China is Blocking America's Economic Recovery

By Alan Caruba

Americans of the generation that fought World War II and lived through the next fifty years of the Cold War never lost sight of the fact that the Soviet Union was Communist and therefore lacking anything resembling the moral values of our nation or the West. Why then do a more recent generations ignore the fact that Red China is Communist and operates in the same predatory fashion?

One of the major reasons why there is no new job creation in America is tied directly to its policies toward Red China. Both the Bush and Obama administrations were reluctant to challenge China’s deliberate strategy of not just destroying America’s manufacturing base, but all other nations, making itself the center for manufacturing.

A new book, “Death by China: Confronting the Dragon—A Global Call to Action”, by Peter Navarro and Greg Autry spells out the threat and explains why letting China be America’s biggest lender, while luring more and more corporations to set up shop there is destroying the nation’s ability to recover.

There are, of course, other factors affecting recovery, not the least of which is Big Government with its massive regulatory stranglehold and the need to reform America’s tax policies, but beyond that is the growing threat of a China that is deliberately breaking all the international rules of trade and getting away with it.

China’s “industrial policy (is) aimed at nothing shore of the total domination of world manufacturing, the total penetration of global markets, and the economic subjection of the Western World.” That may sound like hyperbole, but the authors back it up in a book filled with frightening details and data.

One area that remains largely a mystery to most Americans is addressed in its chapter, “Death by Currency Manipulation.” The authors say “If money is the root of all evil, then China’s manipulation of its currency, the yuan, is the tap root of everything wrong with the U.S.-China trade relationship. China has dramatically slowed America’s economic growth rate and spiked our unemployment rate.”

“China manipulates its currency by artificially ‘pegging’ the Chinese yuan to the U.S. dollar at a grossly undervalued fixed exchange rate.”

The U.S. trade deficit with China is appalling. “In terms of absolute size, America imports almost $1 billion a day more than it exports from China every business day of the year. That’s not a typo: it’s billion, not million.”

“America’s trade imbalance,” the authors point out, “could never persist in a world of free trade where China allowed its currency to float freely alongside other floating currencies around the world like the euro, Japanese yen, Swiss France, Brazilian real, Indian rupee, and the U.S. dollar.”

“It is precisely China’s massive accumulation of dollar-denominated foreign reserves that now allows the Chinese Communist Party to credibly threaten to nuke our financial system.” Beyond the U.S. it threatens “the entire global economic fabric and free trade framework.”

American corporations have been lured to China with the illusion of 1.3 billion consumers there, but the vast bulk of China’s population has yet to have achieved a middle class status with the money to spend on our goods. In the meantime, companies like General Electric are transferring entire elements of their assets to China in order to have them manufactured there for less. With those assets, however, go the technological and intellectual property they possess.

This is a violation of World Trade Organization rules, but there is ample evidence that WTO rules are routinely violated by China and only the most desultory efforts are made by WTO member nations to protest.

“Since China joined the World Trade Organization in 2001 and falsely promised to end its mercantilist and protectionist practices, America’s apparel, textile, and wood furniture industries have shrunk to half their size—with textile jobs alone beaten down by 70%. Other critical industries like chemicals, paper, steel, and tires are under similar siege, while employment in our high-tech computer and electronics manufacturing industries has plummeted by more than 40%.”

These days, I look at the packaging of everything I purchase to determine if it is “Made in China” because, if it is, there is a strong likelihood that it poses a real danger. “Chinese entrepreneurs are flooding world markets with a range of bone-crushing, cancer-causing, flammable, poisonous, and otherwise lethal products, foods, and drugs,” the authors warn.

Eating food produced in China poses a very real threat because of the immense levels of pollution in its environment and the fact that there are ample examples of food producers deliberately adulterating their products.

Thus, America’s economic recovery is directly related to its trade practices with China and its financial system is now mortgaged to China. We must disenthrall and disengage ourselves from China if we are to survive, let along remedy our growing legion of unemployed.

© Alan Caruba, 2011

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GE Stabs the US in the Back

By Alan Caruba

In 1876 Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey for the purposes of exploring how to produce and distribute electricity. History records that he invented the incandescent electric light bulb there. By 1890, he had established the Edison General Electric Company, now know simply as GE.

In 2011, Jeffrey Immelt, the CEO of GE and the chairman of President Obama’s “Jobs Council” is eliminating jobs for American employees of GE at a furious pace. To add insult to injury, in 2010 GE paid no federal taxes at all despite worldwide profits of $14.2 billion. GE claimed a tax benefit of $2.3 billion.

From an America corporate icon to an American disgrace, GE epitomizes how federal policies, cronyism, and rent seeking is destroying America from within by avoiding taxes and shipping jobs overseas. Keep in mind, none of this is illegal. It is, however, unconscionable.

