China On The Rise

I'm Barry Petersen, and this Letter From Asia comes from Tokyo.

Twenty years ago, when I was first poster here, we did a lot of stories about Japan's growing economic clout—how Japan might surpass the U.S., how someday if the average American needed a loan, the local bank on main street might be a branch on Mitsubishi Savings and Loan. To put it bluntly, American was afraid of Japan's rising economy and clout in the world.

But then came the almost total collapse of Japan's economy which has been, it turned out, a bubble fueled by real estate and stock market speculation. It took Japan 15-years to climb back and only now is its economy humming again.

Today Americans find themselves once again nervous, dare we say afraid, of another rising Asian giant. China.

Some of our politicians tell us that China poses a growing military threat. It seems unlikely anytime soon since China's defense budget by even the wildest and highest US estimates is only one-fourth what the US spends.

We are told that the Chinese are stealing our jobs with their cheap labor. Well, here's another reality check – those jobs would have gone to Vietnam or Cambodia or Eastern Europe. China is not the culprit – capitalism and the search for cheap labor is to blame.

Still, the perception is that China is a threat to the U.S. It has shades of the old Cold War and the days of the Soviet Union. The funny thing is the view from China is far different. America is not on China's mind because there are other, more pressing, problems.

The biggest threat is the growing gap between the elite and few rich and the 900 million peasants who live on a family income of a thousand dollars a year. Already, there are protests in the heartland – increasingly violent.

And right behind that problem comes the need for foreign oil – China's 10-percent annual growth will stop dead if it can't feed a hunger for energy getting worse every day.

And here's one that every outsourced American will love…China is losing jobs. That's right…as Chinese workers demand and get higher pay, manufacturers are moving their factories to countries with cheaper labor.

Twenty years ago it made good headlines and scored political points in Washington to paint Japan as some kind of threat. Now it's China in that role, and how we deal with China today may well determine if 20 years from now, they are friend or foe.

by Barry Petersen