How China is cleaning America’s clock

China’s communist rulers don’t depend on an invisible hand to direct the economy – they use an iron fist.  While our ‘best and brightest’ regurgitate 18th century nostrums as 21st century economic wisdom, China locks up crucial resources and industries around the world.

‘The magic of the marketplace,’ ‘the invisible hand,’ ‘enlightened self interest’ - these seem to be the best ideas the captains of American industry offer as a national economic strategy.

Meanwhile, China’s economic planners are deliberately targeting our industries for acquisition or destruction while simultaneously locking up crucial resources on a global scale.

Heriberto Araujo and Juan Pablo Cardenal, authors of the book "China's Silent Army," write in the NY Times that China’s proposed purchase of Smithfield, the US pork producer, is just the latest example of the growing economic clout of China’s state capitalism.

By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination. Beijing’s essentially unlimited financial resources allow the country to be a game-changing force in both the developed and developing world, one that threatens to obliterate the competitive edge of Western firms, kill jobs in Europe and America and blunt criticism of human rights abuses in China.

Adding insult to injury (literally), we learn that China taking the lion’s share of Iraq’s oil, buying nearly half the crude it produces.

“We lost out,” said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. “The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply.

So how is China cleaning our clock?  Well, besides outright theft, subsidies, currency manipulation and strong arming Western companies to surrender technology in order to gain access to China’s market, there’s this:

Chinese companies do not have to answer to shareholders, pay dividends or even generate profits. They are tools of Beijing’s foreign policy of securing [resources] for its increasingly prosperous and energy hungry population.

In other words, China is taking the long view.  While US executives are fixated on quarterly earnings and stock prices – that’s how the CEOs are compensated – China’s industrial captains are willing to forfeit maximum profits in the short term in order to gain long-term advantage.

The sad part is that American businessmen used to think that way.  They saw their interests aligned with the national interest – “what’s good for the country is good for General Motors.”

But patriotism is out of fashion in America’s corporate suites – and in Washington DC, where our elected representatives are loyal not to this country, but to the stateless corporations that write campaign checks and promise to hire retired government officials.

 

hungry dragon