The Beginning Of The End
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National Economic Suicide: The U.S. Trade Deficit With China Just Hit A New Record High

Economics - Public DomainDid you know that we buy nearly five times as much stuff from the Chinese as they buy from us?  According to government numbers that were just released, we imported 44.9 billion dollars worth of stuff from China in September but we only exported 9.3 billion dollars worth of stuff to them.  And this is not happening because our economy is so much larger than China’s.  In fact, the IMF says that China now has the largest economy on the entire planet on a purchasing power basis.  No, the truth is that this is happening because our economy is broken.  Every month, we consume far more wealth than we produce.  Because the outflow of money is far greater than the inflow, we have to go to major exporting nations and beg them to lend our dollars back to us so that we can pay our bills.  Meanwhile, the quality of the jobs in this country continues to go down and our formerly great manufacturing cities are rotting and decaying.  We are committing national economic suicide, and most Americans don’t seem to care.

Barack Obama is constantly hyping a “manufacturing resurgence” in America, but the numbers don’t lie.  In September, our manufactured goods trade deficit with the rest of the world soared to a new all-time record high of 69.16 billion dollars.  For the year, we are nearly 12 percent ahead of last year’s record pace.

When we buy far more things than we sell, we get poorer as a nation.

How do you think that we ever got into a position of owing China more than a trillion dollars?

We just kept buying far more from them than they bought from us, and their money just kept piling up.  Now it has gotten to the point where our politicians literally beg them to lend our money back to us.  They are the head and we are the tail.

And we did this to ourselves.

Once upon a time, the United States was the greatest manufacturing powerhouse that the world had ever seen.  But now China manufactures more stuff than us and China also accounts for more total global trade (imports plus exports) than us.

This should never have happened.  Several decades ago, the Chinese economy was a complete joke.  But decades of incredibly foolish decisions by our politicians have resulted in the loss of tens of thousands of manufacturing facilities, millions of good paying jobs and the destruction of vast stretches of our economic infrastructure.

During the same time frame, gleaming new manufacturing facilities have gone up all over China.

China is literally wiping the floor with us on the global economic stage and most Americans don’t even understand what is happening.  Here is more on the trade deficit numbers that were just released from the RealityChek Blog

>The China goods deficit of $35.56 billion blew past the old mark of $30.86 billion, set in July, by 15.23 percent. The new deficit also represented a 17.77 percent increase over the August level of $30.20 billion.

>U.S. goods exports to the still strongly growing Chinese economy fell on month in September from $9.63 billion to $9.33 billion (3.12 percent). U.S. merchandise imports from China jumped by 12.70 percent over August levels, from $39.83 billion to $44.89 billion – itself an all-time high.

>The U.S. goods deficit with China this year is now so far running 5.62 percent ahead of 2014’s record pace.

>The longstanding U.S. manufacturing trade shortfall shot up from $59.10 billion in August to $69.16 billion in September. This 17.02 percent jump resulted in a beat of the old record of $67.33 billion, also set in July, by 2.72 percent.

And it isn’t just cheap plastic trinkets that China is selling to us.

In fact, their number one export to us is computer equipment.

Meanwhile, one of our main exports to them is “scrap and trash”.

For much more on how China is absolutely dominating us, please see my previous article entitled “Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America“.

Sadly, there are a couple of factors that will probably make our trade deficit with the rest of the world even worse in the months ahead.

Number one, the currency war that I wrote about earlier this week will probably push the U.S. dollar even higher against the yen and the euro.

You might think that a rising dollar sounds good, but the truth is that it will make our exports less competitive in the global marketplace.

Nations such as Japan devalue their currencies so that they can sell more stuff to us.  But that hurts our own domestic industries.  And when our own domestic industries suffer, that means less jobs for American workers.

Secondly, the collapse in the price of oil could have very serious implications for the shale oil industry.

In recent years, the shale oil revolution has caused local economic booms in states such as Texas and North Dakota.  But shale oil tends to be quite expensive to extract.  As I write this, the price of U.S. oil has fallen to about 77 dollars a barrel.  If it stays at that level or keeps going down, shale oil production in the United States will slow down dramatically.

In other words, a lot of these shale oil “boom towns” could go “bust” very rapidly.

If that happens, the amount of oil that we import will rise substantially and that will add to our overall trade deficit.

But of course the biggest factor fueling our trade deficit is that the vast majority of Americans simply do not care that we are committing national economic suicide.

When we buy products made in America, we support American businesses and American workers.

When we buy products made overseas, we hurt American businesses, we kill American jobs and we make ourselves poorer as a nation.

Of course there is nothing wrong with buying a foreign-made product once in a while.  But this holiday season, most people will fill their shopping carts to the brim with foreign-made goods without even thinking twice about it.

The next time that you go into a huge retail establishment such as Wal-Mart, start picking up products and look to see where they were made.

I think that you will be shocked at how few of them are actually made inside the United States.

When are Americans going to get sick and tired of making China wealthier at our expense?

We are willing participants in the destruction of the U.S. economy, and yet only a small minority of people seem to care.

What is it going to take for people to finally wake up?

Will Detroit Be The First Major Chinese City In The United States?

ChinaIs Detroit destined to become a Chinese city?  Chinese homebuyers and Chinese businesses are starting to flood into the Motor City, and the governor of Michigan is greatly encouraging this.  In fact, he has formally asked the Obama administration for 50,000 special federal immigration visas to encourage even more immigration from China and elsewhere.  So will Detroit be the first major city in the United States to be dominated by China?  It could happen.  Once upon a time, Detroit was the greatest manufacturing city in the history of the world and it had the highest per capita income in the entire country.  But now it is a rotting, decaying, bankrupt hellhole that is in desperate need of a savior, and Michigan Governor Rick Snyder appears to be fully convinced that China can be that savior.

To Snyder, encouraging foreigners to invest money and buy up properties won’t cost the state government much, but it could potentially have great benefits

Under a plan to be unveiled Thursday, Gov. Rick Snyder will request 50,000 special federal immigration visas over the next five years to attract foreign professionals who are willing to work and live in the city.

Mr. Snyder, in an interview Wednesday, said that “this is one way for the federal government to step up to provide significant value without cost that could have a huge impact on the city’s future.”

At a news conference announcing his plan, Snyder was not shy about declaring his intentions

Let’s send a message to the entire world: Detroit, Michigan, is open to the world.

In other words, Snyder wants China to save Detroit since nobody in this country is going to.

Snyder has also taken a couple of additional steps to encourage immigration and foreign investment, including opening up something called “an Office for New Americans”

Opening an Office for New Americans to attract and help immigrants better adjust to life in Michigan, and designating the state as an Employer Based or EB-5 center to expedite visas and permits for immigrants who want to open business in the state with investments of at least $500,000 and 10 employees.

In essence, Snyder has done just about everything except roll out the welcome mat for the Chinese.

