New kid on the block 011610

The measures of great power have always evolved.  The Romans gained power status by the Roman sword but became a great power by its engineering and legal innovations.  England became a power by naval architecture, becoming great on mercantilism and industrialization.  America rode industrial innovations to power becoming great on its economic stability.  There is a common thread of great powers leveraging past examples to become dominant powers within a single generation.

Great powers aren’t defeated they merely decline in importance to eventual irrelevance.  They decline because they point to their glory and fail to adapt to changing measures of power.  There is a power queue of young and energetic nations on the doorstep of greatness.

China is a leading new kid on the block.  When the American economy melted down China stepped in to take up some of the slack buying more American paper.  This was not altruism; China already held too much American debt to allow that country to free-fall.  When the economy improves expectations are that China will slowly dump American bonds.   China will continue to use its surplus wealth to acquire interest in North American resource suppliers.  In recent years China has been buying interest in resource rich countries either directly or by making national loans in developing countries, with resources serving as collateral.  It now has extensive energy commitments from its western boarder through central Asian the Middle East and across Africa and even drilling right into the Gulf of Mexico.   Oil is not the only resource China is acquiring; Peruvian copper, Congolese cobalt and Canadian aluminum, which now contributes to Chinese industrial growth.

In addition to products, China is exporting engineering expertise and its own formula for economic development.  Leveraging its growing economic strength China is forming partnership deals in developing countries that advances native technology while cementing friendships and markets for Chinese products.  China is also expanding its market research in Asia and producing products surrounding countries want.  Countering American “Buy America” clauses in stimulus packages, China now has 56 free trade agreements with Asian countries making a powerful trading bloc.  In the past Asian market was the West, increasingly intertwined Asian industry is now producing for Asian markets. Companies in countries left out of these trade pacts (the west) could face competitive disadvantages when trying to tap into fast-growing Asian markets.

China, once a victim great power exploitation has learned its lessons well.  Instead of colonial extortion from developing countries China seeks cooperative agreements that mutually aid development as its economy expands, producing another stable world currency.  The western concept of “win, win” situation is we can’t lose; for Asians “win, win” means everyone wins.  The United States can’t fight this trend but it can adapt to new players and cooperative agreements.  The failure to change with the times is the trapdoor to darkness and time is short.