Analysis: Geography, not economy, counts in China's rebalancing

May 28, 2012

 Someone sent me an interesting analysis from Reuters on China's economic development (

It muddles "geography" with "demography" but otherwise, this is a useful analysis - particularly if you understand the significance of the following:


" . . .Meanwhile shifting investment inland to where workers are cheaper allows China to squeeze another decade or two from a development model pushing its maximum potential on the coast. . . ."

As Keynes said, "in the long run we're all dead" and runs don't get much longer than 20 years, eh?

The underlying warnings are quite valid:

1) "DON'T think the China Challenge will collapse under its own weight for economic or demographic reasons in the next 10-20 years" and;

2) DON'T assume that somehow "China's economy will soon re-balance toward consumer-driven and/or services-driven growth and China will ease up on its drive toward global industrial predominance."

China's Politburo and Central Military Commission see the prime social stresses on internal security as coming from the vast West where national minorities (esp. Tibetans and Muslims -- and some Mongolians) agitate against the State.

What's the Final Solution? "Drang Nach Westen" . . . Flood the thin populations of minorities with double their weight in relocated Chinese . . . It will spark either ethnic violence which then will be squashed by the army and/or angry new Chinese internal migrants, or out-migration of repressed minorities into neighboring states . . . anyway, massive infrastructure in the west is needed to encourage and sustain new Chinese in-migration in the west.

Suppression of these minorities will become a festering human rights problem in American, European and Japanese eyes (but India and Central Asia will be begging for mercy) . . . It will be leveraged into militant nationalism among Han Chinese populations . . . And the West's impotence in pressuring China to respect human rights will erode whatever might be left or the West's moral authority.

At any rate, China's continued colossal investments in industrial and manufacturing infrastructure means that in 10 years - at the latest - China will be the preeminent industrial and hi-tech power on earth; America is facing a behemoth.

Yet, (SecDef Panetta's USNA speech today notwithstanding) America, at this point, is NOT making the strategic decisions needed to sustain (much less expand) its industrial/mfg/adv-tech infrastructure - which means that, militarily, America is pretty much pre-destined to fall behind China faster than just looking at China's growth would suggest.

In other words, it's curtains for the free world... 



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