But this is nothing new for Governor Snyder.  In fact, he has been making overtures to China for years

Snyder, who was a businessman before starting his political career, believes that automobiles can no longer change the fate of Detroit. He said that he has learned from the history of the United States that what has made the nation great is immigrants.

In the early 1990s, Snyder went to China to develop the automobile market. After he was elected as the governor of Michigan, he made at least one trip to China every year, with the aim of recruiting talent.

He hopes that well-educated Chinese people can revitalize the Motor City in the new era. And as he desired, after Detroit announced its bankruptcy in 2013, the Chinese began to take the dying city by storm.

Rich Chinese men see Detroit as a rare opportunity for investment outside their home country.

In 2013, without any field investigation, Dongdu International Group of Shanghai — whose assets total 5 billion yuan (US$800 million) — spent US$13.6 million to buy the David Stott building and the Detroit Free Press building at auctions in September.

And when we talk about the Chinese domination of Detroit, this is not something that is just future tense.  This is something that is already happening right now.  For example, the following is an excerpt from a CNBC article that discussed how Chinese companies are already aggressively “putting down roots in Detroit”…

Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.

Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.

 

The transformation that has taken place in that region of the country is absolutely remarkable.

48 percent of the manufacturing jobs in the state of Michigan were lost between December 2000 and December 2010.  Our trade deficit with China was largely responsible for that.

And now we are relying on China to come in and salvage the ruins of our gutted economic infrastructure.

Not only that, but the Chinese are also eagerly buying up homes at extremely depressed prices all over Detroit.

According to CNN, Detroit is already number four on the list of the top 10 destinations for Chinese homebuyers.  In many cases, Chinese buyers are scooping up properties without even looking at them first.  Just check out what one Detroit real estate broker told Quartz last July

“I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’” she tells Quartz, noting that one of her colleagues recently sold 30 properties to a Chinese buyer. “They say ‘We don’t need to see them. Just pick the good ones.’”

And they aren’t just interested in Detroit.  As I have written about previously, one Chinese company known as “Sino-Michigan Properties LLC” actually had plans to buy 200 acres of land near the little town of Milan, Michigan and turn it into a “China City” with artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.  For much more on how Chinese buyers are gobbling up real estate all over the nation, please see my previous article entitled “The Chinese Are Acquiring Large Chunks Of Land In Communities All Over America“.

All of this is just another indication of how rapidly the global economic landscape is changing.

Since the late 19th Century, the United States has been the most dominant economic power in the world.

But now that reign is ending.

Just recently, a new study released by the World Bank indicated that China is now the largest economy in the world in terms of purchasing power…

A report out of the World Bank shows rapidly expanding China is poised to overtake the once invincible United States as the world’s largest economy by the end of 2014.

The International Comparison Program looks at exchange rates to reveal purchasing power of different currencies and found that yuan in China will soon pack more punch than the mighty dollar.

Meanwhile, Chinese officials bashed the report as flawed, likely for fear of losing its status as a developing nation and the pollution-spewing perks that come with it.

And a couple of years ago China passed the United States and become the leader in global trade.

As the Chinese economy continues to rise and the U.S. economy continues to decline, the shift in global power is going to become even more dramatic.

Yes, let us hope for the best for our failing economy, but you also might want to teach your kids to speak Chinese just in case.

China Is On A Debt Binge And A Buying Spree Unlike Anything The World Has Ever Seen Before

Chinese Black Dragon - Photo by AngelusWhen it comes to reckless money creation, it turns out that China is the king.  Over the past five years, Chinese bank assets have grown from about 9 trillion dollars to more than 24 trillion dollars.  This has been fueled by the greatest private debt binge that the world has ever seen.  According to a recent World Bank report, the level of private domestic debt in China has grown from about 9 trillion dollars in 2008 to more than 23 trillion dollars today.  In other words, in just five years the amount of money that has been loaned out by banks in China is roughly equivalent to the amount of debt that the U.S. government has accumulated since the end of the Reagan administration.  And Chinese bank assets now absolutely dwarf the assets of the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England combined.  You can see an amazing chart which shows this right here.  A lot of this “hot money” has been flowing out of China and into U.S. companies, U.S. stocks and U.S. real estate.  Unfortunately for China (and for the rest of us), there are lots of signs that the gigantic debt bubble in China is about to burst, and when that does happen the entire world is going to feel the pain.

It was Zero Hedge that initially broke this story.  Over the past several years, most of the focus has been on the reckless money printing that the Federal Reserve has been doing, but the truth is that China has been far more reckless

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion – some two and a half times the GDP of China!

 Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

I was curious to see what all of this debt creation was doing to the money supply in China.  So I looked it up, and I discovered that M2 in China has grown by about 1000% since 1999…

M2 Money Supply China

So what has China been doing with all of that money?

Well, they have been on a buying spree unlike anything the world has ever seen before.  For example, according to Reuters China has essentially bought the entire oil industry of Ecuador…

China’s aggressive quest for foreign oil has reached a new milestone, according to records reviewed by Reuters: near monopoly control of crude exports from an OPEC nation, Ecuador.

Last November, Marco Calvopiña, the general manager of Ecuador’s state oil company PetroEcuador, was dispatched to China to help secure $2 billion in financing for his government. Negotiations, which included committing to sell millions of barrels of Ecuador’s oil to Chinese state-run firms through 2020, dragged on for days.

And the Chinese have been doing lots of shopping in the United States as well.  The following is an excerpt from a recent CNBC article entitled “Chinese buying up California housing“…

At a brand new housing development in Irvine, Calif., some of America’s largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It’s a rebirth for U.S. construction, but the customers are largely Chinese.

“They see the market here still has room for appreciation,” said Irvine-area real estate agent Kinney Yong, of RE/MAX Premier Realty. “What’s driving them over here is that they have this cash, and they want to park it somewhere or invest somewhere.”

Apparently a lot of these buyers have so much cash that they are willing to outbid anyone if they like the house…

The homes range from the mid-$700,000s to well over $1 million. Cash is king, and there is a seemingly limitless amount.

“The price doesn’t matter, 800,000, 1 million, 1.5. If they like it they will purchase it,” said Helen Zhang of Tarbell Realtors.

So when you hear that housing prices are “going up”, you might want to double check the numbers.  Much of this is being caused by foreign buyers that are gobbling up properties in certain “hot” markets.

We see this happening on the east coast as well.  In fact, a Chinese firm recently purchased one of the most important landmarks in New York City

Chinese conglomerate Fosun International Ltd. (0656.HK) will buy office building One Chase Manhattan Plaza for $725 million, adding to a growing list of property purchases by Chinese buyers in New York city.

The Hong Kong-listed firm said it will buy the property from JP Morgan Chase Bank, according to a release on the Hong Kong Stock Exchange website.

Chinese firms, in particular local developers, have looked overseas to diversify their property holdings as the economy at home slows. Chinese individuals also have been investing in property abroad amid tight policy measures in the mainland residential market.

