America’s Position in a Global Economy:? A Case for the Grand Alliance


Michael E Nelson Jr.

September 2007


In an ever more connected and globalized world, the United States should be prudent concerning its relationship with China and the future of this relationship.?China is growing by leaps and bounds each year and is on track to surpass the United States in military and economic strength.?As time goes on it will be important for the United States to look for new allies in the global system in order to create a strong pillar to counter-act any negative events in the system.?While China is on course to take over the lead in the world system, it is not certain as to how they will lead.?Right now China is not a democracy, which creates an inherently unstable pillar for the world system.?Couple this with the weakening of the United States, and any major problem in the system might bring the whole thing down.?The true motives of the Chinese regime are yet to be realized as well.?While they have not behaved in an aggressive manor internationally up to now does not guarantee that the same holds true for the future.?Carlo Pelanda in “The Grand Alliance? presents a possible solution to these types of problems.?The alliance is a way for the democracies of the world to strengthen their own positions and also keep the Chinese in check.?This is not to say that it is an aggressive alliance or partnership bent on the collapse of the Chinese but more of a safety measure.?An alliance will provide strength to counter unwanted Chinese moves, and in the event of an internal collapse of the Chinese regime, it will allow for better management of that potential problem.

          ?Over the past three decades the Chinese have experienced extreme growth.?On average the Chinese have experienced growth at an average rate of 10% a year.? China has become a place to manufacture goods for many countries, especially the United States.?This situation itself presents a problem for the world system.?A significant recession in one of these markets could spell trouble for other markets.?As China has grown, it has come to matter much more to the rest of the world, and the fate of the world economy now hinges not just on America, but also on China’s economic fitness continuing over at least the next two years.[1]?The timeframe presented by the economist is based on the current American market and the housing situation that the market is experiencing today.?It is however somewhat short sighted and is only taking economic factors and trends from other nations into effect.

?/span>One weakness of the current Chinese economy is their inflation rate.?Current inflation rates in China have increased since last year, but this is not the main issue.?The key to the inflation increase is that it is due entirely to a rise in food prices.[2]?Currently the inflation rate in the country is 6.5% but when food is taken out of the equation, inflation is only 0.9%.?The food problem may be the result of increasing population and a shortage of water in the Northern plain of China.?In the past in this area farmers had compensated for the region’s limited annual rainfall by planting only three crops every two years.?After government policies called for increased production the farmers had to plant a second annual crop, usually winter wheat, which requires a lot of water.[3]?The water problem is so bad that the government has started pipeline projects that will pump water from the South to the North.?However, much of the water in the South is polluted, and even in the North, the cities dump wastewater into the same water systems used by the farmers.? The water usage policies of the Chinese show the reckless side to the government itself.?It is destroying a natural resource to apply a temporary fix to growing problems.?

Another pressing issue regarding the Chinese economy is the number of product recalls that have occurred this year.?Millions of toys, animal foods, drugs, and foods have been recalled.?The Chinese export 40% of their goods to the United States and have expressed little remorse for the product recalls this year.?A significant recent portion of the recalls seems to center around the usage of lead paint.? Lead paint has been banned in the United States for many decades.?Recently 550,000 toys were recalled.?RC2 recalled 200,000 toys because the paint contained levels of lead that violate federal standards.[4]?Target also is recalling 350,000 gardening toys because of excessive lead levels.[5]?These lead paint problems arise from the toys made in China and 80% of the toys sold in the United States are made in China.?Hopefully the United States consumers will demonstrate their opinion to the Chinese this holiday season by not buying Chinese goods.?But the likelihood that the Chinese will show any culpability for this problem is unlikely.?This is not a situation in which the market reacts and the products will become safer or better.?The Chinese may fix the lead paint problem but what other products will be recalled in the future because of safety issues??In the future China will also be more powerful and perhaps even more arrogant.?With the present situation they did not apologize for the products, but had the American company apologize for the transgression.?This constitutes economic blackmail.?The likelihood that Mattel itself is directly responsible for this is ludicrous.?The largest toy maker has no motive to sabotage itself in this manner, but as China grows stronger substances such as lead paint end up in our children’s toys.?Mattel’s vice president for worldwide operations, Thomas Debrowski, had to apologize to China for harming the reputation of Chinese manufacturers.[6]?This is a scary road to travel down for the United States and its Multi-National Companies.?The Chinese have demonstrated that they are willing to blackmail companies so that the companies can continue to operate in China. With a stronger China in the future, it might be possible for the Chinese to blackmail entire countries.

