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August 14, 2013

Will China Take Over The United States?

Topics: China

Dick Morris, was the architect for President Clinton's two term is a well-educated individual when it comes to the political scene and foreign affairs.

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For the most part I find him to be on the money.

Thomas Friedman, in his national best seller "The World Is Flat," A Brief history of the twenty-first century, that it is a great idea to help under developed countries become part of the U.S. Supply Chain.

In doing so they receives millions of dollars from the U.S. thus what would be the point in going to way with your trading partner that helps build economies.

Morris explains how China is a far exaggerated super power. It spends little on its military per GDP and vast amounts of that are used to spy on their own people.

Forty three percent of Chinese work on unproductive farms at 2 dollars per day.

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With the help of foreign countries mostly located in Taiwan, eighty percent of China's innovation and sixty percent of its exports flow back to the motherland in the way usable financial instruments.

The Chines are savers, thus little money is available to invest. The have no social security system or welfare system.

*Morris incorrectly points out that due to their one child policy favoring male babies the demographics look even worst for the Chinese Male in the coming years.

The entire house of cards upon which China is built upon is that the Chinese government can provide a better standard of living for its citizens.

Anyone up for taking that bet?

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Mr. Morris furthers his case in a recent read, Stumbling Giant by Timothy Beardson.

The Threats to China's Future, by Timothy Beardson, Yale University Press

Timothy Beardson, who founded Crosby Financial Holdings in Hong Kong in 1984. It became the first investment bank to be licensed in China and at its height employed 650 staff in 17 cities in 13 countries from New York to Beijing, with an annual transaction volume of US$20 billion.

This is an authoritative and well-researched book about the future of China by a man working at the centre of Asia's economy for the past 30 years. His conclusion is that the mainland will not overtake the United States as the world's super-power during this century.

Read the review here.

Cross posted from WeThePeople

Crosby was the first international investment bank to open in China, Thailand and Malaysia, and the only foreign bank invited to participate in the working party to set up the Shanghai stock exchange. Beardson sold Crosby in stages between 1996 and 1999.

The book has a wide-ranging analysis, with chapters on the knowledge economy, finance, social welfare, the environment, threats to social and civil stability and identity, the future of the state and the Communist Party, relations with the US and China's neighbours, and on cyber warfare.

For Beardson, the key factor is demography. "China's demographic outlook is dire - extreme gender disparity, remorseless aging, a falling population and a declining labor force, all of which will affect stability and make high economic growth unsustainable.

Between 2010 and 2030, the trebling of the over-65s to more than 300 million means either that families must accommodate unprecedented numbers of elderly per adult, at a time when property prices are very high compared to wages, or the government must handle a growth in the number of people in institutional care from the current two million to perhaps over 150 million, which will create severe budgetary pressure," he writes.

Beardson believes the mainland has a window of opportunity of only 20 years to become a more developed economy, before this demographic burden begins to bite.

The book is objective, wide-ranging and nuanced. He outlines the major challenges. "China's wounds in the 21st century are mostly self-inflicted and treatable. Lack of respect for farmers' land, decades of environmental abuse, poor education, severe income inequality, and careless policies for Islam have created a destructive cocktail which threatens to poison the Party and the nation.

"Solutions to such challenges exist; the problem is the sense of stasis. There has been little interest shown in reform and - based on the evidence of recent years - good grounds to believe that the big issues will not be addressed."

Since 2010, spending on internal security - US$111 billion this year - has exceeded that on national defence, much of it in its vast border regions. Beardson has a radical proposal: "Perhaps China would be economically, socially, culturally and politically stronger and more stable if it unilaterally dropped Tibet, Inner Mongolia and Xinjiang (or parts of them)" - just as Russia would be better off without Chechnya, and Israel without large parts of Palestine.

China would go back to the borders of the Ming dynasty, with 90 per cent to 95 per cent of its current land mass.

The book has a good chapter on cyber warfare. It says that the circumstantial and forensic evidence seem to point to the responsibility of the state in these operations. But the rules for this kind of "warfare" are unclear.

"China may now be the leading cyber power" the environment is so new that, although China seems the technological leader, we do not know what it intends as the boundaries to this activity."

This book is a comprehensive guide to the achievements and challenges of modern China; it will interest the general reader as well as the specialist investors and executives with whom Beardson has worked during his life.

Posted by DancingCzars at August 14, 2013 1:57 PM



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