A recent article at TheEconomicCollapseblog.com took a look at the way GE is “moving jobs and economic infrastructure to China at a blistering pace.” For example, “GE makes more medical-imaging machines than anyone else in the world and now GE has announced that it is ‘moving the headquarters of its 115-year-old X-ray business to Beijing.”

The article notes that, “Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.” Even the liberal learning Huffington Post reported that “As the administration struggles to prod businesses to create jobs at home, GE has been busy sending them abroad. Since Immelt took over in 2001, GE has shed 34,000 jobs in the U.S. according to its most recent annual filing with the Securities and Exchange Commission. But it has added 25,000 jobs overseas.”

“At the end of 2009, GE employed 36,000 more people abroad than it did in the U.S. In 2000, it was nearly the opposite.”

The last GE factory in the U.S. that made light bulbs closed last September. This came on the heels of the federal government’s ban on the 100-watt incandescent light bulb and its push to require Americans to purchase the new CFL light bulbs as part of Obama’s green jobs initiative. The CFL bulbs have been universally denounced as providing less equivalent light, costing more, and using mercury as part of their manufacture.

When John Rice was appointed GE’s head of global operations, responsible for growth in markets that include China, India, the Middle East and Brazil, the Huffington Post revealed that GE planned to spend $500 million on research and development and new customer innovation centers in China, adding more than a thousand jobs there. “More than $1.5 billion is expected to be put toward joint ventures with Chinese state-owned enterprises in high-technology sectors.”

At the same time, Daily Finance.com revealed that GE “is arming China to compete with Boeing—and America.” Peter Cohen that “General Electric plans to sell its aircraft electronics to Chinese companies” noting that China just flight-tested a prototype stealth fighter” as it continues to build up its military. GE is selling technology “it developed for U.S. companies like Boeing to Boeing’s Chinese competitors.”

“America is being de-industrialized at lightning speed and very few of our politicians seem to care,” says TheEconomicCollapseblog while noting that in 1979 there were 19.5 million manufacturing jobs in the United States and today there are 11.6 million.

“The United States has lost a staggering 32% of all its manufacturing jobs since the year 2000.”

While President Obama berates the Congress for the lack of free trade agreements, he neglects to say that several such agreements with Latin American nations linger on his desk and none can be acted upon by Congress until he sends them for approval.

While Jeffrey Immelt flies around in his corporate jet and issues vacuous, hypocritical statements about jobs for Americans, he and his close friend in the White House are undermining the economy. Other U.S. corporations are following suit.

The U.S. corporate tax is the highest in the world, but you will not hear any talk of lowering this tax rate, only meaningless class warfare blather about taxing “millionaires and billionaires” more when, in truth, those taxes will fall heaviest on small business owners.

This is the deliberate destruction of the U.S. manufacturing sector.

© Alan Caruba, 2011

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China is NOT the Future

By Alan Caruba

Last year I read a book, “China’s Megatrends: The 8 Pillars of a New Society” by John and Doris Naisbitt and was so entranced I completely neglected my normal skepticism and missed all the signals that what I was reading was essentially propaganda.

I wonder now how I could have missed this after reading just the first page in which the authors said, “the constancy of the Communist Party has worked not against but for the well-being of the Chinese people. Long-term strategic planning could be carried out without the distractions and disruptions of elections that characterize western democracies.”

Oh, wow! This line from the second paragraph of the book says everything you want to know about its justification of a completely authoritarian system whose brief history has put millions of Chinese in their graves, invaded and occupies Tibet, and is most famous for the slaughter in Tiananmen Square where mostly young Chinese were expressing a desire for real democracy.

The other clue about John Naisbitt is that he is “currently a professor at both Nankai University and Tianjin University of Finance and Economics. His wife has been a professor at Yunnan University and now directs the Naisbitt China Institute in Tianjin. Did I really expect to read a book that was anything but pro-China in every respect?

A new book provides a far different perspective. Troy Parfitt is a Canadian who has lived for years in South Korea and in Taiwan as a teacher of English. He has previously written “Notes on the Other China”, but his new book is titled, “Why China Will Never Rule the World: Travels in the Two Chinas” ($20.95, Western Hemisphere Press, New Brunswick, Canada, softcover). It is, for all intents and purposes, a travelogue of a three-month odyssey the former Taiwan-based author took throughout 17 provinces of China until he could no longer stand being in the Middle Kingdom.

Parfitt is his own man and one with an eye for detail and a talent for describing his journey in ways that do not ignore some obvious and ugly truths about the real China, not the tourist China, and most certainly not the China created by media myths.

He has the added benefit of having actually studied the history of China, past and modern, to the point where the book’s “select bibliography” runs to nearly 70 titles. As much as he made a point of visiting the places a tourist is expected to visit, because he spoke Chinese he was able to speak with the locals along the way in ways most tourists cannot. He was not taken in by the “exotic” aspects of China because he had spent enough time in Asia to have lost any naiveté.

