China’s economy to surpass the U.S. in 2016?
According to the latest economic forecast from the International Monetary Fund (IMF), China’s economy will surpass the U.S. economy by 2016. As Wall Street Journal columnist Brett Arends put it:
“[This] casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.”
Arends also points out that the time frame for China’s economic coup d'état over the U.S. has largely been overestimated by economists, as their calculations are based on current exchange rates--and China’s exchange rates are a sham:
“China’s exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
Though Arends admits it’s impossible to gauge exactly when China will surpass the U.S. as the world economic superpower, he believes that this power shift is inevitable, and warns that it will be accompanied by serious global ramifications:
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and never looked back. And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those. The Age of China will feel very different.
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities.
This unnerving prediction from the IMF just reinforces the need for Congress to institute a National Manufacturing Strategy and to hold China accountable for manipulating its currency before it's too late.
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