China has surpassed the productive capacity of the USA !

yapchongyee Updated: 2004-01-16 14:54 The truth? China has over-taken USA in production! America is just the world's biggest casino.

I preceeded the writing of this article with a couple of reprints of other writers under very chellenging titles but are all seriously thought out titles. The article by the Chinese buraucrat Mr WANG JIAN is the most enlightening and I found a lot of arguements there reflecting my views which I wrote in my article

"WORTHLESS USA DOLLAR, MERELY PRINTED PAPER". I wrote it and posted it in Chinadaily. However, I must admit that my articles are not the product of conscietious research; but more from the perspective of sharp observation and lots of common sense. It is on this point that I welcome the article of Mr WANG JIAN because he has invested a lot of his valuable time to research his article; but all told the results of his research tallied with those of my opinion. I therefore suggest that his article can be read alongside mine and the two opinions are compatible. Recently there has been a hum of opinions posing the question "WILL CHINA OVERTAKE THE USA ECONOMY ? The general opinion is that China will over-take the USA but the real issue is only when !

Most of the opinions of those who are reputed to know best put the time frame as soon as before year 2050, and today I will stake a bolder position and SAY THAT CHINA HAS ALREADY OVER-TAKEN THE USA AS THE NUMBER ONE ECONOMY OF THE WORLD. I will place the USA as second to China and Japan will be third (maybe in truth Japan ought to be behind Germany) This assertion is so improbable, but this is the issue that I will prove today ! From all appearances my thesis is a HOOT ! However, this is a case that all that meets the eye is not necessarily so. The issue that is creating the most problem between the USA and China is the value of the "yuan". America wants the Chinese to re-value the yuan to reduce the competibility of Chinese goods. The American position vis a vis this issue in beyond rediculus. When in the history has one trading nation been in the position to dictate what another nation can or cannot do. Why should China pay any heed to the rumblings of the USA Administeration ? China in their wisdom and experience have valued the yuan at just the right level and Chinese leders must not pay any heed to the American demands. Today, AMERICA NEEDS CHINA MORE THAN CHINA NEEDS AMERICA. IT IS SHEER NONSENSE FOR THE CHINESE TO GIVE IN TO THE AMERICANS; because to do so is to make Chinese industries LESS EFFCIENT. Who in his sane mind can think of such nonsense ? TO MAKE CHINA LESS COMPETITIVE SO THAT AMERICANS CAN RETAIN THEIR JOBS ? How insane do the Americans think we Chinese are ? This attitude is not only naive but is an insult to the Chinese. AMERICA THE HOME OF UNFETTED FREE ENTERPRISE ! and here we see the American arrogance to think that Chinese will do according to their dictate. The second factor that exposes the USA economy as second class and the biggest factor that weighs the US economy down like a millstone around the neck of the US economy is the American "debt level" The USA economy is kept afloat by the daily fix of US$2 billion foreign currency repatriation; if this flow stops the USA bubble will DEFLATE and the US will spiral downwards into a depression that is worst than that of year 1929. The truth is, the USA is already teetering on collapse. Just one nudge and the rotten economy will implode like what happened to the former Soviet Union. There is no turning back for the Americans and the collapse is just on the brink ! Just before the invasion of Iraq, I had a discussion with my daughter during dinner, and the topic was, "what is the true the underlying cause for the war ? The prevailing opinion at that time was that Iraq was invaded because the Americans were out to steal Iraqi oil. I believe that this is still the prevailing opinion. It was my opinion as well, but my daughter thought that the real cause was that good ole Saddam was uncoupling the USA dollar as the currency for the international oil trade. This was the case because shortly after good ole Saddam required all payments to be made in Euros, our Malaysian Prime Minister Dr Mahatir also ominated that sale of Malaysian oil will be paid in Euros. At that time the idea was too strange to me but since then I have come around to subscribe to this opinion. I read the development of the "PETRO-DOLLAR". It was with the complicity of the Saud family that the USA was able to force all purchases of Saudi oil to be paid in US$. This