China’s Burgeoning Economic Empire
What’s the Latest Development?
China’s recent purchase of the Virginia-based Smithfield Hams, in what amounts to the largest corporate buyout to date of an American company by the Chinese, is just one of its many global investments. “In the span of just a few years, China has become the leading trading partner of countries like Australia, Brazil and Chile as it seeks resources like iron ore, soybeans and copper. … And in the United States, investment surged from less than $1 billion in 2008 to a record high of $6.7 billion in 2012, according to the Rhodium Group, an economic research firm.”
What’s the Big Idea?
The emerging dominance of the Chinese economy represents the first true ideological challenge to Western liberal capitalism since the collapse of the Soviet Union. China’s vast resources are secured by a generation of savers who “receive negative returns because of interest rates below the inflation rate and strict capital controls that prevent savers from investing their money in more profitable investments abroad.” Such controls have allowed China to quietly invest in cash-strapped corporations while securing very favorable agreements. “It is therefore essential that Western governments stick to what has been the core of Western prosperity: the rule of law, political freedom and fair competition.”
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