China's economic growth threatens the U.S. economy and its global economic lead.
Facts
The growth of the U. S. economy since the beginning of the Bush administration is about equal to the entire economy of China. Go ahead, read that sentence again. Yes, it's true. Said another way, the amount of GDP added to the U.S. economy in just the past six years equals the entire Gross Domestic Product of China.
Keep in mind, the population of China is four times that of the U.S. So, if this chart were drawn on a per capita basis, the bar on the right would actually be one quarter of the height shown in this chart. The average American worker earns 22 times as much as the average Chinese worker.
Assessment
Is it not hard to believe that Americans feel economically threatened by a country where the average worker earns less than 5% of the average American? The idea that Americans are "unhappy with the economy" is beyond belief. Stop by Wal-Mart any day of the week and watch the shopping carts, loaded with products made in Asia. Americans who complain about the disappointing economy are buying such quantities of electronics, toys, sporting goods, clothing, and gadgets that they can hardly fit them into their ever expanding houses. They're able to buy all these goods because they just happened to be born on a piece of real estate called the United States where the advances made by three centuries of productive workers and free enterprise created a huge disparity between U.S. wages and that of China where the goods are made. So Asian workers get to make all these goods, and Americans get to buy them at a fraction of what they would cost if they had to make them themselves. Imagine what these goods would cost if they were made by U.S. companies paying 22 times the labor rate, not to mention the fact that with U.S. unemployment averaging 5.2% over the last 8 and 16 years, even if we wanted to make these products in the U.S., there would be not be enough workers to do it!
The astonishing bounty available to the people of this nation should be a source of perpetual thanksgiving, not whining and dissatisfaction. Yet, according to a report from the Bloomberg financial news service, the growing size and affluence of Chinese manufacturing is seen by many, both in this country and abroad, as a major threat. The writer says that, "China's emergence as a world trade powerhouse, blamed in the U.S. and Western Europe for the loss of thousands of factory jobs, is having an even more severe impact on developing nations." As a result of these concerns, market watchers tell us, support for free trade is dwindling in developing countries around the world, as manufacturers, labor unions, and regional governments begin seeking trade protection against Chinese competition.7
Reality Check explains some of the enablers of China's amazing growth, how its per capita income compares to the U.S. in purchasing power parity. The non-obvious costs of China's growth are significant. As they begin to rear their ugly heads over the next decade, the juggernaut's rapid growth is likely to slow.
Sources:
[6] Helen Murphy, Christopher Swann and Mark Drajem, "
[7] Editorial, "Pursuing Sustainable Growth,"
The Economist, "2008 Pocket World in Figures"
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