Greg Autry

Fighting for space, not over it.

Please Don’t Feed the Dragon

The Pentagon has released its annual report to Congress on the “People’s Republic” of China’s rapidly growing military menace and once again, we are presented with a frightening armory designed to rain death on America and her allies. This time around the PLA’s toy list includes a new stealth fighter and aircraft carrier as well as improved ICBMs and nuclear warheads. Of particular interest is the DF-21D missile specifically designed to destroy U.S. Navy carriers at sea.

Let’s just be honest, China is working overtime to assemble the force required to eject America from her role as peacekeeper of the Pacific so that it can have its way with its Asian neighbors. The Vietnamese know it, that’s why they are buying submarines from Russia as fast as they can get them. Taiwan knows it, which is why they are nearly in a panic for higher tech U.S. weapons. Even ancient enemies Korea and Japan are coming together over their mutal fear of Chinese hegemony.

Meanwhile, President Obama says, “I absolutely believe that China’s peaceful rise is good for the world and it’s good for America.” Well, Mr. President, this DOD report details the most expensive “peaceful rise” since Hitler’s, as everyone’s favorite communist dictatorship has once again increased military spending by double digits to a whopping $160 billion. In fact, China has been growing its military budgets even faster than its phenomenal GDP for the last decade.

While China invests, builds and trains, the U.S. military is wearing out its people and its equipment in fruitless desert conflicts and faces a future of painful budget cuts. You don’t need Excel to understand where those two trajectories lead. The question is what can we do about it? Rather than dwell on the obvious fact that we cannot afford another Cold War build up, let’s ask ourselves just how is China funding theirs? Any ideas Wal-Mart shoppers?

It turns out that America’s trade deficit with China – on track to easily break last year’s record $273 Billion– covers the whole thing with room to spare. Imagine if American businesses and consumers had been funding the Soviet Union’s military machine; Doctor Strangelove would have a seizure. Yet, here we are and so we must ask this question:

Why does America do business with a nation that is preparing to attack our allies and threatens our own families with nuclear death?

Further, if the fact they are preparing to kill your kids isn’t enough to send you screaming from the shelves at Target then consider that China also:

1. Delivers a hugely disproportionate percentage of defective and dangerous products, while effectively avoiding liability and burdening U.S. taxpayers with the regulatory costs.

2. Regularly hacks the computers of our businesses, government offices, military, and humanitarian groups.

3. Cheats on nearly every World Trade Organization rule.

4. Maintains a record on human rights, censorship, women’s rights, and religious tolerance that is on par with Syria and Iran – two countries China regularly provides weapons to.

5. Represses the rights of its own workers in order to gain economic advantage.

6. Terribly pollutes its own and the world’s environment for financial gain.

8. Steals our intellectual property and counterfeits our products.

9. Is taking nearly a million jobs per year out of our economy via the reduction in U.S. GDP caused by the trade deficit.

We could write an entire book detailing the personal tragedies and national costs behind each of these criminal acts (and we did). Suffice it to say most Americans accept that these charges are accurate, but have failed to grasp that together they detail a threat much larger than the sum of the parts. China’s dictators love America’s inability to think strategically about the costs of our fruitless China policy. While they are running a carefully integrated game of economic-military-geopolitical dominance America’s diplomats stick with a flailing, tactical plan of “divide and be conquered” from the last century.

Mr. Kissinger’s policy of “engagement” with China was necessary right up to the day the Soviet Union was driven bankrupt fighting a double-ended cold war. Since then it has been little more than a giant subsidy for the expansion of another communist threat and it is America that will soon face default or obliteration.

While U.S. shoppers may think they are saving money and large multinationals reap short-term profits on this trade, it is clearly not in the long-term interest of America to continue business as usual with the Boys from Beijing. If we must, there are a plethora of countries where we can find cheap labor for Wal-Mart without funding a repugnant regime that views us as its enemy.

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Greg Autry is the co-author of Death by China. He teaches Macro Economics at the Merage School of Business, UC Irvine. He writes and speaks on China, space, economics, investing, and business strategy. Please follow us on Facebook at http://www.facebook.com/DeathByChina