It cannot have escaped people’s notice that China is getting stronger economically and may overtake the USA as the world No. 1 economic power in less than a decade. She already holds a huge stockpile of US bonds & her foreign currency reserves are in $Trillions; there is already talk about the Chinese Yuan becoming the “Reserve Currency” in place of the US$, and that will give her the edge over other nation states in world trade and currency conversions. Militarily, China has the largest army, with over 3 million members, making the People’s Liberation Army the largest employer in the world.
She has also been investing heavily in Africa where a lot of the world’s resources can be found. European sovereign debts? Yes China has bought plenty of those too. She is on a war path, an economic one. The long term plan? Takeover the world of course, but doing it before oil starts running out in probably 20/30 years’ time. By then, she will have built up her infrastructure and power for world domination.
Should the West worry? Oh yes! Unless the West can compete with China (and the likes of India), it will slowly go into economic decline. Asian countries have different familial, educational and social cultures, plus “hard work” ethics which seem to be hardwired into the Asian psyche. A little known fact is that in China, private enterprise produces up to 70% of her GDP, communist she isn’t. Also, the Chinese/Koreans/Indians are far more productive & efficient per capita than their Western counterparts. (loose language alert – I meant the goods & services from these Asian countries can be produced & sold more cheaply due to cheaper labour costs, I do not mean they have higher GDP productivity per capita than the West)
One might say Chinese workers should be paid more and the wealth held by so few in China should be more evenly distributed. Well, nearly a quarter of the world’s population lives in China and that is a handsome source of cheap labour. One can always pray & hope that Chinese wealth will be spread more evenly but that is unlikely to happen for a long time yet. If anything, the Chinese thinks the West is lazy and has an entitlement culture.
China also has a stable political system, whether you agree with it or not, and which facilitates long term strategic planning and control over the nation and people. Some call it State capitalism, the ruling party calls it socialism with Chinese characteristics. We in the West cannot rely on what the Chinese may or may not do in the future, we need to think about concrete solutions now.
So how can the West compete? This country has been too reliant upon financial services and the consumer credit/proper bubbles in the last decade. People have enriched themselves, paradoxically, on debt. UK has fallen behind others in the EU like Germany on manufacturing, and certainly well behind China. Even the EU countries and the US are now experiencing low growth and the situation could become worse. There will be sovereign debt crisis in Europe if the current profligate paths remain unchanged, Greece will be the first to fall….
Will UK Plc catch up with China? I doubt it. We might disagree with how Chinese businesses employ workers but the fact is pound for pound, the Chinese can produce goods far more cheaply than we can. Will foreign investments be diverted to China and other Asian Pacific countries? And how about financial services that we have come to rely upon so heavily? Well, we are seeing world’s largest banks moving more resources to the East, that should tell you something worrying.
I am not an expert on world economy but I can see that unless things change, this country will become poorer and poorer… lower foreign investments (remember our high taxes?), lower national income from financial services and exports, trade imbalance, stagnation/fall of wage levels & property prices, longer working hours, a smaller social security safety net? But at the same time larger pensions & NHS bills (to cater for the fast ageing population). I note here that China also has that problem due to her “one child only” policy. Another reason why she must build her strength now before the old outnumbers the young in China.
Can our government afford to spend what it has been spending in the last few decades? The answer must be a resounding “no”. We are swamped in debt in this country, the State, the people & our companies, it’s not sustainable. Of course, the structural deficit has to be dealt with and we must encourage private sector growth. There have been many arguments in the public domain about cuts to services and welfare benefits BUT, unpalatable as it may sound, we do need to think whether we should voluntarily let our collective “standard of living” fall say by 25% or so in order for UK plc to compete with the East, before we are forced to ….
The Chinese are coming, we are the takeaway.