The Chinese are also aggressively building up their military.? The Chinese are modernizing their military and stating that there is no need for concern.?The Pentagon has been surprised by the rate at which the Chinese have been able to develop.?The Pentagon admits that several aspects of China’s military development have surprised U.S. analysts, including the pace and scope of its strategic forces modernization.[7]?China is also in the process of modernizing its ICBMs.?Along with the ICBMs, China is currently reevaluating its “no first use policy.?a style='mso-footnote-id: ftn8' href="#_ftn8" name="_ftnref8" title="">[8]?This policy will change China’s strategic position in the region and even in a broader spectrum since it has the ability to strike the United States with its Missiles.?The increase in missiles shows that China is possibly willing to take a more aggressive military stand in the future.?The grim situation that Taiwan faces is a step in their emerging aggressiveness.? Military forces in the region have tipped in favor of the Chinese, and a report by the Pentagon estimates that China has 710 to 790 ballistic missiles trained on Taiwan.[9]?The likelihood that the United States and China would go to war is remote.?However, it is not uncommon for large powers to be dragged into open conflict as a result of a smaller nation being attacked or doing the attacking.? The United States has pledged support to Taiwan, and the Defense Department is mandated to provide military support under the Taiwan Relations Act.[10]?China maintains claim to Taiwan, and the United States and China have been on the verge of war regarding the island nation.?The true motives of the Chinese have yet to be divulged.?Some insight could be gained by something that Chinese General Liu has said, “When a nation grows strong enough, it practices hegemony...geography is destiny, when a country begins to rise, it should first set itself in an invincible position.?a style='mso-footnote-id:ftn11' href="#_ftn11" name="_ftnref11" title="">[11]?These words are interesting, and what are the true intentions of the Chinese??Another interesting statement concerning China’s improved relation with Muslim countries was described as “an excellent move because China should do what the West fears.?a style='mso-footnote-id:ftn12' href="#_ftn12" name="_ftnref12" title="">[12]?The Chinese are expanding their military at great rates and forming friendships with the countries that tend to be anti-American.?The real reason for this is yet to be uncovered or expressed.

The United States is in a position where something proactive needs to be done, or it will be pushed around by China.?A collapsed Chinese economy would spell doom for the American market and the global market, allowing the Chinese to blackmail the world into supporting them.? This is a remote scenario, but the Chinese are weak internally.?While the Chinese people are making better wages than they were thirty years ago, they are not seeing better treatment from their government.?Worker riots are common in China, and the Chinese have a strong Secret Police force to put down any political unrest.?However, China exists and grows in the information age, and as time goes on will start to lose control over its people.?The government can censor, as much as possible, but as technology progresses this will become a much tougher job.?The civil unrest caused by labor or food riots can be dangerous to the regime and might cause its collapse.?America is so dependent on Chinese exports that it would cripple America at the same time.?The only way for America to minimize the effects of a collapse would be to have a strong democratic economy to fall back on and pick up the slack.? The American economy itself is not strong enough for the task, but the integration of democracies would be.?The Euro-American core of the Grand Alliance would make it attractive to other democracies according to Carlo Pelanda.? United, the Democracies of the World can stand.?While a collapse is remote, the principle that China will strain relations with the west is not.? As time goes by the Chinese are entering areas of the world not friendly to the West and are positioning themselves to take over the world system.?Eventually the Chinese will be able to change the rules of the system since they will be more powerful militarily and economically than any single nation, but not more powerful than a group of democracies.?The democracies of the world, working together and united, will not only be able to save themselves from trouble but also promote their system against any opposing system.?The important thing to consider however is in what manner the Chinese should be viewed.? Treating China as an enemy now may become a self-fulfilling prophecy, but America and the Europeans should still prepare for this eventuality.? While the likelihood of war between the two nations is a very remote scenario, the United States should look to its friends in the system now to prevent disaster in the future.

[1] Source:?The Economist.?“How fit is the panda??Retrieved 9/25/2007 from

[2] Source:?The Economist.?“How fit is the panda??Retrieved 9/25/2007 from

[3] Source:?Yardly, Jim.?“Beneath Booming Cities, China’s Future is Drying Up?The New York Times 9/28/2007

[4] Source: Mouawad, Jad ?50,000 More Chinese Toys Recalled for Lead? The New York Times 9/27/2007

[5] Source: Mouawad, Jad ?50,000 More Chinese Toys Recalled for Lead? The New York Times 9/27/2007

[6] Source: Story, Louise “Mattel Official Apologizes in China?The New York Times 9/21/2007

[7] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007

[8] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007

[9] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007

[10] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007

[11] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007

[12] Source: Tkacik, John J. Jr.? “Panda Hedging: Pentagon Report Urges New Strategy for China?The Heritage Foundation.?Retrieved from on 9/30/2007