> It is hugely dependent on China to fund its borrowing. Were it not for the fact that the dollar is the main global currency and that Washington can still borrow in the dollars it prints, the country would have gone bankrupt long ago.
Yes, a sovereign nation can print its own currency. This passes for insightful analysis these days?
The author fails to mention (on purpose, I'm sure) that the U.S. is paying very low interest rates for the privilege of borrowing all that money from abroad. The U.S. is not leaning precariously on lenders like China; it is selling something that everyone wants these days: a stable store of value. That's why the dollar is the global reserve currency: because it is the most desired currency. That is not a weakness, that is a strength.
Speaking of China, where does the author think it gets all that money it lends to the U.S.? China is still an economy that is highly dependent on exports driven by foreign IP. We hire Chinese companies to manufacture stuff that we invented, then we buy that stuff, and then China takes that money and buys U.S. Treasuries. Yet somehow in the author's mind it is China that has the upper hand.
The author accuses the Obama administration of using fear of China to sell the TPP, then proceeds to push even dumber China fear-mongering. His argument is essentially that China is just so damn good that we shouldn't bother with the TPP. Does anyone buy that, either on the facts or the logic?
What makes you think China isn't creating it's own IP? it is after all 1/4 of the worlds people, and contains 1/4 of the world's smart people ... more than are in the US ....
Partly because Western culture evolved differently and emphasizes the individual rather than the collective, which is a big driver behind innovation. The immaterial/philosophical elements of culture diffuse much slower than the material/technological which explains why Asian and Orthodox civilizations lag behind in IP production, despite having adopted tech from the agricultural/industrial revolutions.
Chinese parents have begun to question Confucian orthodoxy in pedagogy and are demanding less rote learning and more exploration, inquisitiveness and questioning authority (of teachers).
However, their main issue will become an aging population --like Japan/Korea and Europe.
China is creating its own IP, but so far, primarily for use inside China. Far more people inside China use U.S. IP, than vice versa.
China are trying to transform their economy to be more internally self-sufficient, and are making progress. But the position they hold in the world now, at least economically, was built by manufacturing for export based on foreign IP.
I'm not trying to say that the Chinese people are dumber than Americans--they're not. I'm talking about the macro-economics of how we got to where we are today.
Selling treasury bonds doesn't mean the government is 'borrowing' anything; they're a hand-out to savers. It's the difference between interest bearing and non-interest bearing U.S. liabilities (checking vs savings account).
The real 'problem' if anything is that trade deficits mean that net government spending has to fill the void in domestic demand lost through the foreign surplus (else the domestic private sector must necessarily go into deficit).
Is it just me or does anybody else feel like China will be the most important threat for U.S in the next 5-10 years? I am talking w.r.t trade, cyber security, etc.
It's not just you as in there are a lot more paranoid people than just you, if that is really the companionship you seek?
I don't mean to demean you, definitely not for what you say - but for the way you say it. There's thoughtful analysis - and then there's your comment. You should really give some context and show your sources, data and reasoning.
Personally I don't even see a basis for your thoughts, from a "threatening" perspective the US has a much larger shadow - and I don't want to say this as a value statement. It's just that you will find China military operations abroad are much less numerous than that of the US, independent of what you think about it.
How exactly is the US "threatened"? Unless you see anyone who isn't at least two orders of magnitude weaker than yourself as a "threat" automatically, just because "they could".
As for cybersecurity, do you think the US is less involved with their spy software placed on foreign systems than the other way around?
And shouldn't a much larger country, in terms of population, naturally end up with a much larger economy, if things turn out well? Isn't it bad that some people in the current #1 economy feel "threatened" by this? Especially when throughout the last 100 years the US has meddled in foreign affairs much more than China ever did (exclude WWII if you feel uncomfortable about it).
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Finally, to answer your question, as a foreigner who lived in the US for a decade, it seems to me the greatest threat to the US is... the US! The optimistic interpretation of more recent headlines would be "Well, they are finally starting to tackle some serious long-standing issues".
A few years ago I would have been reluctant to post it, but with yet another year breaking the records worrying about the impact of climate change on the US seems a lot more justified than worrying about a threat from China. Priorities...
> Because we make our allies in the ME sell oil in dollars?
Petrodollarism has little to do with modern dollar hegemony. This is why we are fine building domestic energy sources, e.g. through solar and fracking.
Dollars are valued because the American economy is huge. This means lots of Americans spend dollars, demand to be paid in dollars, and want to save and thereby invest in dollars. All this supports a deep and complex financial system.
It's network effects backed by our military's de facto role as the global guarantor of freedom of navigation.
