Wake up Call on China

The Air Show in Zhuhai started yesterday and that is a model of  the Comac C919 which may be in your future.The powerplant is a LEAP X1C, a joint venture with COMAC, a French company and no surprise here:GE. And guess who placed an order for their aircraft leasing arm:  GE. The CEO says that China has plans to develop their own propulsion engines. I’ll just bet the C919 is giving  the execs at Boeing and Airbus heartburn. And it should. All those deals by Boeing to subcontract out bits and pieces of Boeing airliners to Chinese suppliers to avoid paying Boeing machinists will within the next few years be  more nails in the coffin for good paying  American  Jobs. The C919 is just the latest egregious example of a huge multinational profiting(for a while) selling out to the Communist Chinese for the greater good of the Boeing Corporation at the expense of American Workers. It was just a few years back that our media and our government referred to China as Communist China because communism was the enemy and the masses had to be reminded of the dangers of all the socialist pinko countries out there trying to bring America to its knees. But the Corporate Military state soon woke up and let bygones be bygones. The chance to make even more lolly employing hard working Chinese at slave labor rates was too good a money making deal to pass up.  China is still a centrally controlled communist state and if you don’t think the Chinese military poses a strategic military threat to the world, perhaps it is time you strike up a conversation with your neighborhood Korean Army or Marine veteran who was there when the Chinese troops swooped down on them  near the Yalu River inflicting terrible casualties and ending the American advance. For the American Military who was used to winning wars, this was the first wake up call. It was our first military defeat. Of course in the US we called it a “stalemate.” Think Viet Nam, Afghanistan, Iraq.    I brought up this  1950 era example as a metaphor for the next takeover of America which is well along. The ironic tragedy of this takeover is that it has been facilitated by our corporate globalized capital machine who just couldn’t resist the chance to make a few  trillion . I was called a “conspiracy theorist” recently and nothing could be further from the truth. I don’t believe that Boeing or GE or Wall mart are traitors intent on undermining American Military and economic superiority. I don’t believe that the Chinese economic and military leaders have a developed mission plan to militarily defeat the United States, yet. I do believe that the Chinese are a proud and determined extremely hardworking people who are intent on bettering their station and making as much lolly as possible, not unlike the immigrants who settled this nation.
My point is that the Chinese by dint of hard work and strategic cooperation would have risen in the world economy but someone over there in the secret councils in Beijing decided that the old state run model of centralized production wasn’t paying the bills and needed a kick start. And what a kick start it was and has been. And the model was this: Open up China to  the wonders of comparative advantage, let the yellowhairs come and build their factories with tax advantages galore and a starving population from the country willing to work at slave labor wages, sell salad shooters to Americans and take the enormous profit generated to buy treasuries. But here is where the Chinese were crucially foxy and the US government was criminally insane. The Chinese said we will build your salad shooters but we want you to send over the machinery and the technology to build those shooters. Of course it didn’t stop with salad shooters. It soon began to include machine tools, building materials, computers,textiles,solar and wind technology and now  aircraft manufacturing. They made transfer of the technology and the machines a precondition of the deals and our government was stupid and greedy enough to permit and encourage the destruction of the American economy. The Chinese didn’t destroy and take over our economy, we actively encouraged it.
      Now again, this is no conspiracy. If you recall at the time in the 1980’s when the Chinese ascent began, we had an imbecile running the Federal Reserve and a demented retired actor running the country who told us we were a nation of ideas, and would not miss these dirty manufacturing jobs. This was the dawn of the computer age and consumerism, cheap gasoline, the toppling of the Berlin Wall and the Soviet Union dissolving before our eyes. And so began globalization, shutting down American Plants who paid living wage jobs to uneducated folks who could afford to buy  American cars, shoes, clothes and tools and appliances and live in their slab boxes in the suburbs. I guess you could call it  some early post industrial version of the American Dream. What we have here then is analogous to a war and it is hard to argue that America has won any battles and if we don’t start winning a few pretty soon, it will be all over.
        The Chinese are sitting on  cash, a pile of treasuries,and agency debt. They have not come by this cash hoard by sheer hard work. They have ignored patents, intellectual property laws and have stolen machinery outright as well as engaging in cyber theft and espionage. They are just doing what a lot of countries have done but on a huge scale,  What I find most ominous is that the Chinese have been making big energy deals with any country willing to sign an exclusive contract with them and of late they are using those treasuries to buy up mines and mining companies all over the world supplying only China. They are willing now to retaliate against anyone who crosses them. When a Chinese trawler strayed into disputed waters last month near Japan and banged into a Japanese Coast Guard vessel, the skipper and ship were impounded  and the Chinese immediately cut off deliveries of crucial metals and rare earths to Japan. For a country like Japan which relies on these metals for export, that was big deal. Whatever. Maybe it was payback for the Rape of  Nanking but it got the world’s attention. The Chinese play for keeps. They are spending money like a drunken sailor buying up every crucial asset in sight. But remember this: It was money that we gave to them and if we keep giving it to them, in time, they will own us. What we can do about winning a skirmish or two in this war will be the subject of an upcoming blog. Now a disclaimer:A few years back our family hosted a choir from the University of Nanjing  and it was an eye opening experience to meet such fine and warm people. I became an instant fan of the Chinese people and their rich and varied culture and history. I think we have more to learn from them that they from us.

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About cal48koho

I was born in Montana and raised in a dozen Air Force SAC bases. I attended Holy Cross,West Point and UNC in Chapel Hill(MD"71). Army doc in the last years of the Viet Nam fiasco. My wife and I live in a log cabin I built in Jackson Hole in 1975 when we aren't on our Cal 48 yawl. I've done a dozen different jobs and retired from ER and Anesthesia in 2004. I've written magazine articles and am writing a Kunstleresque novel about life in a past Peak Oil world. We are living in a beautiful alpine setting where we hike and ski when we're not thinking about economics and spreading the implications of PO to anyone who will listen.
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