monopoly forced all other oil producers to transact in US$ and it is for this reason that the US$ is called "the petro-dollar" and due to the fact that money for the purchase of oil formed the major expenditure of all nations the huge flows of US$ became the only currency that is the accepted currency for the oil trade. Whether good ole Saddam knew it or not, he broke this monopoly by changing the rules in the oil trade and required that all oil purchases out of Iraq will henceforth paid in Euros. This was promptly followed by Malaysia and then by Russia. THIS ISSUE WAS THE TRUE CAUSE OF THE ILLEGAL INVASION OF IRAQ BY THE USA. I am of the opinion that good ole Saddam can sleep well in his cell KNOWING THAT HE SINGLE HANDEDLY BROKE THE MONOPOLY OF THE PETRO-DOLLAR. This is the cause of the imminent collapse of the USA. Is this scenario too impossible ? I do not think so; ready examples are at hand. Think of the collapse of Argentina, Brazil, Soviet Russia, Zimbabwe, Romania and etc....etc. These types of collapse comes suddenly and like the busting of a balloon ! From the research of Mr WANG JIAN it is discovered that the total currency transactions in the world amounts to US$600 trillion and the USA accounts for 45% of these total currency transactions; and the American share of these US$600 trillion is 40% of this amount. All the money that flowed from the USA are mostly printed paper money, and they are happily circulating to all parts of the world. These trillions of US$ are UNSUPPORTED BY AMERICAN PRODUCED GOODS OR SERVICES. THIS IS THE CLASSIC CASE OF THE BANANA NOTES first introduced by the Japanese during the years of their colonial experience in Malaysia and Indonesia. They were so freely printed that the local commander of any Japanese detachments can crank up any number of notes by himself. If the truth be told the USA$ is a "banana note"; it is not worth the paper it is printed on. That being the case the truth is China has already well on the way to catching up to the USA. There is no chance of redemption whatsoever. The PRODUCTIVE CAPACITY OF THE WHOLE OF THE USA ACCOUNTS FOR ONLY 1% of the US$600 trillion. To redeem the credibility of the US$, Americans will be required to bear the hardships 1000 times that borne by the Brazilians or 1000 times the hardships and the humiliation borne by the Russians. I have written an article that argues for the Chinese leadership to dump the US$ before it implodes. China now reputedly holds US$400 billion. I believe that it will be a good idea to buy as quickly as China can of capital equipment of all kinds for our industrial expansion. Spend for the purpose of gaining the value of the dollar before it collapses. This will help the US economy to recover. We do not want the US to implode because we hold US$400 billion. What good will it do us to hold useless paper ? We can buy Boeing air-craft. While we do buy Air-bus from Europe as well, we need to buy from the US a bit more for the purpose of drawing down our reserves of US$, because Europe is not in dire straits as much as the US is in. Draw down our pile of US$ to the level of say US$100 billion. In the process we also help the US to recover. It is to our advantage to keep the US alive but not too strong because the USA is by their nature essentially predatory. It is not as easy as the Americans pressure the Chinese to buy more from the USA, as I am sure the Chinese are doing. A look at the discrepancies that exist between the relative costs structures of the two sides will show why China cannot buy from the USA. I will illustrate the simple case of the relative costs of producing a bicycle. In China it is produced at the costs of US$50 per unit but the same bicycle is produced at the costs of UD$1000; if China were to buy bicycle from the USA it means that China is LOOSING THEIR COSTS ADVANTAGE and it makes no sense. Everything that is produced in both China and the USA has the Americans at a disadvantage. Why buy an American bicycle for US$100 when you can buy the same machine in China for US$50. From this perspective it makes much more sense for China to draw closer to Russia than to be an ally of the USA. China is at the same level of development as the Russians but of course they are for the moment at a disadvantage, but this will be temporary and Russia will recover to be worthy trading partner of China. Both countries are not dragged down by debts and both are complimentary to each other as for example the joint production of the SU 28. In the field of science and technology the two countries are complimentary to each other.

