Why China Is Not A Threat.

Jonah Goldberg does a great job of explaining why the latest news about China passing Japan is not that big a deal.

see the article at Townhall.com

In fact, per capita income is lower for China than it is for many African nations. The last I saw, China was #99 out of about 185 countries in terms of per capital income. That is no threat to the US. Of course 1.3 Billion people can produce a lot of cheap plastic garbage. However, I don't think many people would trade their middle-class lifestyle in the US or Japan for that of middle-class China.

In addition, a rich China does mean more markets for US goods and that's a good thing. So a strong China is good for everyone even if it means they are more competitive with the US for world domination. Rising standards of living in China do not have to mean a zero sum gain or a reduction in US standards of living.

What the Chinese Don't Know

This story from AP makes it clear the China is not the threat we all make it out to be.

He are some parts:

Hu told members of the Communist Party's powerful Political Bureau that the financial meltdown posed critical challenges to a government that has staked its legitimacy in part on competent management of a rapidly developing society.

Whether the pressures can be turned into a driving force and the challenges turned to opportunities ... is a test of our ability to control a complex situation, and also a test of our party's governing ability," Hu said.

First, a government that stakes it's legitimacy on competent management is doomed to fail.  Government is made up of bureaucrats and politicians that have incentives to stay in power, not create value for society.  When the pace of change is as fast as it is in China, government cannot respond as fast as markets.  Hu is right on one front, the situation is complex.  It is so complex that no human, or group of governing humans, can expect to coral and control it.  Market forces work and are unstoppable.  They brought down the Soviet Union and they will bring down China as well.

He said greater effort should be made to raise living standards, use resources more efficiently and develop rural and urban areas, the report said.

Governments cannot choose how to use resources more efficiently.  Only markets can and after entrepreneurs that fail are allowed to go out of business and successful ones thrive.  The above statement says the government will always know how to best use resources and that is just not possible.  Products have to be created that people actually want and those products have to be created as inexpensively as possible.  Again, governments cannot do either of those things.  Governments create things like the Postal Service, Department of Motor Vehicles, and Medicare.  These are the best creations of our government where losses mount every year, are inefficient uses of citizens' time, and where waste, fraud and corruption run wild.

As long as the US is a free market and upholds the virtues of economic freedom, China will never be a threat to the US.

China Vs. USA

Russ Roberts makes a great case for why Americans should not fear China's economic growth. For one, their prosperity only means there is a bigger market for our products. However, China is still desperately poor and the fact their government spent so many resources winning gold medals is a travesty for the Chinese people.

See the Cafe Hayek post.

Why China is not a threat...Part II

Chinese businessman Liu Keil spent about $500,000 for seven acres in Spartanburg, S.C. -- less than one-fourth what it would cost to buy the same amount of land in Dongguan, a city in southeast China where he runs three printing-plate plants. U.S. electricity rates are about 75% lower, and in South Carolina, Liu doesn't have to put up with frequent blackouts. About the only major thing that's more expensive in Spartanburg is labor. Liu is looking to offer $12 to $13 an hour there, versus about $2 an hour in Dongguan, not including room and board. But Liu expects to offset some of the higher labor costs with a payroll tax credit of $1,500 per employee from South Carolina.Liu is part of a growing wave of Chinese entrepreneurs expanding into the U.S. From Spartanburg to Los Angeles they are building factories, buying companies and investing in business and real estate.

Read more of the LA Times story here.