With less than a year before the Presidential election and with the first GOP caucus in Iowa just around the corner, the US economy is a hot topic of discussion in the media and by all of the candidates. We look at jobs, the value of the dollar, national debt, and other factors when discussing the economic threats that stunt growth and expose weakness. Is the biggest threat coming from abroad? Should China be the focus point of most of the candidates’ economic discussions?
The largest country in the world has its own challenges but they appear to be in a general upswing that’s growing faster than the US since both countries were hit hard by the 2008 worldwide recession. They have major infrastructure problems that have kept the country from developing as fast as it grows, but there’s one thing that makes this something that they can overcome.
Their workforce is huge. Everyone knows that they have a lot more people in the country, but few realize that the labor force itself is a higher percentage of their population than any developed country. They have 4.27 times as many people as the United States, but their workforce is over 5.29 times larger than the US. This is due to a higher percentage of residents working – 49% of US residents are working compared to 61% of Chinese residents working. They get less schooling but are able to start working and earning at a much earlier age.
One might ask, “How is their success a threat to the US economy?” This comes down to Economics 101. Today, China and the US have a variation of a symbiotic relationship. We need their cheap labor and inexpensive products to keep prices of merchandise low. They need the revenue they receive from our purchases and contracts to keep money flowing in. It has worked well for decades.
The atmosphere is changing. Their own internal buying power is increasing as is the demand for their own products and services. The US rise to power in the early part of last century was based on our ability to be self-sufficient, but we’ve grown beyond that now. We have to import. China is experiencing the same sort of internalization that allows them to rely less and less on exporting. In other words, they’re gaining the ability to buy the products they produce. This can be seen in the moves they’ve made in recent years, most notably the raising of tariffs on US-built automobiles last week.
The scariest part of the whole thing is that there is no solution proposed by any of the GOP candidates or the current administration that addresses this issue properly.