A good start to such an alliance is to win over the Russians to China�s side to secure the conclusion of the Siberian pipeline, which is also courted by the Japanese. I am all for setting aside the sum of US$200 million for BRIBES TO WIN OVER CRUCIAL VOTES TO THE CHINESE SIDE. How do I arrive at my claim that China has already surpassed the USA; because to most readers they will find this claim incredulous; therefore what is the basis for me to so bravely make such a claim ? I will at the outset state that I am not comparing the total wealth of the USA against the total wealth of China. I treat these issues of total wealth as static and the relative worth of the two gives the advantage to the USA. My analysis treats the ongoing productive capacity of the USA against that of China as reflected in our GDP. I have no figures but my discussion is based on common sense and plain observation. I already can anticipate �nit-picking?from my dissenters and critics. Be that as it may my approach is to paint with a broad brush, because it will be too much to research by my lonesome. My �straight between the eyes shot at the Americans?is the ever widening gap between the relative trade performances of the two nations. In this year alone the balance of trade is in favour of China to the tune of US$100 billion. This gap is widening and it is predicted that in the next year the gap will be US$120 billion. This is not merely with China that the Americans OWE MONEY ! They owe Japan more than their debt to China and then there are the debts to Singapore, Malaysia Hong Kong, Taiwan and a myriad of other nations. According to Mr WANG JIAN (whose article I incorporated into my article that the next war is one fought on economics) the USA printed and bought with these printed US$ notes the sum of 40% of US$600 trillion. Its is a staggering 40% of these US$600 trillion that is money printed by the USA to buy goods and services from all the other countries of the world. THIS US$ TRILLIONS TRANSLATE INTO A DEBT OWING BY THE USA TO THOSE WHO HOLD THESE US$ and US treasury bonds that indicate THE USA OWES 45% of US$600 TRILLION TO THE REST OF THE WORLD. I take the research of Mr Wang Jian as credible therefore the USA must honour these US$ trillions in goods and services; but the research of Mr Wang Jian ALSO REVEALED THAT THE PRODUCTION CAPACITY OF THE USA CONSTITUTES ONLY A MINUSCULE 1% of this huge debt The apparent wealth of the USA has been amassed by CONFIDENCE TRICKERY; it was a �con?job, a BUNCKO JOB ! as the New Yorkers will call it. Here is when I will illustrate my argument; I will draw a graphical analogy. The USA by USING THE ACCEPTABILITY OF THE US$ MUSTERED THE PRODUCTIVITY OF ALL THE DEVELOPING NATIONS TO WORK FOR THE AMERICANS FOR FREE. They achieve this �bancko job?by paying for the work and toil and sweat of these unfortunates by paying for their hard work with printed paper US$. LOOK AT THIS PROPOSITION HARD AND ASK YOURSELVES WHAT DID WE GET FOR OUR EFFORT ? Third world poverty and early death through work under inhuman conditions that promises more of the same poverty and humiliation. WHAT DID THEY GET FOR THEIR HARD WORK AND GRINDING POVERTY ? Printed Paper money that the USA uses electronic printing machine so that more can be printed and faster ! Of course most of you will ask the logical question; that is wrong with getting paid with US$ because you can buy with the US$, so how wrong can it be ??What is wrong with this arrangement is that goods produced by developing world are all real goods? My argument is that each country has a limited capacity to produce goods and services. We are limited by our ability to grow food (so much land produces so much food); this capacity is limited by land and fertilisers. On the manufacturing side we are limited by our factory space and capital equipments etc?This goes for the Americans as it does for us. The inequity of the present system that is dominated by the Americans, is that they have created a myth to enable the Americans to rob these poor developing nations of their produce by paying for their purchases with printed paper money. And why should that be robbing the poor third world of their produce ? America buys a pair of Reebok shoes for US$30 but sells it in the developed countries for US$500 a pair.; thereby making a profit of US$400 a pair. Reebok does not manufacture the shoes. The sweat hard work and materials all supplied by the developing world�s manufactures. America only acts as the middleman. Why should this be a problem ? America by this means TRANSFERRED THE GRIME AND THE POLLUTION TO THE THIRD WORLD; and they make many times more profit than the manufacturer does. This