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Politics : American Presidential Politics and foreign affairs
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To: TimF who wrote (22390)9/4/2007 3:44:34 PM
From: Peter Dierks  Read Replies (1) of 71588
 
You make good points.

"Its easier to grow from a lower level, esp. when other countries are already developed and can serve as a market."

Yes, and many great nations used that technique including our own. We used to be an agricultural exporter as a primary means of obtaining foreign currency, that and gold. China has held its currency below what it might be worth in free trade. This has allowed them to attenuate the rate of wealth increase and hold onto power.

"As China grows its labor costs will go up."

Yes, but it is a large provider and costs are low now. Capitalists go where the costs are lowest if the quality is sufficient. Also see above opinion on foreign exchange.

"As for debt giving them power over us. Not really. Any attempt to weld that power would hurt them more than it would hurt us."

They hold enough foreign currency to get them through a mild economic downturn. they have more flexible options than the largest debtor nation does. Do you remember when the largest holder of US debt was Japan? They started buying trophy properties at inflated prices and RE costs in major markets took off. Come to think of it, Arabs are buying up properties now.

"its a power that's pretty hard to weld effectively."

If we were to defend Taiwan, they might dump dollars and use economic attack as a weapon of war.
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