The “Yellow Peril” is a convenient scapegoat for politicians and their partisan followers eager to divert popular anger toward a foreign – and non-white and non-black – scapegoat. Oldsters will recall another yellowish peril, Japan, which supposedly threatened to upend American economic supremacy by flooding the market with cheap goods – and we all know how that turned out.
Japan was supposed to be the wave of the Asiatic future, a future that never came – and the myth of China, the Sleeping Giant Awakened, is but the second act of a fundamentally false fear. That fear is partially rooted in economic misconceptions, and the rest is perhaps accounted for by racial animus and a complete lack of contextual knowledge about China’s past and its future prospects.
It’s true that the free market reforms unleashed by Deng Xiaoping greatly benefited the nation, but a recent report on China’s much-touted economic growth rate puts the issue in perspective:
“In nominal terms, the nation’s GDP is more than 100 times bigger than in 1978, when Communist Party leader Deng Xiaoping began rolling out free-market policies. While China outstripped Germany in 2007 and the UK and France in 2005, the economy remains less than half as big as that of the U.S.”
The average annual income of the typical Chinese worker – a farmer – is under $5,000. Urban workers are better off: they make nearly twice as much. In spite of Beijing’s pretensions, the Chinese leadership is acutely aware of the country’s relative poverty, and massive underdevelopment. That was the whole point of Deng’s radical reform program, which sought to modernize an essentially pre-industrial agricultural society. And they aren’t even halfway there: most of China remains mired in poverty, while the coastal regions are booming. A huge displaced lumpen proletariat is forming, displaced by the upheavals of the past few decades, rootless and dangerous to the established order.
A great deal of China’s festering social problems are directly linked to the inflationary policies – the pursuit of a “cheap” currency – implemented by the regime. In order to fuel its export-driven industries, Beijing increases prices on the home front, where inflationary pressures keep prices high, in order to subsidize exports headed to the US, where they will be snapped up by bargain-hunting American consumers. In the meantime, we borrow from them in order to finance our ballooning deficit, while Ben Bernanke speeds up the printing presses at the Federal Reserve – and we pay them back in devalued dollars.