The Chinese economy has become one of the most exceptionally productive, efficient, effective and successful models in the world. By using the weak links of market economics against market economies, such as the United States; and by implementing the best aspects of state capitalism, like we see in Japan, China has become a true power.

China has the ability to sway domestic policies in the United States, and its global reach spreads from dominance of raw materials to dominance of labor-intensive export production. From time to time people in the American public call for reforms of the U.S.-China relationship, but few understand that there is little left to save.

Carolyn Bartholomew, writing for The American Prospect, detailed some of the difficulties that the U.S. faces.

Bartholomew portrays China as having a sort of “Great Industrial Wall” surrounding its economy. This wall not only protects the Chinese home economy from foreign incursions, it also allows China to avert the watchful gaze of the international community. They use this wall to block imports, but they also use it to shield export practices that would be overtly illegal according to Beijing’s own agreements as well as international standards.

At the very beginning of Bartholomew’s article, she states that Chinese “mercantilism” will challenge our conceptions of free markets and America’s role in the world.

When the United States first entered into its trade agreements with China it was done so under the impression that we were opening up a land filled with 1 billion anxious customers. As it turned out, the goods that America produced and exported, in the early 1990s, were nothing the Chinese could handle. Electronics, cars, televisions, and textiles were all simply too expensive for them.

So China offered a cure to the problem; instead of importing from America, just relocate your factories to China and sell direct. The plan worked, and over the past two decades the U.S. has seen more than one million jobs leave for China. U.S. companies have also created millions more jobs in China, which would have otherwise been created here. And the net result is a total trade deficit of $2 trillion that grows by more than $200 billion each year.

Every time the U.S. opens a new “free trade” deal with a developing nation it does so to “open markets up to American goods.” What goods are made in America? If a German came to the U.S. they could see their wares all around them. The same goes for people from Japan, South Korea, Mexico, and China. If we were to go overseas what would we find that was made in the United States? You may see a Ford or GM, but the vehicle was almost certainly made on foreign soil by foreign workers.

First we lost our productive facilities, now we are beginning to outsource our design capacity, and our research and development. All of the most basic functions of economic growth are heading overseas where labor is cheap, and forced to stay that way; and where foreign governments reward outsourcing with huge subsidies and kickbacks. This is a boon for multinational corporations, but a plague for the workers left behind.

A recent article in The Economist, highlighted the shift that China is undergoing as it tries to adjust to its position of dominance. Beijing has been able to adapt its economic and industrial policies quickly to stay ahead of the international curve, but diplomatically they are still rather novice. The Chinese do hold considerable sway over certain policy areas in the U.S., but they are unable to challenge the technological and military might of Western powers.

Unfortunately for those at the top, China is a nation on the rise. It may still lag behind in some areas now, but it has true goals and strategies for the future. If nations like the United States want to stay ahead, or even stay afloat, they will have to adapt just as rapidly.

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