Earlier this month, Chinese state-owned developer Greenland Holdings Group agreed to buy a 70% stake in an apartment project next to the Barclays Center in Brooklyn, N.Y., in what is the largest commercial-real-estate development in the U.S. to get direct backing from a Chinese firm.

And in a previous article, I discussed how the Chinese have just bought up the largest pork producer in the entire country…

Just think about what the Smithfield Foods acquisition alone will mean.  Smithfield Foods is the largest pork producer and processor in the world.  It has facilities in 26 U.S. states and it employs tens of thousands of Americans.  It directly owns 460 farms and has contracts with approximately 2,100 others.  But now a Chinese company has bought it for $4.7 billion, and that means that the Chinese will now be the most important employer in dozens of rural communities all over America.

For many more examples of how the Chinese are gobbling up companies, real estate and natural resources all over the United States, please see my previous article entitled “Meet Your New Boss: Buying Large Employers Will Enable China To Dominate 1000s Of U.S. Communities“.

But more than anything else, the Chinese seem particularly interested in acquiring real money.

And by that, I mean gold and silver.

In recent years, the Chinese have been buying up thousands of tons of gold at very depressed prices.  Meanwhile, the western world has been unloading gold at a staggering pace.  By the time this is all over, the western world is going to end up bitterly regretting this massive transfer of real wealth.

Unfortunately for the Chinese, it appears that the unsustainable credit bubble that they have created is starting to burst.  According to Bloomberg, the amount of bad loans that the five largest banks in China wrote off during the first half of this year was three times larger than last year…

China’s biggest banks are already affected, tripling the amount of bad loans they wrote off in the first half of this year and cleaning up their books ahead of what may be a fresh wave of defaults. Industrial & Commercial Bank of China Ltd. and its four largest competitors expunged 22.1 billion yuan of debt that couldn’t be collected through June, up from 7.65 billion yuan a year earlier, regulatory filings show.

And Goldman Sachs is projecting that China may be facing 3 trillion dollars in credit losses as this bubble implodes…

Interest owed by borrowers rose to an estimated 12.5 percent of China’s economy from 7 percent in 2008, Fitch Ratings estimated in September. By the end of 2017, it may climb to as much as 22 percent and “ultimately overwhelm borrowers.”

Meanwhile, China’s total credit will be pushed to almost 250 percent of gross domestic product by then, almost double the 130 percent of 2008, according to Fitch.

The nation might face credit losses of as much as $3 trillion as defaults ensue from the expansion of the past four years, particularly by non-bank lenders such as trusts, exceeding that seen prior to other credit crises, Goldman Sachs Group Inc. estimated in August.

The Chinese are trying to get this debt spiral under control by tightening the money supply.  That may sound wise, but the truth is that it is going to create a substantial credit crunch and the entire globe will end up sharing in the pain…

Yields on Chinese government debt have soared to their highest levels in nearly nine years amid Beijing’s relentless drive to tighten the monetary spigots in the world’s second-largest economy.

The higher yields on government debt have pushed up borrowing costs broadly, creating obstacles for companies and government agencies looking to tap bond markets. Several Chinese development banks, which have mandates to encourage growth through targeted investments, have had to either scale back borrowing plans or postpone bond sales.

This could ultimately be a much bigger story than whether or not the Fed decides to “taper” or not.

It has been the Chinese that have been the greatest source of fresh liquidity since the last financial crisis, and now it appears that source of liquidity is tightening up.

So as the flow of “hot money” out of China starts to slow down, what is that going to mean for the rest of the planet?

And when you consider this in conjunction with the fact that China has just announced that it is going to stop stockpiling U.S. dollars, it becomes clear that we have reached a major turning point in the financial world.

2014 is shaping up to be a very interesting year, and nobody is quite sure what is going to happen next.

Meet Your New Boss: Buying Large Employers Will Enable China To Dominate 1000s Of U.S. Communities

The United States - A Colony Of ChinaAre you ready for a future where China will employ millions of American workers and dominate thousands of small communities all over the United States?  Such a future would be unimaginable to many Americans, but the truth is that it is already starting to happen.  Chinese acquisition of U.S. businesses set a new all-time record last year, and it is on pace to absolutely shatter that record this year.  Meanwhile, China is voraciously gobbling up real estate and is establishing economic beachheads all over America.  If China continues to build economic power inside the United States, it will eventually become the dominant economic force in thousands of small communities all over the nation.  Just think about what the Smithfield Foods acquisition alone will mean.  Smithfield Foods is the largest pork producer and processor in the world.  It has facilities in 26 U.S. states and it employs tens of thousands of Americans.  It directly owns 460 farms and has contracts with approximately 2,100 others.  But now a Chinese company has bought it for $4.7 billion, and that means that the Chinese will now be the most important employer in dozens of rural communities all over America.  If you don’t think that this is important, you haven’t been paying much attention to what has been going on in the world.  Thanks in part to our massively bloated trade deficit with China, the Chinese have trillions of dollars to spend.  They are only just starting to exercise their economic muscles.

And it is important to keep in mind that there is often not much of a difference between “the Chinese government” and “Chinese corporations”.  In 2011, 43 percent of all profits in China were produced by companies that the Chinese government had a controlling interest in.  Americans are accustomed to thinking of “government” and “business” as being separate things, but in China they are often one and the same.  Even when there is a separation in ownership, the reality is that no major Chinese corporation is going to go against the authority and guidance of the Chinese government.  The relationship between government and business in China is much different than it is in the United States.

Over the past several years, Chinese companies have become increasingly aggressive.  Last year a Chinese company spent $2.6 billion to purchase AMC entertainment – one of the largest movie theater chains in the United States.  Now that Chinese company controls more movie ticket sales than anyone else in the world.  At the time, that was the largest acquisition of a U.S. firm by a Chinese company, but now the Smithfield Foods deal has greatly surpassed that.

But China is not just relying on acquisitions to expand its economic power.  The truth is that “economic beachheads” are being established all over America.  For example, Golden Dragon Precise Copper Tube Group, Inc. recently broke ground on a $100 million plant in Thomasville, Alabama.  I am sure that many of the residents of Thomasville, Alabama will be glad to have jobs, but it will also become yet another community that will now be heavily dependent on communist China.

And guess where else Chinese companies are putting down roots?

Detroit.

Yes, the poster child for the deindustrialization of America is being invaded by the Chinese.  The following comes from a recent CNBC article

Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.

Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.

If you recently purchased an “American-made vehicle”, there is a really good chance that it has Chinese parts in it.

In fact, it is becoming harder and harder to get auto parts that are actually made in America by American companies.  A lot of those companies are dying off.  One example of this is a battery maker that had received $132 million from the federal government that was recently gobbled up by a huge Chinese corporation…

Industry analysts are hard-pressed to put a number on the Chinese suppliers operating in the United States. “We simply don’t know how many there are,” said David Andrea, an official with the Original Equipment Suppliers Association, a trade organization for auto parts makers.

In one of the more prominent deals, the Wanxiang Group bought most of the assets of the battery maker A123 Systems, which filed for bankruptcy last year despite receiving $132 million of $249 million in federal grants to build two factories in Michigan.

