China – Pulling America’s Purse Strings

Monday, October 31st, 2016 @ 12:00PM

President Ronald Reagan believed in America. He also believed in protecting America. And he put his money where his mouth was. Serially underestimated by his adversaries and even by most of his close friends, Reagan performed not only the greatest geo-political feat of the 20th Century, but also the greatest strategic military feat of the 20th Century as well – he won the Cold War without so much as firing a shot. How? Through vision, courage of conviction, and faith in God, Reagan beat the Russians at their own game.

When he became president, some say the Russians, knowing Reagan was strong on national security, felt the need to flex their military muscles in response. They began spending money on a massive military build-up – lots of money. Reagan responded in kind and the race was on – the arms race, that is. At the time, most considered Reagan’s approach misguided if not down right reckless. “The president is just provoking the Russians,” many said. But Reagan understood clearly something that most pundits and politicians were oblivious to – that the Soviet economy was weak and shallow and therefore, Russia was vulnerable. Reagan believed that, in their desperation to keep pace with the American military build-up, the Russians would spend themselves into bankruptcy. And he was right. Eventually, the Russian economy failed, the Iron Curtain fell, and the Cold War came to an end. Ah, where’s the “Gipper” when we need him?

Fast forward 30 years and, regrettably, America finds itself in a new kind of undeclared war – a war not based upon military power but, rather, an economic war. And America is losing. The relationship between the US and China is tense to say the least and has been for many years. In the past, however, America held the edge by maintaining a strong military coupled with a strong economy. Of course, we still have a strong military but, regrettably, our economy is weak and in shambles – a situation that leaves us vulnerable.

Even worse, as if a weak American economy weren’t bad enough when it comes to our ability to deal effectively (and forcefully if need be) with China, America finds itself in the completely untenable position of being in debt to the Chinese. Various sources offer varying figures but the total US indebtedness to the communist nation is in the trillions of dollars. That reality is both astounding and scary. How, one must ask, did that happen? Again, many reasons are offered but the bottom line is that America spends far more than it earns. Thus, we borrow. And we borrow big. In fact, we’ve borrowed so much, that many countries, including China, have signaled an unwillingness to continue lending to us at current levels.

So what does being so in debt to China have to do with our ability to deal with them effectively? Plenty. Consider for a moment the issue of human rights violations, something the Chinese are notorious for committing. The US has long described itself as caring about human rights. We have made repeated attempts through the years to encourage China to stop its overt oppression of political dissidents who speak out against the country’s dictatorial communist regime. Does China listen? Of course they don’t. And why should they? We aren’t going to do anything substantive about it and they know it. And why aren’t we going to do anything substantive about China’s infamous record of human rights violations? Because, regrettably, we need China a lot more than China needs us. Sure, Americans buy lots of stuff from the Chinese and they don’t want to lose us as a trading partner. But, more importantly, they are well aware that we need their cash more than we need their cheap products and that gives them the edge over us.

Consider another example – Iran. The United States has urged China to support our efforts at stopping the radical Islamist-led nation from producing weapons-grade uranium at its uranium enrichment facilities (facilities which Iran repeatedly denies access by inspectors from the International Atomic Energy Agency). For the most part, however, the Chinese refuse to participate along with us in economic sanctions. Why? Two reasons: China makes lots of money selling supplies to Iran that are utilized at their uranium enrichment facilities and, China knows we aren’t in a position to pressure them to support the sanction. So, there you have it – China keeps doing whatever it wants and America is powerless to stop them or to even effectively pressure them for that matter.

Some say that China’s ultimate goal in loaning America so much money is to contribute to our eventual economic collapse. This could be true. But that wouldn’t really make sense. After all, if the American economy fails completely, we won’t be able to pay our debt to China which means, in the end, that if we lose, China loses as well. There’s an old saying that if you owe someone a thousand bucks, you have a problem but if you owe someone a million bucks, they have a problem. That being the case, I don’t believe China is out to destroy us economically as Reagan did the Soviet Union. However, the fact remains that America’s dependence on Chinese loans to run the government and pay its bills places us at a decided disadvantage in dealing with any issue in which China is a player. The stark reality is that we are a superpower in name only as long as China is pulling America’s purse strings.

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