used in the media?
2. What about the current state of the American economy? Wasn't there a recession in 07?

3. What about outsourcing of cheap manufacturing jobs to China/India? Doesn't that constitute a threat to American citizens/jobs?
4. Why is there so much foreign investment in China then?

Not meaning to sound pro-Asia or anything. It's just that balance is needed in posts.

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