Deep holes in American pockets shock Chinese observers

Por • 26 ago, 2010 • Sección: Internacionales

Global Times
By Zhou Jianjun
August 23 2010

From the perspective of an outsider seeing the changes in China, I often feel a great shock. This is the Chinese preamble written by former Time journalist Joshua Cooper Ramo for his new book The Age of the Unthinkable.

China is indeed a country where great changes are taking place. Yet as an outsider to the US, I find that recent events there have been equally shocking to the Chinese people.

The US financial crisis is not yet fully subsided, and concerns are now being raised about US debt. Many US cities and states are dangerously at risk of bankruptcy.

According to the news from the US Treasury, the US federal government debt has reached a record $13 trillion, equivalent to 90 percent of the current total US GDP per year.

The possibility of bankruptcy among local governments, such as Los Angeles and Detroit, is rising steeply.

In some smaller municipal bond markets, such as Harrisburg, Pennsylvania and Jefferson County, Alabama, there are open discussions about using Chapter 9 of the bankruptcy laws to apply for reorganization.

More and more Americans have expressed their concerns and anxiety over the dangers of the US government debt.

According to a recent Gallup poll, 40 percent of Americans view the US federal debt problem and terrorism as the chief threats to the US.

Considering this public opinion survey, it is no wonder that Ramo wrote in The Age of the Unthinkable that «How did China, a country with an average daily income of $7 per person, amass nearly $2 trillion in US debt in less than a decade?»

Clearly, in spite of the same concerns about the $2 trillion figure, Chinese and Americans have a different focus and understanding.

If the $2 trillion of US bonds it holds represents China’s rapid economic development and the resulting changes in the world’s political and economic structure, the $13 trillion of US debt gives us the space to imagine other changes for the world’s political and economic structure.

Nobel Prize winning economist Joseph Stiglitz once claimed that current economic crisis was for capitalism the equivalent of the collapse of the Berlin Wall, as it exposes the deep flaws of the market system. Two decades ago, who would have imagined that the kind of economic crisis foreseen by Karl Marx would actually take place in the US?

In addition to those important changes at economic level, changes in the US are also reflected at political and military levels.

Americans are now placing a greater emphasis on multilateralism and international cooperation, rather than unilateralism and recklessness.

Since US President Barack Obama took office, the US has been working to repair diplomatic relations internationally.

Recently, the Americans even modified their long insistence on the «preemptive strike» strategy.

It is also a major change for the military strategy of the US. Perhaps American power is simply too tired and too stretched to manage. This is a profound gap in its grand strategic immune system.

As an outsider to China, Ramo saw an incredible China. As outsiders to the US, we also see profound changes taking place in the US.

We know that China is still facing many problems, and it is so important to stay aware of them. However, the changes in the US, no matter whether economic, political, or military, have shaken people deeply.

The author is a Beijing-based economic and financial commentator.


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