Congressional Republicans criticized the deal, saying A123’s technology could support military applications in China. Still, the buyout was approved this year by the Committee on Foreign Investment in the United States, a federal government panel.

China seems particularly interested in acquiring energy resources in the United States.  For example, did you know that China is actually mining for coal in the mountains of Tennessee?

Guizhou Gouchuang Energy Holdings Group spent 616 million dollars to acquire Triple H Coal Co. in Jacksboro, Tennessee.  At the time, that acquisition really didn’t make much news, but now a group of conservatives in Tennessee is trying to stop the Chinese from blowing up their mountains and taking their coal.  The following is from a Wall Street Journal article back in March…

The Tennessee Conservative Union began airing an ad Tuesday that says lawmakers have failed to protect the state’s scenic mountains and are allowing the “Chinese to destroy our mountains and take our coal…the same folks who hold our debt.”

But when it comes to our energy resources, China has been most interested in our oil and natural gas.  It is a complete and total mystery why the federal government would allow China to buy up our precious domestic sources of energy, but it is happening.  The following is a list of some of the oil and natural gas deals that China has been involved in during the last few years that was compiled by the Wall Street Journal

Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.

Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.

Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.

Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.

Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.

Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.

Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.

Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.

How could we be so stupid?

Sadly, as our politicians endlessly bicker China just continues to aggressively push ahead.

And pretty soon China may want to build entire cities in the United States just like they have been doing in other countries.  According to Bloomberg, right now China is actually building a city larger than Manhattan just outside of the capital of Belarus…

China is building an entire city in the forests near the Belarusian capital Minsk to create a manufacturing springboard between the European Union and Russia.

Belarusian President Aleksandr Lukashenko allotted an area 40 percent larger than Manhattan around Minsk’s international airport for the $5 billion development, which will include enough housing to accommodate 155,000 people, according to Chinese and Belarusian officials.

And this is actually already happening on a much smaller scale in this country.  For example, as I have written about previously, a Chinese company known as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the little town of Milan, Michigan.  Their stated goal is to construct a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other cases, large chunks of real estate in the middle of major U.S. cities are being gobbled up by Chinese “investors”.  Just check out what a Fortune article from a while back says has been happening in Toledo, Ohio…

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Are you starting to get the picture?

China is on the rise and America is in decline.  If you doubt this, just read the following list of facts which comes from one of my previous articles entitled “40 Ways That China Is Beating America“…

#1 As I mentioned above, when you total up all imports and exports of goods, China is now the number one trading nation on the entire planet.

#2 During 2012, we sold about 110 billion dollars worth of stuff to the Chinese, but they sold about 425 billion dollars worth of stuff to us.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

#3 Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.

#4 China now has the largest new car market in the entire world.

#5 China has more foreign currency reserves than anyone else on the planet.

#6 China is the number one gold producer in the world.

#7 China is also the number one gold importer in the world.

#8 The uniforms for the U.S. Olympic team were made in China.

#9 85 percent of all artificial Christmas trees are made in China.

#10 The new World Trade Center tower is going to include glass that has been imported from China.

#11 The new Martin Luther King memorial on the National Mall was made in China.

#12 One of the reasons it is so hard to export stuff to China is because of their tariffs.  According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

#13 The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

#14 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#15 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#16 Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

#17 According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

#18 China now produces more than twice as many automobiles as the United States does.

#19 Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

#20 After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.

#21 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

#22 The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

#23 China’s number one export to the U.S. is computer equipment, but the number one U.S. export to China is “scrap and trash”.

#24 The U.S. trade deficit with China is now more than 30 times larger than it was back in 1990.

#25 China now consumes more energy than the United States does.

#26 China is now the leading manufacturer of goods in the entire world.

#27 China uses more cement than the rest of the world combined.

#28 China is now the number one producer of wind and solar power on the entire globe.

#29 There are more pigs in China than in the next 43 pork producing nations combined.

#30 Today, China produces nearly twice as much beer as the United States does.

#31 Right now, China is producing more than three times as much coal as the United States does.

#33 China now produces 11 times as much steel as the United States does.

#34 China produces more than 90 percent of the global supply of rare earth elements.

#35 China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

#36 A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.

#37 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

#38 China now awards more doctoral degrees in engineering each year than the United States does.

#39 The average household debt load in the United States is 136% of average household income.  In China, the average household debt load is 17% of average household income.

#40 The Chinese have begun to buy up huge amounts of U.S. real estate.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

And what we have seen so far may just be the tip of the iceberg as far as Chinese “investment” in U.S. real estate is concerned.  The following is a brief excerpt from a Bloomberg article that was posted just last week

China is studying the possibility of investing a portion of its $3.4 trillion in foreign-exchange reserves in U.S. real estate, said two people with direct knowledge of the situation.

The State Administration of Foreign Exchange began the study after seeing signs of a recovery in the U.S. property market, said the people, who asked not to be identified as they weren’t authorized to speak publicly about the matter. China may acquire properties, invest in real estate funds or buy stakes in property companies, they said. The safety of the investments will be the top priority, said the people, who didn’t elaborate on a timetable or other details.

So what can we do about all of this?

Unfortunately, not a whole lot.  Both major political parties seem to be fully convinced that merging our economy with the economy of communist China is a great idea.  I would not expect major changes in our policies regarding China any time soon.

For now, I will just leave you with one piece of advice…

Learn to speak Chinese.  You might need it someday.

Is China Going To Dominate America?

Does China Plan To Back The Yuan With Gold And Make It The Primary Global Reserve Currency?

Chinese Renminbi Yuan - Photo by MiLu24What in the world is China up to?  Why are the Chinese hoarding so much gold?  Does China plan to back the yuan with gold and turn it into a global reserve currency?  Could it be possible that China actually intends for the yuan to eventually replace the U.S. dollar as the primary reserve currency of the planet?  Most people in the western world assume that China just wants a “seat at the table” and is content to let the United States run the show.  But that isn’t the case at all.  The truth is that China doesn’t just want to compete with the United States.  Rather, China actually plans to replace the United States as the dominant economic power on the planet.  In fact, China already accounts for more global trade than the United States does.  So what would happen one day if China announced that it was backing the yuan with gold and that it would no longer be using the U.S. dollar in international trade?  It would cause a financial shift so cataclysmic that it is hard to even imagine.  Most of those that write about the “death of the U.S. dollar” usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned.  China owns about a trillion dollars of our debt, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.  Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative.  But a gold-backed yuan would change all of that very rapidly.

And without a doubt, the Chinese government has already been very busy promoting the use of the yuan in international trade.  In a recent note, John McCormick of RBS Group stated the following…

Financial crises in the US and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5-6 billion daily – double what they were a year ago.

A number of factors suggest that the Chinese authorities want to make RMB internationalisation happen by 2015.

For China, having a global reserve currency is not just about economics.  It is also about power.

