Tension off the China Coast

1.  China exports fully one quarter of its output

2.  Therefore, approximately a quarter of China’s labor force is employed in its export sector.  By comparison, only seven percent of the U.S. laborforce accounts for all the goods and servicesAmerica sends abroad.  China’s economy, thus, is hypersensitive to changes in the demand for its exports.  A sharp enough falloff in that demand will sink the economy.

7.  Hence, China’s leaders dread the present recession; if their policies cannot counter the export falloff, unemployment will skyrocketand their regime will implode

8.  How, then, can China hold down unemployment?

9.  restraining its costs of production is one way.

10.  But how can it subdue costs?

11.  By compelling research-rich Southeast Asia, which is nearby, to reduce the prices of its exports, since they serve as China’s imports.

12.  And how can China twist Southeast Asia’s arm enough to get the prices down to where it wants them?

13.  By means of a coastal fleet capable of intimidating Southeast Asia into lowering the prices of its exports!

14.  That is why China has been expanding its coastal navy.  It will use warships to punish Southeast Asia if milder methods cannot achieve the desired price reduction; for China, the taming of Southeast Asia is a matter of life and death.

15.  This calls for grasping the recent evolution of China’s business sector.

16.  Until two years ago, China’s economy appeared to be marking time.  It sold the U.S cheap consumer goods and plowed much of the profits back into American securities. the global recession, though, prevented this from continuing.

17.  During the recession the decline in the demand for China’s exports caused massive losses to its economy.  China had to remedy this or suffer business collapse and the social collapse that would ensue.

18.  As indicated above, pressuring Southeast Asia on the price front was one remedy but it could go only so far.  Imposing sweeping price reductions on the region might drive it into bankruptcy, which would hardly serve China’s purposes; failed businesses cannot satisfy a nation’s needs for customers and suppliers.

19.  Thus, limited modification of China’s economy, such as would be inherent in the price reduction described above,had no value; a thorough economic transformation was called for.  this would entail actions of two sorts.  Acquiring more equipment of the kind already being used is one of them.  But installing more advancedtechnology is the superior approach, in that it represents an irreversible improvement in the productivity of the enterprise.  We are speaking of course, of China’s climbing the technology ladder.

20.  This, though, is aformidable undertaking.  Even the U.S., which is better at it than anyone else, does not do it easily.  And habitual innovation was encouraged neither in China’s long classical period nor in its so-called communist era.  Where, then, will China acquire thebold outlook possessed by the U.S., which brought forth a Thomas Edison and shelteredAlbert Einstein?

21.  China will use the cognitive springboard that is the human heritage to leap to the next technological stage.  Whatever Michelangelo did, China will do.  

Michelangelo was not superhuman and China will not need to be in order to arrive at the technological frontier.Membership in the human race will be the necessary and sufficient conditions. Nothing less than the survivalof the species requires it! China’s survival now requires a shift in its attitude toward the scientific method, ‘official wisdom,’ geopolitics, etc.,and so it will develop the same mentality the West began forging in the Renaissance.  Revolutions – political, economic, cultural – are part of our nature.  They are, indeed, human nature.

22.  What are the implications, then, of China’s taking to the technology path?

23.  What else can they be except that the U.S. and China will contend for control of the planet?