Thomas P.M. Barnett :: Weblog

What does this mean I;ve been out of the loop for two weeks.

China and the US are mutual hostages. It is our most important international relationship bar none. The rest is largely history. The only question is in the competition for resources will China unlike the rest of world continue to allow the US to utilize 25% of the natural resources of the world on an annual basis. If you are around in 2030 this question will have been answered definitively.

William: Tom's answer to resource scarcity is often find/make more. Malthus hasn't been right yet...

This reminds us of gold as the benchmark of all currencies. Petrodollars are well and good, but oil is consumed. Gold sits there, year after year. The same hoard shines in place over generations of natural lives.

Our financial relationship with China reminds me a bit of a friend of mine who told me he lost a lot of sleep worrying about his business debt when he owed the bank $100,000. When his business grew and his debt also grew to 1 million dollars he slept like a baby and it was his banker who worried about how much he owed.

Since China now owns a huge amount of our debt it is they who have to worry about whether we can repay it or not. They also have to worry about U.S. consumer demand drying up.

I have to agree with Thomas that this kind of relationship requires both parties to be responsible and cooperative.

The next revolution -or step in an evolution - will be when we start speaking of " China's Alan Greenspan".

My first guess for the meaning is even simpler. China is now powerful enough economically for the words of some of their officials to have an impact previously reserved for American officials.

This is awful. It means that our livelihoods are increasingly tied to someone (or some organization) that in no way represents us or is accountable to us in the form of elections, etc. Then again, such is the state of much of the world in the presence of the US today.

It's certainly a step forward for connectivity, but I can't help but see it as a large step backward for just about everything else. And the problem with trade imbalances is that they don't last forever. At some point, China will decide to sell--and if they decide to do it suddenly because they no longer need us (their domestic market is huge and getting huger), we're in lots of trouble. So, seeing more of this in the headlines only makes me more worried. If this happens more, it means that the imbalance between the US and China is getting steeper and that the resolution to said imbalance will be that much sharper.

"William: Tom's answer to resource scarcity is often find/make more. Malthus hasn't been right yet..."

True enough. Just realize that China will have a much easier time of it than the US. They're still building up their modern infrastructure, while ours is firmly entrenched--along with our "oil culture." If history is any indicator, the transition from one source of energy to the next is not kind to the reigning power of the times.

Dutch wind, wood, and hydro power didn't let them hang on for the changeover to coal. British coal didn't give them an advantage in the switch to oil. And I don't think American oil is going to give us much help in the switch to renewables.

I've got my fingers crossed and am hoping that we defy history and make it. But I wouldn't bet on it.