If America’s economy tanks, then China loses the biggest customer they have. Also, we might default on all those bonds they hold. China can not afford to let or cause the American economy to to get much worse, because they will be hurt badly.
Economic advancement is not a zero-sum game. It isn’t that if the Chinese economy booms, the American economy busts. It’s much more cooperative than that. We are all dependent on each other, and a rising economy in any part of the world provides fuel that causes other economies to rise, as well.
The reasons for China’s growth are several. One, the government has freed people to own private property and to keep the profits from their work. Two, there are what? Two or three billion people in China. Three, the rest of the world took advantage of the cheap stuff China provided.
Make no mistake—China is still a poor country with a low per capita income. There are billions of peasants out there, making subsistence wages.
Since poor countries are so poor, their economies can grow very quickly. They have so far to go. A person hardly need to work at all to double their income. So a boom is easy to maintain in a poor country. But once you get better off, it is much harder to grow as quickly. Every nation eventually settles down to a 3 or 4 percent growth rate, once their economies are at parity with the most advanced economies.
Except they never will be at parity. Fast as the developing nations can grow, they don’t have the resources to develop new technology nearly as quickly as the developed world. The more advanced you are, the faster you advance. So even with a booming economy, China will still fall behind. They got started too late.
We need to encourage Chinese growth because it is to our advantage. We get to keep on getting cheaper goods. And advancement anywhere in the world, helps push other economies higher. Economies may benefit from competition, but they benefit from cooperation even more.
Competition does help, so we need a good balance. I don’t care if this is in the classroom, or business or in large economies. The principle is still true. A rising tide raises all boats. We live together or we die separately.