The Real China Threat

In the Washington Post, Robert Samuelson writes:

China’s economy is now only a fourth the size of the $14 trillion , but given plausible growth rates in both countries, China’s output will exceed America’s in the 2020s, Goldman Sachs forecasts. But this is the wrong worry. By itself, a richer China does not make America poorer. Indeed, because there are so many more Chinese than Americans, average Chinese living standards may lag behind ours indefinitely. By Goldman’s projections, average American incomes will still be twice Chinese incomes in 2050.

The real threat from China lies elsewhere. It is that China will destabilize the world economy. It will distort trade, foster huge financial imbalances and trigger a contentious competition for scarce raw materials. Symptoms of instability have already surfaced, and if they grow worse, everyone — including the Chinese — may suffer. China is now “challenging some of the fundamental tenets of the existing [global] economic system,” says economist C. Fred Bergsten of the Peterson Institute.

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