U.S. Grows More Dependent on China

The company is called Sichuan Tengzhong Heavy Industrial Machinery. At its plant near Chengdu, a burgeoning commercial hub, the company's proud slogan is prominently displayed on a sign printed in yellow characters: "Let the World Imitate Us!"

When the name Hummer is mentioned in Chengdu, it comes with a feeling of collective satisfaction. A huge gas guzzler that America can no longer afford but that still has plenty of admirers in China, the Hummer represents the wasteful side of the American way of life. For the workers at the Chengdu plant, the acquisition symbolizes a much longed for victory over the crisis-shaken United States.

Capitalism's Tough Test

Despite their mutual dependence and their new partnership, the two powers remain what they have always been: rivals.

Ideologically speaking, the Americans are already on the defensive. For decades, they preached their model of an unbridled market economy as the only engine of peace and prosperity worldwide. But now US-style capitalism is experiencing what is probably its toughest test.

Meanwhile, the newly self-confident People's Republic is betting on the strength of its authoritarian state-controlled economy. And now China's mercantile approach to business even has its fans in Western governments and banking centers.

China is also continually expanding its political influence. Africa is indebted to the People's Republic as a major customer for its natural resources, and the Arab oil states are also enthusiastically reviving age-old trading routes with the Asian giant. Even Latin America is in the process of switching sides. China is now the key trading partner of Brazil, the largest economy on the continent. In many world capitals, a handshake with Beijing is worth more than strategic dialogues with Washington.

The United States is still the richest and militarily most powerful country in the world, but this is partly as a result of help from the Chinese. The two countries are locked together in a sort of community of fate. "We are truly going to rise or fall together," Secretary of State Hillary Clinton said during her visit to China in February.

More and More

America consumes what China produces. That, at least until now, was the basic law of globalization. The system worked without a hitch for decades. Fired up by various stock market and real estate booms, the Americans kept buying more and more each year, more clothing, toys, iPods and flat-screen TVs. Most of these products came from China.

But this cycle hasn't been working properly since mid-2008, when a blockage occurred in China's most important market. The American consumer, up until then the pillar of the world economy, discovered a virtue he had never even dreamed of before: saving money.

Suddenly the crisis hit China, whose economy had been oriented almost completely toward the United States. In Dongguan, home to one low-wage factory after the next, entire neighborhoods have died out. "We have lost a third of our orders," says Li Zhaoyuan, who owns Dongguan Singyan, a company that makes metal parts. He has laid off 40 percent of his workforce.

Join the Discussion
blog comments powered by Disqus
You Might Also Like...