You can hear the distant drums of war with China beating in the halls at CNN and the boardrooms of the Heritage Foundation and American Enterprise Institute.
The Geely Holding Group made a big splash in Detroit this week at the North American International Auto Show; and from the noise being made, you'd have thought they`d storm the Cobo Center with armed troops. Instead, they displayed just one car, a little four-door sedan that is outstanding only in its country of origin, the People's Republic of Cheap Labor, otherwise known as China.
Now, I wouldn't have bothered with this blog had it not been for CNN's Lou Dobbs, whom I like most of the time because of his aggressive stance against job outsourcing and illegal immigration on behalf of middle class Americans.
But of late, he's taken to criticizing the Chinese (the mainland variety) for their consumption of resources (from oil to cement), their aggressive military posturing and their economic and diplomatic forays into Latin America, principally Venezuela, Panama, Peru and Brazil. Did you know that Chinese companies manage both ends of the Panama Canal? I did... known it for sometime now. I also know they've got a very modest oil concession from the government of Hugo Chavez amounting to a few million barrels of oil annually, compared to 1.5 million Venezuela sends the US every single day.
But to hear Mr. Dobbs tell it, the Chinese are about to overrun South America in their proverbial Red Hordes.
Okay, the communist government of China is an overbearing, authoritarian police state that could stand serious reform and democratization; and most of the people there despise it. But its what they've got and in the last ten years, it's brought them previously-unimagined prosperity and a modicum of freedom and personal expression, or have you not heard of the Super Voice Girls?
According to the head of the Asian office of JWT, the Chinese middle class virtually didn't exist in 1995. "But by 2005, there were approximately 100 million individuals in China with incomes in excess of $4,000 (even in expensive coastal cities, purchasing parity power is at least 2.5 versus the U.S.). By 2010, there will probably be 200 million middle-class folk".
Even more amazing, the Chinese save 40% of their income, which is why they not only have a lot of money to invest in their own economy, but also in America's. China is the third largest holder of U.S. Treasury Securities, after Japan, the largest single holder. China's prosperity has helped fuel America's home equity boom.
China currently accounts for 13% of the World's GNP. Its demand for raw materials from oil to metals has driven prices to stratospheric heights. According to JP MorganChase, "Last year China accounted for 121% of the increase in global copper demand and 90% of the increased demand for steel."
Mr. Dobbs and the strategy hawks he has on his nightly program -- usually from the conservative Heritage Foundation or American Enterprise Institute -- are correct to point out that China is fast becoming the world's largest consuming nation and is on track to rival America by 2020. But they forget to mention that we here in the good ole' U.S. of A are still the kings of consumption, or that the real rivalry to be concerned about is that between China and Japan, who are both vying for the same limited resources in the World commodity market. China recently surpassed Japan as the second largest oil importer, but it's still far behind the U.S. They are also the world import leader in a whole range of commodities, but they do represent one-fifth of the world's population -- with India close on their heels.
So, if my name were Hu Jintao, I would be very concerned about how I was going to continue to stoke the furnaces of China's economic engine. My government, screwed up as it might be, has given a billion people a taste of capitalism and there's no turning back now. I've got to make sure, for the sake of the nation and my own neck, that we keep the raw materials flowing into the ports and the finished products flowing out, especially when I am surrounded by equally aggressive economic "Tigers" including renegade Taiwan, Japan and Korea.
Considering that the West and its powerful oil companies have pretty much tied up most of the World's oil reserves outside of OPEC, China has to contract for the oil where it can find it; and that includes nations not friendly to the West like Iran. It's hunt for contracts has taken it to Africa, Canada and yes, South America, where the U.S. has pretty much worn out its welcome. And to make sure it can keep those raw materials flowing unimpeded, it -- like the United States and other economic heavyweights of the past -- have penned diplomatic alliances and built strategic outposts.
When Mr. Dobbs laments about China's presence in the Western Hemisphere, he conveniently forgets that the United States has more than 700 military installations scattered around the globe, many relics of Cold War, but all with the intention of maintaining U.S. global economic dominance. We regularly fly surveillance missions along China's coast and maintain a fleet of warships in the region. In fact, we've had a military presence in Asia since the days of Admiral Matthew Perry. And before us were the British, the Dutch, the Spanish and the Portugese.
From my perspective, the problem isn't China's growing economic might, with its accompanying political and military clout. The problem is that there isn't enough Earth for everyone at North American consumption rates. That China -- and India and the rest of the developing world -- want to emulate the West's affluence is understandable, as is the West's apprehension that its highflying, consumptive lifestyle will be eroded at a result. We have to either figure out how to share what we have or squabble over the scraps. Considering that the resource competition path will ultimately produce no real winners, only economic and environmental losers; it behooves all of us to work cooperatively, and that starts by not demonizing the Chinese for doing precisely what the United States has done the last 100 years.
Instead of sewing the seeds of suspicion and resentment between nations, we need to be talking about ways to move beyond such childish recriminations and selfishness; and one of the first places to start is with the Rimini Protocol first proposed at the Pio Manzu Conference in Italy in 2003.
It's purpose is to lay the foundation for an international accord designed to deal fairly with the inevitability of oil depletion on a global basis. It calls on oil producing and consuming nations alike to maturely acknowledge the scope of the problem and respond in an agreed-upon manner where producing nations reduce their production at a predictable rate, while consuming nations reduce their demand by a comparable amount.
This, Mister Dobbs -- and Mr. Huo and Koizumi and Chavez and Putin and Blair and Chirac and Bush -- is what you need to be talking about. Otherwise, imported Geely cars will be the least of our worries.