Well, we just went through a pretty nasty presidential election. More than $2 billion was spent on campaign ads; most of them attack each other’s ads. They were nasty, telling half-truths, and trying to totally demean the other candidate’s personal character. There was nothing pleasant about it, it wasn’t pretty, but that’s how we do American politics now. We should be ashamed of ourselves, and it seems that politics is not the way to run our great nation. However, that’s the way it is, but today I would like to talk to you about a different topic, not American politics, but China politics.
You will see that China is also busy choosing their new leaders and in the meantime they are having quite a bit of social unrest. There have been many protests over pollution problems, working conditions, food prices and inflation. There is also a bit of class warfare and somewhat corrupt politics. Yes, China is known for its brutal politics in the Communist Party, but these days things are hitting the media much more frequently, even with all the internet censorship behind ‘The Great Firewall’.
You may not realize this, but what we do here in the United States will greatly affect leadership in China and what happens from here on out. When China’s economy is doing well and growing, more of the population is happy because they have a stream of income and jobs. They see things happening and they see their lives improve because they have more money. They can save more, maybe buy a car, and move up the ranks at work while improving their quality of life and standard of living.
However, China’s economy has been affected due to economic challenges in Europe, so China’s exports to the EU have slowed down dramatically. Now China depends on exporting more products to the United States so they can expand the number of jobs they have and continue to grow their own economy. However, if we enter a recession again in 2013, China may have already painted itself into an economic corner, and will not have the means to keep its economy running and growing. Will the county collapse economically or implode politically with massive civil unrest?
On November 7, 2012, an article appeared in the Wall Street Journal titled; “China Gazes at America’s Fiscal Cliff,” by Tom Orlik. Interestingly, China actually has more to lose from the US fiscal cliff than we do. After all, if we stop spending and move on to the next few quarters of negative GDP growth, it will hurt here for sure, but perhaps we will also have put our fiscal house in order. China, on the other hand, will find itself in a really difficult situation as we will stop buying many of the products that are produced there.
This is very problematic for China at the moment as it is going through some “change management” issues in its Communist Party with perhaps more politically turbulent times ahead. Combine that with higher unemployment, slow growth, inflationary pressures, etc. and it could be enough to bring about some major changes that China doesn’t necessarily want right now.
Note: please refer to the article; “Hu Sets China Income Target for Xi as Communists Gather,” in Bloomberg News, along with accompanying video for a little more insight.
In fact, suffice it to say that we are all globally connected now, this is a giant economy, and every time one of the major trading partners is affected, it affects the whole world. What we do in the United States and how we move forward will affect the future of politics in China, which then will affect us as well. Do you see that point? I hope you will please consider all this and think about it.