China to Surpass America By 2016
The International Monetary Fund has produced a report stating that in 2016 China will overtake the U.S. as the world’s largest economy.
As recently as 10 years ago, the U.S. economy was three times the size of China’s, but that is expected to rapidly change, and the next president of the country will have to grapple with this issue. The report looks at Purchasing Power Parity (PPP), instead of just Gross Domestic Product (GDP) to assist in this calculation.
That is chiefly due to China’s well known policy of currency manipulation, which devalues Chinese goods (allowing them to be sold at a virtual discount), as well as reduces the value of the Chinese economy. However, such dirty practices are not the biggest reason why China has so rapidly grown.
As the U.S. has abandoned all economic protections in favor of “free” trade, our government has allowed us to be swindled by a mercantilist Chinese economy that isn’t above using currency manipulation, lax regulations and illegal subsidies to get ahead of everyone else.
This has major geopolitical ramifications as well. Prior to the U.S., the world’s leading economic power was Great Britain. Both are nations that are fundamentally democracies that respect open markets and human rights. China is a completely different animal.
“[Asian nations] see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony,” Victor Cha, a senior adviser on Asian Affairs, said at the Washington’s Center for Strategic and International Studies.
Our nation is reaping the oats sown from abandoning the sound economic principles that built our economy and industry originally. By allowing our trading partners to take advantage of us, through a lax trade policy, we are quickly falling behind. In order to create jobs and expand the economy, America desperately needs sensible trade policy, not more failed “free” trade.
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