McCormick ended his recent note this way…

China’s new leadership faces a number of problems. The country’s economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound.

But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.

Similar sentiments were echoed in a recent article in the Wall Street Journal

Beijing is undertaking a long, gradual campaign to establish the yuan as a more market-oriented, international currency. China’s State Council, or cabinet, said in a statement this month that the country would draft a plan to allow the yuan to become fully convertible. Meanwhile, the People’s Bank of China is guiding the currency higher and set the median point of its permitted daily trading band last week at the strongest level ever.

We don’t hear much about these sorts of things in the western media, but the convertibility of the Chinese yuan is a very big deal.  Up until recently, the yuan was only directly convertible into dollars and yen.  But now that is rapidly changing.  So far this year, the Chinese government has entered into currency convertibility agreements with Australia and New Zealand.

So instead of having to change yuan into U.S. dollars to trade with Australia and New Zealand, now China can cut U.S. dollars completely out of the process.

But right now there is nothing that really gives the Chinese yuan a significant competitive edge over the U.S. dollar.  If Chinese authorities truly want the yuan to end up replacing the U.S. dollar as the primary reserve currency of the planet, they need to do something that will make the rest of the world want to use it.

And they could do that by backing the yuan with gold.  In fact, there are persistent rumors that China has been busily preparing for that.

For example, the Economic Policy Journal recently pointed out that Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush, is claiming that China has plans to turn the yuan into “a hard, gold-backed currency” that will have a distinct competitive edge over the rapidly depreciating paper currencies that the rest of the globe is currently using…

The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyers of gold, mainly off-market. They want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue.

The recent bilateral currency deals with Australia, France, Russia and Singapore, and many others, reflect this desire to displace the USD as the world’s reserve currency.

It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.

Other analysts are also fully convinced that the goal of the Chinese is a gold-backed yuan.  The following is what money manager Stephen Leeb told King World News recently

Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.

The move in the yuan overnight was one of the most significant upticks I have seen. Like I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that’s over 2,400 tons of gold per year on an annualized basis.

This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn’t just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese.

It’s only a matter of time before the Chinese back the yuan with gold. This will push the yuan front and center as a key element in terms of being part of the world’s reserve currency basket. China gets the message. They are doing whatever it takes to establish their dominance in the world, particularly in the commodity arena. Their currency is flying and they are importing as much gold as they possibly can.

And without a doubt, China has been hoarding massive amounts of gold.  Everyone agrees on that.  But what nobody knows is exactly how much gold China currently has stockpiled, because China is not telling anybody.

One recent estimate put China’s gold reserves at more than 7,000 tons of gold, but it could potentially be far higher than that.  When China does finally tell the rest of us how much gold they have, they will probably be just a move or two away from checkmate.

What we do know is that China is importing absolutely enormous amounts of gold right now even though China is also the number one gold producer on the planet.

According to Reuters, more than 223 tons of gold was imported into China from Hong Kong in March.  That smashed the previous record of 114 tons in December.

Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 is going to absolutely smash what we saw in 2012.

Obviously something is happening.

China is massively hoarding gold at the same time that it is trying to substantially raise the international influence of the yuan.

It doesn’t take a genius to see where all of this is headed.

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy.  Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar.  At that point you could forget about cheap gasoline or cheap Chinese imports.  Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively.  If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living.  Today, most U.S. currency is actually used outside of the United States.  If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.

So keep an eye on China, and look out for any news about the yuan.

It won’t happen next week or next month, but eventually we could see China back the yuan with gold.

When that happens, it is going to be a complete and utter financial disaster for the United States.

 

Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America?

Does China Plan To Establish Chinese Cities And Special Economic Zones All Over America?What in the world is China up to?  Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America.  In some cases, China appears to be attempting to purchase entire communities in one fell swoop.  So why is this happening?  Is this some form of “economic colonization” that is taking place?  Some have speculated that China may be intending to establish “special economic zones” inside the United States modeled after the very successful Chinese city of Shenzhen.  Back in the 1970s, Shenzhen was just a very small fishing village, but now it is a sprawling metropolis of over 14 million people.  Initially, these “special economic zones” were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria and establishing special economic zones in those nations.  So could such a thing actually happen in America?  Well, according to Dr. Jerome Corsi, a plan being pushed by the Chinese Central Bank would set up “development zones” in the United States that would allow China to “establish Chinese-owned businesses and bring in its citizens to the U.S. to work.”  Under the plan, some of the $1.17 trillion that the U.S. owes China would be converted from debt to “equity”.  As a result, “China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss.”  Does all of this sound far-fetched?  Well, it isn’t.  In fact, the economic colonization of America is already far more advanced than most Americans would dare to imagine.

So how in the world did we get to this point?  A few decades ago, the United States was the unchallenged economic powerhouse of the world and China was essentially a third world country.

So what happened?

Well, we entered into a whole bunch of extremely unfavorable “free trade” agreements, and countries such as China began to aggressively use “free trade” as an economic weapon against us.

Over the past decade, we have lost tens of thousands of businesses and millions of jobs to China.  When the final numbers for 2012 come out, our trade deficit with China for the year will be well over 300 billion dollars, and that will be the largest trade deficit that one country has had with another country in the history of the world.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.  That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money.  But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us – at interest.  We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them.  Those that say that the U.S. debt “does not matter” are being incredibly foolish.

So thanks to our massive trade deficit and our exploding national debt, China is systematically getting wealthier and the United States is systematically getting poorer.

And now China is starting to use a lot of that wealth to aggressively expand their power and influence around the globe.

But isn’t it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada.  It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years.  In fact, the Vancouver suburb of Richmond is now approximately half Chinese.  The following is an excerpt from a BBC article

Richmond is North America’s most Asian city – 50% of residents here identify themselves as Chinese. But it’s not just here that the Chinese community in British Columbia (BC) – some 407,000 strong – has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.

A similar thing is happening in many communities along the west coast of the United States.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

But in other areas of the United States, the Chinese are approaching things much more systematically.

For example, as I have written about previously, a Chinese group identified as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the town of Milan, Michigan.  Their stated goal is to build a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other instances, large chunks of real estate in major U.S. cities that are down on their luck are being snapped up by Chinese investors.  Just check out what a Fortune article from a while back says has been happening over in Toledo, Ohio…

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Toledo is being promoted to Chinese investors as a “5-star logistics region“.  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis…

With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.

But some of these deals appear to be about far more than just making “investments”.  According to the Idaho Statesman, a Chinese company known as Sinomach (which is actually controlled by the Chinese government) was actually interested in developing a 50 square mile self-sustaining “technology zone” south of the Boise airport…

A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.

Officials of the China National Machinery Industry Corp. have broached the idea — based on a concept popular in China today — to city and state leaders.

The article suggested that this “technology zone” would be modeled after similar projects that already exist in China, and that Chinese officials were conducting similar negotiations with other U.S. states as well…

Sinomach is not looking only at Idaho.

