Hit to American Hegemony
India and China have decided to put their differences behind them and have struck a "strategic partnership" of gigantic proportions. As the Post article describes:
The rationale for this strategic alliance is perfectly clear - China and India are trying to usher in a "new Asian century." To be perfectly honest, I don't have the slightest inkling how this will play out (although expect a good number of job losses for average Americans when this free trade area revs up). The only thing I do know is that the Bush Administration and Congress need to get a handle on our trade deficit while ceasing to write checks other countries such as China are financing.
And this may sound a bit militaristic, but the day will probably come when the U.S. has to go to war with China. That's the nature of realpolitik and balance of power theory. Let's not be naive, we're the big kid on the block right now, and there's always someone else who wants to run the schoolyard. That said, shouldn't we keep as much manufacturing capacity as is economically feasible so that we don't have to rely on our enemy for goods that are vital to us during war?
the statement announcing the partnership was signed by both premiers and said the agreement would promote diplomatic relations, economic ties and contribute to the two nations "jointly addressing global challenges and threats."Trade is the decisive factor here:
On Monday, the two leaders agreed to boost bilateral trade to $20 billion by 2008. Last year, trade totaled $13.6 billion, with India recording a trade surplus of $1.75 billion, according to India's trade ministry.This is a huge deal. As many people know, many of the jobs outsourced from the IT sector have been going to India, while manufacturing jobs the world over have been sucked into China. At the same time, China has been purchasing obscene amounts of U.S. Treasury bonds, that while allowing us to live high on the hog, have been keeping our currency artificially high and therefore pricing a lot of our goods out of foreign markets. The flip side of that means Chinese goods are less expensive around the globe, allowing them to run a trade surplus while we fall farther and farther into debt - a debt that largely Asia owns from buying so much of our Treasury bonds.
China is keen to develop a free trade area between the two countries. Their combined population is 2 billion, which would make it the largest free trade area in the world. During their talks, Wen and Singh agreed to set up a panel of experts to study the feasibility and benefits that would accrue from establishing such a trade area.
The rationale for this strategic alliance is perfectly clear - China and India are trying to usher in a "new Asian century." To be perfectly honest, I don't have the slightest inkling how this will play out (although expect a good number of job losses for average Americans when this free trade area revs up). The only thing I do know is that the Bush Administration and Congress need to get a handle on our trade deficit while ceasing to write checks other countries such as China are financing.
And this may sound a bit militaristic, but the day will probably come when the U.S. has to go to war with China. That's the nature of realpolitik and balance of power theory. Let's not be naive, we're the big kid on the block right now, and there's always someone else who wants to run the schoolyard. That said, shouldn't we keep as much manufacturing capacity as is economically feasible so that we don't have to rely on our enemy for goods that are vital to us during war?
posted by Matthew Harwood at 11:11 AM
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