is not all because the developing world cannot buy produce from the USA because their costs is so high that they have to spend their US$ in other third world countries. This will always keep the US$ from repatriation back to the USA. Therefore what passes for profit from exports to the USA is a mere illusion. The miserable sums that the developing country receives is so meagre that they can only buy in the third world. That being the case so why don�t we in the third world trade among ourselves where our effort produces real things for trade and our sweat and toil is justly rewarded ? We can only grow if we make real profit measured by an increase in real terms translated into real things. The real produce of a nation is measured in terms of their GDP; therefore let us go back to the real world of real things. If this happens then the USA will be made to meet their obligations for the trillions of US$ that they have printed to rob the poor of the third world. Following from the above illustration I will argue my second point. Consider this proposition, the US$ can buy you a room in a Thailand hotel, but can the Chinese yuan buy a room in an American hotel ? The answer is a yes to the first and a No in the case of the yuan. Why should this happen. What quality is there in the US$ that can pass as in Thailand and Not in New York. The injustice of this illustration is that the holder of the Chinese yuan had to work to earn that yuan while the US$ was merely printed without any backing in gold nor in produce. Which of the two currency is the more valuable in terms as a unit of worth in work or produce ? It is exactly in this issue that Justice is perpetrated because THE AMERICAN PAID FOR HIS PURCHASE WITH A PRINTED PAPER AND HE TAKES AWAY THE PRODUCE OF THE POOR WORKER IN THE DEVELOPING WORLD; THE DEVELOPING WORLD GETS POORER AND POORER AND THEY SINK DEEPER AND DEEPER IN DEBT TO THE USA. THINK ABOUT THIS ILLUSTRATION AND TRY TO BALANCE LONG TERM ! I now come to the kernel of my argument ! The USA is today rich because they have TAKEN AS THEIR OWN THE WORK OF ALL THE POOR DEVELOPING NATIONS (including China) and PASS THESE PRODUCTS. I have written an article using the �REEBOC?brand as illustration; to show that it is the work and sweat of Chinese workers that makes profits for the American multi-nationals. THIS MUST BE REALISED AND STOPPED. Following from the above point, consider this proposition : US$600 trillion has invaded the developing world, AND IF WE REPATRIATE THESE US$600 TRILLION BACK TO THE USA WHAT WILL HAPPEN ? It will raise the price of a box of matches from 10 cents US to an inflated prices of US$20,000 a box of matches. The Americans are today screaming foul that China�s yuan is unfairly manipulated to the disadvantage of the USA; I SAY TO OUR CHINESE LEADERSHIP, CALL THEIR BLUFF ! What do I mean by this claim ? I mean have a confrontational TRADE WAR AGAINST THE USA. How do we do that ? I have already argued that China SELL to the USA in Euros and buy American goods in USA$. This is to draw down our reserves of US$ from US$400 billion to the level of US$100 billion. IF CHINA DOES THIS WE CAN ALLOW THE YUAN TO FLOAT ! If the Americans push our yuan up we keep buying the capital equipments that China requires because they will become cheaper. China today has reached such a high level of development that we scarcely need the technology transfer that people say we still need. There is no need to be too careful because it is a zero sum game; we draw down on the US$ while we increase our reserves in Euros. From this point it is very easy to point to the fact that China has already surpassed the USA in productive capacity because they are owing China in ever increasing level of debt. Cash money is ever decreasing in value and if China keeps their level of American dollar reserves then we can only lament that it serves China right to loose money to the ever spiralling downwards of the US$. America cannot rescue the US$ from this point on. The US$ is in crisis and China needs to dump US$ very GINGERLY SO THAT THE USA DOES NOT ROLL OVER THE BRINK ! This is not the scenario of a superpower ! China needs to draw closer to nations on the Indian sub-continent, South East Asia and East Asia; and to form a UNITED NATIONS OF ASIAN NATIONS?and have our own currency like the Eurolands?and then to seek equality in our trading with our trading partners. We need to get full VALUE FOR OUR PRODUCTS AND SERVICES. The prevailing trading system that is structured on the dominance of the USA$ is unfair and it is a scamp ! The above content represents the view of the author only. Close

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