The company sent delegations to Ohio, Michigan and Pennsylvania this year to talk about setting up research and development bases and industrial parks. It has an interest in electric transmission projects and alternative energy as well.

The technology zone proposal follows a model of science, technology and industrial parks in China — often fully contained cities with all services included.

Thankfully the deal in Idaho appears to be stalled for now, but could we soon see China establish special economic zones in other communities all around America?

The Chinese certainly do seem to be laying the groundwork for something.  They have been voraciously gobbling up important infrastructure all over the country.  The following comes from a recent American Free Press article

In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.

And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors. In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.

Does it make sense for the Chinese to own some of our most important ports?

Isn’t there a national security risk?

Sadly, there isn’t much of anything that our politicians won’t sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

But it is not only just land and infrastructure that the Chinese have been buying up.

They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.

The first is the China National Offshore Oil Corporation (CNOOC).  According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…

CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

The second is Sinopec Corporation.  Sinopec Group is the largest shareholder (approx. 75% ownership) in Sinopec Corporation.  And as the Sinopec website tells us, Sinopec Group is fully owned by the Chinese government…

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.

So whenever you see CNOOC or Sinopec, you can replace those names with the Chinese government.  The Chinese government essentially runs both of those companies.

And as you can see from the following list compiled by the Wall Street Journal, those two companies have been extremely aggressive in buying up rights to oil and natural gas all over the nation…

Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.

Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.

Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.

Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.

Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.

Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.

Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.

Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.

So why is the U.S. government allowing this?

That is a very good question.

For a nation that purports to be pursuing “energy independence”, we sure do have a funny way of going about things.

Unfortunately, the sad truth is that China is absolutely mopping the floor with the United States on the global economic stage.  China is rising and America is in an advanced state of decline.  Global economic power has shifted dramatically and most Americans still don’t understand what has happened.

The following are 44 more signs of how dominant the economy of China has become…

1. A Chinese firm recently made a $2.6 billion offer to buy movie theater chain AMC.

2. A different Chinese firm made a $1.8 billion offer to buy aircraft maker Hawker Beechcraft.

3. In December it was announced that a Chinese group would be purchasing AIG’s plane leasing unit for $4.23 billion.

4. It was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.

5. A $190 million bridge project up in Alaska was awarded to a Chinese firm.

6. A $400 million contract to renovate the Alexander Hamilton bridge in New York was awarded to a Chinese firm.

7. A $7.2 billion contract to construct a new bridge between San Francisco and Oakland was awarded to a Chinese firm.

8. The uniforms for the U.S. Olympic team were made in China.

9. 85 percent of all artificial Christmas trees are made in China.

10. The new World Trade Center tower is going to include glass that has been imported from China.

11. The new Martin Luther King memorial on the National Mall was made in China.

12. In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollars on products made in China.

13. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

14. According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

15. The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

16. The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

17. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

18. Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

19. According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

20. Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

21. In 2010, China produced more than twice as many automobiles as the United States did.

22. Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

23. After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.

24. Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

25. The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

26. China’s number one export to the U.S. is computer equipment.

27. The number one U.S. export to China is “scrap and trash”.

28. The U.S. trade deficit with China is now more than 28 times larger than it was back in 1990.

29. Back in 1985, the U.S. trade deficit with China was just 6 million dollars for the entire year.  For the month of November 2012 alone, the U.S. trade deficit with China was 28.9 billion dollars.

30. China now consumes more energy than the United States does.

31. China is now the leading manufacturer of goods in the entire world.

32. China uses more cement than the rest of the world combined.

33. China is now the number one producer of wind and solar power on the entire globe.

34. Today, China produces nearly twice as much beer as the United States does.

35. Right now, China is producing more than three times as much coal as the United States does.

36. China now produces 11 times as much steel as the United States does.

37. China produces more than 90 percent of the global supply of rare earth elements.

38. China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

39. A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.

40. 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

41. China now awards more doctoral degrees in engineering each year than the United States does.

42. According to one study, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.

43. According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.

44. Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

Without the “globalization” of the world economy, none of this would have ever happened.  But instead of admitting our mistakes and fixing them, our politicians continue to press for even more “free trade” and even more integration with communist nations such as China.

In fact, according to Dr. Jerome Corsi, the U.S. government has already set up 257 “foreign trade zones” all over America.  These “foreign trade zones” are apparently given “special U.S. customs treatment” and are used to promote “free trade”…

Corsi noted that the U.S. government has created 257 foreign trade zones, or FTZs, throughout the United States, designed to extend special U.S. customs treatment to U.S. plants engaged in international-trade-related activities.

The FTZs tend to be located near airports, with easy access into the continental NAFTA and WTO multi-modal transportation systems being created to move free-trade goods cheaply, quickly and efficiently throughout the continent of North America.

“There is nothing in the U.S. government’s description of FTZs that would prevent a foreign government, like China, from operating a shell U.S. company that is in reality owned and financed by the Chinese government and operated through a Chinese government-owned corporation,” Corsi wrote.

Sadly, we are probably going to see a whole lot more of this in the years ahead.

According to Corsi, a professor of economics at Tsighua University in Beijing named Yu Qiao has suggested the following plan as a way to transform the debt that the United States owes China into something more “tangible”…

  1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
  2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
  3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
  4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.

Apparently the Bank of China really likes this plan and would like to see something like this implemented.

In the years ahead, perhaps many of you will end up working in a “special economic zone” for a Chinese company on a project that is being financially guaranteed by the U.S. government.

If that sounds like a form of slavery to you, the truth is that you are probably not too far off the mark.

The borrower is the servant of the lender, and we should have never allowed ourselves to get into so much debt.

Now we will pay the price.

To get an idea of how much the world has changed in recent years, just check out this incredible photo which contrasts the decline of Detroit over the years with the amazing rise of Shanghai, China.

Things did not have to turn out this way.  Unfortunately, we made decades of incredibly foolish decisions and we wrecked the greatest economic machine that the world has ever seen.

Now the future for America looks really bleak.

Or could it be that I am being too pessimistic?  Please feel free to post a comment with your thoughts below…

The United States - A Colony Of China? - Photo by DrRandomFactor

47 Signs That China Is Absolutely Destroying America On The Global Economic Stage

Have you ever watched a football game or a basketball game where one team dominates the other team so badly that calling it a “blowout” would be a huge understatement?  Well, that is what China is doing to the United States.  China is absolutely destroying America on the global economic stage.  Once upon a time, the Chinese economy was a joke and the U.S. economy was the most powerful the world had ever seen.  But over the past couple of decades the U.S. economy has decayed and declined while the Chinese economy has skyrocketed.  Today, China makes more steel, more automobiles, more beer, more cotton, more coal and more solar panels than we do.  China has the fastest train in the world, the fastest computer in the world and they export twice as much high-tech equipment as we do.  In 2011, our trade deficit with China was the largest trade deficit that one nation has had with another nation in the history of the world, and China has now accumulated more than 3 trillion dollars in foreign currency reserves.  Every single day, we lose more jobs, more businesses and more of our national wealth to China.  In technical economic terms, China has “taken us out behind the woodshed” and has beaten the living daylights out of us.  Unfortunately, most Americans are so addicted to entertainment that they don’t even realize what is happening.