Thus, Parfitt, looking for a description, concludes that China is “the epitome of George Orwell’s most famous novel. It is ‘Nineteen-Eighty Four with Chinese characteristics.”

Orwell’s book is about an authoritarian future ruled by Big Brother where truth is what the state says it is. It is a world inhabited by “proles” who are not encouraged to have any thoughts other than those approved by the state. It is, in short, Communism.

“China’s great rise is a great illusion,” says Parfitt. “Modernization in Chinese society is little more than window-dressing, the welding of superficial constructs—Pepsi signs, department stores, state-of-the-art production methods—onto an antique mindset. To say that China is rising is exceedingly vague. To say that it is already great or slated for greatness is a mindless mantra at best and a cheap marketing ploy at worst.”

One is brought up short when told that “China’s economic advances are certainly impressive, although it’s important to remember that foreign companies are responsible for roughly 60 percent of all Chinese exports and 85 percent of all high-tech exports.” (Emphasis added)

And then Parfitt adds, “Politically, culturally, socially, and historically, China has practically nothing to offer the Western world…or any other non-Confucian country or culture.”

“China does not even meet the definition of a developed state,” notes Parfitt. “As of 2009, it was listed on the United Nations Human Development Index as being in the 92nd spot.”

“Chinese culture remains locked in a self-replicating state of chaos, myopia, inefficiency, intolerance, violence, and irrationality. It is, in a word, backward,” says Parfitt. “China may be embracing Western trends and technology, but so what? It’s been doing that for more than a century. Culturally, and psychologically, it remains anchored to the distant past.”

For my part, I have long thought that a nation with 1.3 billion people is not likely to function well under the best of circumstances, even with the most enlightened leadership. If you want to see a country that has real potential to emerge in a leadership position among nations, look instead to India which had the great good fortune of being a British colony long enough to adopt its best qualities.

If the U.S. ever gets around to reducing its hideous debt and, in particular, reducing the amount of it owned by China, we may also begin to treat China more realistically. In the meantime, let’s not romanticize China.

© Alan Caruba, 2011

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North Korea, China's Hidden Dagger

By Alan Caruba

The Korean War ended in a stalemate in 1953. Having begun on June 25, 1950 with the blessings of Joseph Stalin, an armistice agreement on July 27, 1953 left the peninsula divided between the Republic of South Korea and the Peoples Republic of North Korea. How long ago was that? Dwight D. Eisenhower was elected largely on the promise to go there and secure an end to the conflict

By the time it was over the Red Chinese had intervened and American casualties were around 54,000 with 103,000 wounded. The North Koreans and Chinese were estimated to have lost ten times that number. The war was immensely unpopular with an American public that was still recovering from World War Two that had ended in 1945.

To his credit, President Truman did not hesitate to commit troops. Within two days after the invasion, Americans were fighting another war in Asia. The United Nations provided cover and the conflict was officially a UN action.

It was a proxy war, part of the long Cold War that had begun at the end of World War Two. The Chinese got involved when Gen. Douglas McArthur’s strategies put U.S. troops close to their border. He wanted to finish off not just the North Koreans, but the fledgling communist Chinese government as well. Truman relieved him of command after he neglected the fact that U.S. armies fight under civilian control in the form of an elected Commander-in-Chief and authorization from Congress.

In time, China for reasons of proximity and other factors became the power that controlled North Korea. Under Kim ill-Sung, known as the “Great Leader”, a Soviet protégée of Stalin’s, and his son Kim Jong-il, the “Dear Leader”, North Korea has evolved into the classic rogue nation. It was named one of George W. Bush’s “axis of evil.”

China provides life support for North Korea, the supplier of food and energy. In his 2004 book, “Rogue State: How a Nuclear North Korea Threatens America”, William C. Triplett II, noted that “communist China is central to all North Korean issues, from human rights to weapons proliferation.”

Whatever North Korea does is sanctioned by China. This fact has been largely shielded by U.S. policy from the American public. North Korea is known in diplomatic circles as “China’s hidden dagger.” The phrase is taken from an ancient Chinese military text called “36 Srategems.” It means the covert use of another country to annihilate your enemy. North Korea threatens South Korea and Japan, and by extension the U.S. which is committed to come to its defense.

American administrations have negotiated with North Korea and each has learned that they will not adhere to any agreement, using negotiations to secure bribes of all kinds, including one in which the U.S. agreed to build two nuclear facilities there! Recent news revealed they have increased their ability to produce nuclear weapons to the utter astonishment of U.S. intelligence agencies.

Its nuclear program was begun by Moscow and Beijing converted it to a weapons program. Triplett said that Beijing uses North Korea as a proxy distributor of weapons of mass destruction and ballistic missiles to terrorist nations that include Iran and Syria. They in turn, provide weapons to their proxies, Hezbollah and Hamas.

