[quote]hspder wrote:
hedo wrote:
The US could still crush the Chinese economy in two weeks. They know it, we know it.
Yes, but at even greater cost to ours. Remember how many US bonds they have. Remember how many products we buy from them. China has recovered from much worse situations, it would be a relatively small setback for them (a decade or so back) – the impact on our economy of such an attack, however, would make the Great Depression look like the good old days for us.
All our debt would come back to bite us. The dollar would fall so much all the whole world would immediately switch to trading oil in Euros, which would make the dollar plummet even more. We would never be the same again, since it would be completely impossible to buy anything from anyone else, and we would have to become fully self-sufficient literally overnight.
Remember that the US is not the only market on the planet. We might be the greatest individual importer (in dollar value), yes, but we’re not worth more than everybody else combined – especially if you consider the size of China’s own internal market, which is growing much faster than our own.
On the other hand, our dependency on Chinese products just keeps growing.
In a game of chicken, they will always win – they value their pride above everything else, and we value money much more than they do. Remember that.
Furthermore, China has remained relatively stable over the centuries compared to the Western World. They know how to be patient, and exert their power slowly.
For example, it is in the best interest of China to arm Iran to their teeth. Not only the last thing they want is for us to take over their oil supply (they need it even more than we do), it is a great source of income…
I’m not saying that with the current status quo things will go down the drain – even though China is as dependent on us as you make it out, the best possible outcome for them includes keeping our economy healthy – with the current status quo. But if we change the status quo – by attacking Iran, or some other country, or even China themselves – that will change.
As I said, the situation today is very different, and if we’re not careful with China, it might come a time where the mighty US will be just “one of the guys”.
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So you are saying that the sky will fall if the Chinese don’t buy our bonds. It won’t. The customer always calls the tune in the relationship. Remember that.
Interest rates may rise. The economy may falter and then we will move on. China exists as a manufacturing giant because we buy from them. We can buy from others or make it ourself. In a game of chicken the stronger nation always wins. China can threaten. We can threaten and back up our threats. Big difference. How long do you think the Chinese working class would remain calm if the navy the factories were shut down while the politcal leadership “saved face”? The same argument over “who will buy our debt” has been used over and over again The Arabs, The Japanese, The Europeans have all filled in the blank and in the end reason prevails.
All that being said I thinbk we can work with China and should. They are stable for now and we should take advantage of it. The stability you wrote about is a recent phenomenon. Those born in 1930 or later in China may not sure your view of the stable politcal situation that existed for the last 80-100 years in China.
In the end the realtionship we have with China is beneficial to both. We can each hurt each other. I only point out we can be much more lethal militarily and economically. I’m sure the point is not lost on the Chines.
(good post Lucassa…didn’t catch it before I responded…could have saved some typing)