If you do not believe that China is wiping the floor with America in front of the rest of the world, just keep reading.  The following are 47 signs that China is absolutely destroying America on the global economic stage….

#1 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Today, China’s high-tech exports are more than twice the size of U.S. high-tech exports.

#2 America has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

#3 The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

#4 In 2010, China produced more than twice as many automobiles as the United States did.

#5 In 2010, China produced 627 million metric tons of steel.  The United States only produced 80 million metric tons of steel.

#6 In 2010, China produced 7.3 million metric tons of cotton.  The United States only produced 3.4 million metric tons of cotton.

#7 China produced 19.8 percent of all the goods consumed in the world during 2010.  The United States only produced 19.4 percent.

#8 During 2010, we spent $365 billion on goods and services from China while they only spent $92 billion on goods and services from us.

#9 In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  The final U.S. trade deficit with China for 2011 will be very close to 300 billion dollars.  That will be the largest trade deficit that one nation has had with another nation in the history of the world.

#10 The U.S. trade deficit with China is now 28 times larger than it was back in 1990.

#11 Since China entered the WTO in 2001, the U.S. trade deficit with China has grown by an average of 18% per year.

#12 According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China.

#13 According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

#14 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#15 The United States had been the leading consumer of energy on the globe for about 100 years, but during the summer of 2010 China took over the number one spot.

#16 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

#17 China is also expected to soon become the global leader in patent filings.

#18 In 2009, the United States ranked dead last of the 40 nations examined by the Information Technology & Innovation Foundation when it came to “change” in “global innovation-based competitiveness” over the previous ten years.

#19 China now awards more doctoral degrees in engineering each year than the United States does.

#20 China now possesses the fastest supercomputer on the entire planet.

#21 China now has the world’s fastest train and the world’s most extensive high-speed rail network.

#22 The construction of the new $200 million African Union headquarters was funded by China.

#23 Today, China produces nearly twice as much beer as the United States does.

#24 85 percent of all artificial Christmas trees are made in China.

#25 Amazingly, China now consumes 53 percent of the world’s cement.

#26 There are more pigs in China than in the next 43 pork producing nations combined.

#27 China is now the number one producer of wind and solar power on the entire globe.

#28 Chinese solar panel production was about 50 times larger in 2010 than it was in 2005.

#29 Right now, China is producing more than three times as much coal as the United States does.

#30 China controls over 90 percent of the total global supply of rare earth elements.

#31 China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

#32 According to author Clyde Prestowitz, China’s number one export to the U.S. is computer equipment.  According to an article in U.S. News & World Report, during 2010 the number one U.S. export to China was “scrap and trash”.

#33 The United States has lost an average of 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.

#34 Back in the year 2000, more than 20 percent of all jobs in America were manufacturing jobs.  Today, only about 5 percent of all jobs in America are manufacturing jobs.

#35 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#36 The average household debt load in the United States is 136% of average household income.  In China, the average household debt load is 17% of average household income.

#37 The new World Trade Center tower is going to be made with imported glass from China.

#38 The new MLK memorial on the National Mall was made in China.

#39 A Washington Post/ABC News poll conducted a while back found that 61 percent of all Americans consider China to be a threat to our jobs and economic security.

#40 According to U.S. Representative Betty Sutton, an average of 23 manufacturing facilities a day closed down in the United States during 2010.

#41 Overall, more than 56,000 manufacturing facilities in the United States have shut down since 2001.

#42 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent out of the country over the next two decades.

#43 Over the past several decades, China has been able to accumulate approximately 3 trillion dollars in foreign currency reserves, and the U.S. government now owes China close to 1.5 trillion dollars.

#44 According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.

#45 According to one prominent economist, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.

#46 According to Stanford University economics professor Ed Lazear, if the U.S. economy and the Chinese economy continue to grow at current rates, the average Chinese citizen will be wealthier than the average American citizen in just 30 years.

#47 Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

If the global economy was a game, America would be losing very badly and China would have all the momentum.

Unfortunately, the global economy is not a game.  Very real businesses and very real jobs are affected by this every single day.

Barack Obama keeps talking about how “the economy is improving“, but the reality is that we have never even gotten close to where we were back before the financial crisis of 2008.

The following chart (which I pulled off a Fed website today) shows the average duration of unemployment in America.  Does this look like an economic recovery to you?….

The Obama administration tells us that the official unemployment rate is only 8.5 percent, but that is a joke.  Even the Congressional Budget Office admits that the official unemployment rate should actually be somewhere up around 10 percent.

But the real story is the number of long-term unemployed workers we have in America today.

According to the Hamilton Project, approximately 53 percent of all unemployed workers in the state of Florida were out of work for more than six months during 2011.

But Barack Obama seems absolutely amazed that there are still so many unemployed people out there during his “economic recovery”.   Just check out the following interaction that took place between Obama and one concerned wife during a recent appearance by Obama on Google+….

“Can I ask you what kind of engineer your husband is?,” Obama said to the wife of the unemployed engineer.

“He’s a semiconductor engineer,” she responded.

“It is interesting to me — and I meant what I said if your send me your husband’s resume, I’d be interested in finding out exactly what’s happening right there because the word that we’re getting is that somebody in that type of high-tech field, that kind of engineer, should be able to find something right away.”

Obama does not realize that it is not so simple to “find something right away” in this economy.

We have been shipping high-tech jobs overseas at a blistering pace.  The jobs simply are not there anymore.

In Europe, unemployment is even worse.  Just check out this chart which shows what has been happening to youth unemployment in Europe recently.

In both the United States and Europe, a great disconnect has taken place.  Just because big corporations in the U.S. and in Europe are doing well, that does not mean that they are going to provide good jobs for workers in the U.S. and in Europe.

These days, it is way too easy for big corporations to ship jobs over to places like China where it is perfectly legal to pay workers slave labor wages.

So unless something changes, that means that from now on there will be chronic structural unemployment problems in the United States.

That also means that the number of Americans dependent on the government is going to continue to increase.

And unfortunately, there are signs that the economy is about to experience another downturn.  Consumer confidence in the U.S. is falling once again.  The Baltic Dry Index, which is often used as a measure of the health of the world economy, has fallen more than 60 percent since October.

Perhaps most importantly of all, Europe is heading into a recession and several European nations are already experiencing depression-like conditions.

Considering the fact that half of all global trade involves Europe in some manner, that is not a good thing for us.

So if you have a job right now, you might want to hold on to it tightly.  Jobs are precious commodities at the moment, and they are going to become even more scarce in the years ahead.