Like Iran, no sanctions and no threats of military reprisal have ever had any serious affect on North Korea.

Writing during the George W. Bush administration, Triplett said “There is no endgame strategy. North Korean aggression and provocations still go unpunished.” Together, the North Koreans and China “have successfully bogged any progress in endless diplomatic meetings and conferences while North Korea’s nuclear research marches on.”

America is in no position to fight another war on the Korean peninsula and is dependent on China (and Japan) to purchase its securities to keep its economy functioning in the wake of the 2008 economic crisis. America’s manufacturing base has largely been undermined by the transfer of many of our industries to China.

Americans have largely forgotten the threat of communism.

The latest North Korean attacks are China’s way of reminding the U.S. of its dilemma and dependence.

The failure to secure a victory over North Korea in the 1950s, too much dithering since then, and too much distraction fighting recent wars in Afghanistan and Iraq have combined to render America a paper tiger who, despite our vast military power, will not or cannot pull the trigger.

© Alan Caruba, 2010

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Voters are Distracted in a Dangerous World

By Alan Caruba

It is natural that Americans would be focused on the November 2nd elections, but it is worrisome that they are also distracted from a world that grows more volatile and dangerous by the day.

Just across the southern border, Mexico is disintegrating into anarchy with mass murders occurring all the time. The government gives little evidence of being able to gain control because, as often as not, holding a position in its government will get you killed. A recent CNSnews.com article reports that 1,200 children have been killed by cartel violence in Mexico since 2006. Overall, more than 28,000 Mexicans have been killed as the result of drug trafficking related-violence between December 2006 and July 2010.

At what point must Mexico be put under martial law to crush the drug cartels or cease to be a modern state? At what point would the U.S. have to invade militarily to impose security on our shared southern border?

While Americans ponder the elections, the U.S. has moved a second carrier group to the Persian Gulf, perhaps because military intelligence has picked up signals that the Iranian leadership which normally works through proxies like Hezbollah and Hamas is preparing for either an offensive or defensive state of war.

Iran has managed to stir the cauldron of the Middle East for decades now. Closely allied with Syria and the main support for Hezbollah, Lebanon is poised for yet another civil conflict and no matter what the outcome it will not bode well for Israel. A huge arsenal of rockets and other weapons have been moved into Lebanon since the 2006 conflict with Israel.

The failure of the Iraqi elections to result in a ruling coalition in its parliament is a sign of instability and it is known that Iran has played a massive role in the provision of weapons that were used against U.S. forces following the 2003 invasion.

Economic sanctions against Iran are having some effect, but not enough to destabilize the ruling junta of ayatollahs even in the face of major protests in the streets of Tehran following the rigged reelection of Mamoud Ahmadinejad.

Afghanistan has proven to be a total loss for U.S. policy and the exercise of its military efforts. Participating nations are withdrawing from the NATO military coalition there. General Petraeus has noted that the Taliban are safely harbored in Pakistan, a nation into which the U.S. has poured billions to no obvious effect.

China is achieving hegemonic ambitions as its economy continues to grow, keeping Japan on edge and manipulating North Korea, always a potential trigger for conflict. While many see it as a military enemy, its real strength is the enormous U.S. debt it owns in the form of our treasury securities. Its human rights record is dismal and it continues to hold a recent Nobel Peace Prize winner in jail.

Europe is only just beginning to recognize the threat posed by a huge population of Muslims in its midst. Germany’s Chancellor, Angela Merkel, has recently declared that “multiculturalism has failed.” In France, there are areas in its cities that are “no go” zones controlled by their Muslim population and this is true in other European cities as well. In England, the most popular name for new baby boys is Mohammed!

South America is a patchwork quilt of nations either friendly to the U.S. or led by communists like Venezuela’s Hugo Chavez who continues to seek alliances with Russia, Iran, and South American neighbor states.

A visit to a website of Freedom House.org provides a map illustrating that much of the world; in particular Russia, China, the Middle East and large portions of Africa do not offer any freedom to their vast populations.

Foreign relations are a duty allocated to the president of the United States. The midterm elections which are mostly about domestic issues will not likely affect the policies of the remaining two years of President Obama’s first and hopefully last term. He is weak on Middle Eastern affairs, seemingly indifferent to Mexico and illegal immigration issues, and has alienated many leaders in Europe.

A fragile U.S. economy and, in particular, its dollar, leaves America vulnerable to its enemies.

Depending on the outcome of the midterm elections, we may either see an energized Republican Party, supported by the Tea Party movement, take dramatic efforts to end wasteful spending, repeal Obamacare, and ensure the Bush tax cuts do not expire, or we will enter upon a period of political gridlock and compromise that will endanger the nation’s future in ways that defy the imagination.

© Alan Caruba, 2010

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