I feel this is backwards, the oil is sold in dollars because most stuff international stuff is traded in dollars and because the dollar is the global reserve currency
"Rather than checking China’s economic power, TPP would actually afford China substantial benefits via generous “rules of origin.” ... sets the origin threshold so low that even if the vast majority of value-added content come from outside countries, a product may be able to get preferential treatment ... more than 90 percent of the value of a product can come from outside TPP and still qualify for benefits under the agreement ... This is the worst of both worlds: goods sourced from countries that do not commit to TPP’s labor, environmental, and other standards or reciprocate market opening to our goods can still get free access to TPP markets.
Rather than strategically countering China’s influence, TPP will hand a win to China’s companies and the multinational corporations that have put China at the heart of their global business strategies. This should be no surprise given who wrote the rules and the secrecy with which they were written — not “we” the people, but the battalion of lobbyists working tirelessly with the U.S. Trade Representative, who now hope to ram it undemocratically through a lame duck Congress later this year."
He seems very "meh" on everything lately. Could be one of those reasons. Are you saying we should speculate about that before we complain about the drafting and ratification process?
The TPP is Obama cashing out of his presidency. Notice that he's been the prime force behind the deal but he's not been front and centre in promoting the deal. That's because he knows this deal represents corporate interests that are not particularly well aligned with citizen's interests.
TPP is really just a warmed over version of the Multilateral Agreement on Investment (MAI), which was the last big push corporations made to further their interests and just like that agreement the TPP will flounder in the court of public opinion. Obama though will have paid off favours he accrued during his presidency to corporate interests by making this half hearted attempt to make it happen.
In the end it's all good. Obama pays his bills and the TPP ends up in the trash where it belongs.
I hope you're right. Seriously, TPP has all the hallmarks of antidemocratic (specifically, not trying to throw bombs) policy being shoved down the throats of the people who will be the only recipients of its negative effects.
Obama announced his intention to pursue the TPP in November 2009, less than a year into his first term. This is not something he came up with at the end of his presidency.
Actually no. In January 2008 the Bush administration entered talks with the Pacific 4 which was the original trade organisation started by Brunei, Chile, Singapore and New Zealand and which has since morphed into the TPP under US influence.
However, my original post doesn't imply anything about the timing of when the TPP negotiations originated, it just speaks to my view of what's happening with it currently.
1.) China is negotiating its Regional Comprehensive Economic Partnership with all the Asia-Pacific TPP countries -> this is old news. Ever since the South China sea incidents/ruling, China has been acting belligerent towards all its neighbors, and as a consequence, most countries have shied away from China and towards US. thus the THAAD missile deploys in south korea, joint military exercises between Japan, US, Australia, and even closer relationships between Japan and South Korea. Less we forget, China's power is now fundamentally in the hands of one dictator - Xi, who grows closer to another dictator, Putin.
2.) One Belt, One Road project -> also old news. Ever since China's stock market crash, and the world finding out China's heavily indebted, supporting its state enterprises such as banks, steel and coal, it has no power nor finances to go abroad. This project has simply gone nowhere, much like supposed growing trade between China and Russia.
3.) China is now by several important measures the world’s largest economy, with about $4 trillion of reserves -> US is the biggest economy, period. the second biggest is US last year. China has now $3 trillion reserves and falling (and no one knows how much it really has, since it's covering up the capital outflows).
the RCEP is apparently being written to allow members to play fast and loose with IP and labour laws. If TPP goes through, TPP members signing the RCEP will not accept an agreement that allows non TPP members to be held to a lower standard while trading with TPP members who are bound to the TPP requirements. The RCEP is not an opposing plan to the TPP that is true, and likely both will coexist peacefully in the future, but TPP going through is going to influence the nature of RCEP significantly. the RCEP is still in infancy, so a lot can change in that thing.
Don't forget that TPP is also about doing an end-run around our own Congress. Once something is locked into the agreement it becomes near impossible to change it unilaterally.
Yes, a sovereign nation can print its own currency. This passes for insightful analysis these days?
The author fails to mention (on purpose, I'm sure) that the U.S. is paying very low interest rates for the privilege of borrowing all that money from abroad. The U.S. is not leaning precariously on lenders like China; it is selling something that everyone wants these days: a stable store of value. That's why the dollar is the global reserve currency: because it is the most desired currency. That is not a weakness, that is a strength.
Speaking of China, where does the author think it gets all that money it lends to the U.S.? China is still an economy that is highly dependent on exports driven by foreign IP. We hire Chinese companies to manufacture stuff that we invented, then we buy that stuff, and then China takes that money and buys U.S. Treasuries. Yet somehow in the author's mind it is China that has the upper hand.
The author accuses the Obama administration of using fear of China to sell the TPP, then proceeds to push even dumber China fear-mongering. His argument is essentially that China is just so damn good that we shouldn't bother with the TPP. Does anyone buy that, either on the facts or the logic?