35 Facts About The Gutting Of America’s Industrial Might That Should Make You Very Angry

Did you know that an average of 23 manufacturing facilities were shut down every single day in the United States last year?  As World War II ended, the United States emerged as the greatest industrial power that the world has ever seen.  But now America’s industrial might is being gutted like a fish and both political parties seem totally unconcerned.  Yes, we will always need trading relationships that are fair and balanced with other countries that have economic systems that are similar to our own.  However, the truth is that most of our trading relationships are neither “fair” nor balanced.  For example, China manipulates currency rates so that Chinese products are much cheaper than they should be, they brazenly steal our technology and we let them get away with it, they deeply subsidize their most important industries and they exploit their citizens by allowing them to be paid slave labor wages.  How in the world does that resemble the “free market” at work?  Predatory nations such as China do everything that they can to distort the free market.  So why in the world would any rational economist ever recommend that we should keep trading with other countries that are cheating us blind?  After you read the facts in this article about the gutting of America’s industrial might, hopefully you will get very angry.  We need the American people to start getting very upset about these very important issues.

Both major political parties promised us that globalization would be wonderful for the U.S. economy.  Well, in the first decade of this century less net jobs were created than in any other decade since the Great Depression.

The “free trade” polices of the globalists have been an abysmal failure.  Tens of thousands of factories, millions of jobs, and hundreds of billions of dollars of our national wealth have gone to countries that engage in predatory trade practices and that exploit slave labor pools.

How in the world are American workers supposed to compete against workers that make less than a dollar an hour (with no benefits) on the other side of the globe?

If you support the version of “free trade” that most of our politicians are promoting, then you are supporting the one world economic system that the global elite are trying to establish.  In this one world economic system, American workers will increasingly be forced to compete for jobs with the cheapest labor on the planet.  This will continue to force the standard of living of American workers way, way down and it will continue to absolutely destroy the middle class.

The following are 35 facts about the gutting of America’s industrial might that should make you very angry….

#1 According to U.S. Representative Betty Sutton, America has lost an average of 15 manufacturing facilities a day over the last 10 years.

#2 Sadly, it looks like this trend is picking up momentum.  During 2010, an average of 23 manufacturing facilities a day were shut down in the United States.

#3 Since 2001, the U.S. has lost a total of more than 56,000 manufacturing facilities.

#4 According to the Economic Policy Institute, the U.S. economy loses approximately 9,000 jobs for every $1 billion of goods that are imported from overseas.

#5 The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.

#6 Back in 1979, there were 19.5 million manufacturing jobs in the United States.  Today, there are 11.6 million.  That represents a decline of 40 percent during a time period when our overall population experienced tremendous growth.

#7 Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

#8 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of all jobs in the United States are manufacturing jobs.

#9 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#10 The Economic Policy Institute says that since 2001 America has lost approximately 2.8 million jobs due to our trade deficit with China alone.

#11 All over the United States, road and bridge projects are being outsourced to Chinese firms.  Just check out the following excerpt from a recent ABC News article….

In New York there is a $400 million renovation project on the Alexander Hamilton Bridge.

In California, there is a $7.2 billion project to rebuild the Bay Bridge connecting San Francisco and Oakland.

In Alaska, there is a proposal for a $190 million bridge project.

These projects sound like steps in the right direction, but much of the work is going to Chinese government-owned firms.

“When we subsidize jobs in China, we’re not creating any wealth in the United States,” said Scott Paul, executive director for the Alliance for American Manufacturing.

#12 If you can believe it, the United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#13 The U.S. trade deficit with China rose to an all-time record of 273.1 billion dollars in 2010.  This is the largest trade deficit that one nation has had with another nation in the history of the world.

#14 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#15 The new World Trade Center tower is going to be made with imported glass from China and imported steel from Germany.

#16 The new MLK memorial on the National Mall was made in China.

#17 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

#18 In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

#19 Even in high technology products we are being destroyed.  In 2002, the United States had a trade deficit in “advanced technology products” of $16 billion with the rest of the world.  In 2010, that number skyrocketed to $82 billion.

#20 China has now become the world’s largest exporter of high technology products.

#21 Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

#22 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.

#23 In 2008, 1.2 billion cellphones were sold worldwide.  So how many of them were manufactured inside the United States?  Zero.

#24 The United States now has 10 percent fewer “middle class jobs” than it did just ten years ago.

#25 Today, American workers are bringing home a much smaller share of economic pie.  Over the past decade, the ratio of wages to GDP has been declining very steadily.

#26 Now that millions of our jobs have been exported, there aren’t nearly enough jobs left for all of us.  Right now, the average amount of time that a worker stays unemployed in the United States is approximately 39 weeks.

#27 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#28 If you gathered together all of the workers that are “officially” unemployed in the United States today, they would constitute the 68th largest country in the world.

#29 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#30 As the number of good paying jobs declines, America’s middle class is rapidly shrinking.  In 1970, 65 percent of all Americans lived in “middle class neighborhoods”.  By 2007, only 44 percent of all Americans lived in “middle class neighborhoods”.

#31 In the United States today, corporate profits are at a record high, and yet employment numbers have still not rebounded.  Obviously something is structurally wrong.

#32 The Obama administration says that there are certain things that “we don’t want to make in America” anymore.  If you don’t believe this, just check out what U.S. Trade Representative Ron Kirk recently told Tim Robertson of the Huffington Post about the Obama administration’s attitude toward keeping manufacturing jobs in America….

Let’s increase our competitiveness… the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don’t want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don’t want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure.

#33 Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, has shipped tens of thousands of good jobs out of the United States.

#34 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades.

#35 One recent poll found that 41 percent of all Americans believe that “the American Dream has been lost”.

Yes, it is fun to go out and fill up our shopping carts with “cheap products” from the other side of the world, but when we do that it destroys our jobs, our businesses and our communities.

Our addiction to cheap foreign products is incredibly self-destructive.  Essentially what we are doing is that we are ripping apart pieces of our own home and throwing them into the fire in an attempt to keep it going.  Eventually we will cannibalize our entire home.

And we never really think about what it is like for the slave laborers that make all these cheap products for us.  The following is from an article in the Telegraph about what conditions at one major Chinese manufacturing facility are like….

So far, at least 16 people have jumped from high buildings at the factory so far this year, with 12 deaths. A further 20 people were stopped by the company before they could attempt to kill themselves.

The hysteria at Longhua, where between 300,000 and 400,000 employees eat, work and sleep, has grown to such a pitch that workers have twisted Foxconn’s Chinese name so that it now sounds like: “Run to your Death”.

If we stay on this current path, even more of our formerly great manufacturing cities will turn into post-industrial hellholes.

Once upon a time, I also bought the “free trade” propaganda hook, line and sinker.  But then I opened up my mind and I learned the truth.

This nation is losing jobs, factories and wealth at a pace that is almost unbelievable.

Something desperately needs to be done.

Is there anyone out there that is willing to defend the emerging one world economic system that is stealing our jobs and killing the middle class?

If so, I challenge you to take your best shot.  Leave a comment below and explain to the rest of us why we are wrong.

We need to debate these issues because the myth of “free trade” is absolutely killing us.

Please wake up and get angry about these issues America.

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