Both the U.S. and China are facing economic problems. China has been following the U.S. as a successful example in opening up and reforming her economy. China’s fast rise is not a miracle but simply because of Chinese citizens have been poor for too long thus having gradually faced the similar economic problems the U.S. is facing, income and wealth gap, declining GDP growth, job creation, and high debt throughout all levels of government and common citizens. Therefore targeting China to make her like US is not the solution, rather, targeting the U.S. and working with China may solve our problems.
The U.S. favored financial products on the other hand do not even need assembly workers thus even less welcomed by the developing countries. So they are hampered by complex local laws and regulations which are designed to protect their citizens from capital taking. Other than investment financing, most financial products such as insurance and money management are simply taking money away from the developing countries where they need their capital for their education and economic and social development. It is perfectly understandable that all developing countries are leery of opening their financial markets to the developed countries, because with capital being controlled by foreign firms they cannot design and control the destiny of their economic development. So they have to put protection laws to prevent the foreign financial industry from robbing their capital. China needs huge capital for her economic development. Chinese people have a good habit of saving money. But they are vulnerable to foreign financial products offering a little higher interest. It is no surprise that the Chinese government protects her financial market.
The above description is a nut shell how the U.S. has arrived at her current state of economy – income and wealth gap, declining GDP growth, high unemployment (for more permanent high-productivity jobs), and high debt throughout all levels of government and common citizenry. The U.S. has more higher education institutions than any other country in the world and yet they produce more graduates who cannot get a meaningful job. Government must honestly take responsibility for this situation, not inventing half baked stories that other countries stole American jobs, pirated American technologies and practiced unfair trades. Other than trades under the gun point during ‘colonial eras’, modern trades are made by two willing parties voluntarily. The U.S. does not have to buy low priced imports just the same as other countries refuse to buy high priced imports. Trades are made by needs and demands. Human civilization is advanced by absorbing technologies from each other. Every developed nation has absorbed technologies from other countries before they became a developed nation.
Today, no one can steal someone else’s job; it is all initiated by corporations, who own the jobs, by doing transfer, lay-off or merger. Every advanced country including the U.S. practiced copying, learning and pirating technologies at different levels and at different time in different industries from other advanced nations, otherwise the world will see far less technological advances. The crux of the matter is how a country manages its economic policy to keep up with the competing and advancing world. The U.S. must revisit the ground level of economic theory to employ right policies to make America great again. Not by targeting China or any other country. China has been embracing capitalism, in many ways learning from the U.S. except she was large and poor with very uneven economic condition across the country. China is very much concerned that she will become like the U.S., thus the U.S. China policy to demand China to be more like the U.S. will not go too far unless the U.S. can fix her own economic problems.
China seems to have understood the above discussion, especially the U.S. industrial migration problems (at least at her present economic development stage). China is rightly concerned that the financial and economic problems in the U.S. may be replicated in China. China is taking precaution making ginger steps in opening and reforming her economy from manufacturing export to domestic consumption, especially careful with her financial sector. In Eastern Europe and Latin America, there were ample examples that opening financial market essentially yielded economic development to foreign conglomerates whose goal is nothing but making profit for them. China not only has a right to be prudent but also need to have a strong grip on her economy. Otherwise, her economy will never be sustained at a high growth rate, more likely to shrink and collapse dragging the world down with her. Christopher Balding has published a paper entitled, What Is Causing China’s Economic Slowdown and How Beijing Will Respond, in Foreign Affairs Snapshot, March 11, 2019. The paper discussed many reasons such as rising wages, mounting debts, and external pressure (trade tariff and interest rate), not so different from the problems the U.S. has. However, the author seems to have faith in China’s government to weather out its problems.
What should the U.S. do for her economic problems? This is an important question, but answer is not in a simplistic legacy strategy by targeting China as an enemy then China will collapse like the Soviet Union did in 1990, nor is the answer in the sophisticated economic theory. Actually the answer lies in some common philosophy and applying which can lead to a few good policy changes. The main objective of any economic policy must be creating meaningful long-term jobs for the citizens and focusing on industries and products not only having a market demand, making profits but also contributing to the positive advancement of human civilization in a collaborative way. The Earth resources are limited. One nation or a few nations cannot dominate the usage of all resources such as energy, food and materials. Fair usage and fair competition under peaceful regulation and negotiation are the only way to keep the world economy going.
As the most advanced nation, the job loss and job change in the U.S. is only getting worse not better if the government does not target the U.S. to find a solution. With the advancement of AI and robotics, some handwriting is already on the wall. However, stopping advances in technology is to stop advancement in human civilization, therefore, the U.S. cannot stop technology development but must embrace competition as well as collaboration. Recently, China has increased story reporting about many unsung heroes in science and technology profession emphasizing their life-long dedication to their careers with very little financial reward not even recognition. In contrast, China has also increased harsh criticism on the exorbitant income and greed in the entertainment industry. They blame that resulted from the influence of Hollywood and argue from socialistic point of view: Who made more contribution to the society, thousands of professionals working their whole lives devoting to research, for example, converting desert to productive agriculture land versus a movie star who made a few movies grossing millions of dollars? This simple question brings us to think what is wrong with the U.S. economic model and what fixes she has to make.
The problem the U.S. is facing is definitely not from technology competition nor trade competition; it is in our society and in our culture. The U.S. claims to be the democratic country with the most freedom and liberty, but we have a society with at least 21.3 % depends on government assistance program, 20% receiving food stamps and 35% getting some form of government assistance. The income gap can be described as top 0.1%, 1%, and 10% having income equal to 198 times, 40 times and 9 times of the average income of the lower 90% of the population. Our social benefits take away incentive to work or to become productive in the society. The income gap accentuates the culture that capitalism breeds in American society. No wonder we have a poor work ethics. Our democracy cannot make minority yield to the majority’s decision, instead, the minority puts up protests and boycotts to hinder progress be it infrastructure projects or social programs. Our culture worships stardom right from the school age. More kids want to be sports or movie stars to become famous, because they make millions of dollars. The rich and famous are the ones on the news, in the TV and mingling with power. Interestingly, China is sensing the same issues worrying American culture happening in her societies. Should the U.S. target China to make her become like us or should we target the U.S. to work with China together to solve the problems? The answer is the latter!