I.O.U.S.A - Addison Wiggin [34]
do not think that ’ s good over time. ” — WARREN BUFFETT
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64 The
Mission
This is why the U.S. trade defi cit remains high. The United States is consuming more than we are producing. The country ’ s dependence on foreign oil, automotive parts, and cheap consumer products from China accounts for almost the entire defi cit.
Welcome to Thriftville
Although the United States is China ’ s largest export market, it is importing far more Chinese products than it is exporting to the Far East. In order to fuel America ’ s consumption, the Chinese are the second - largest holders of U.S. Treasury Securities after Japan. In less than 10 years, China ’ s ownership of U.S. securities has gone from around $ 50 billion to more than $ 500 billion. And the economic ties between the two countries are getting tighter every day. (See Figure 4.1. ) In the past few years, China has become the country to watch. In Jonathan Fenby ’ s book Modern China: The Fall and Rise of a Great Power, 1850 to Present (Harper Perennial, 2009), he points out that “ in 2007, for the fi rst time since the 1930s, another country contributed more to global growth than the United States. A Gallup poll in early 2008 reported that 40 percent of Americans considered the [Peoples ’ Republic of China] to be the world ’ s leading economic power, while only 33 percent chose their own country. ”
And who could blame them? China has been the world ’ s leading producer of commodities such as steel, copper, aluminum, and coal for years. The country has edged out Japan as the second - largest importer of petroleum — and this from a country whose vast majority, just a decade ago, didn ’ t even own cars!
The Chinese manufacturing sector is putting the United States to shame — and in 2007, the country had the largest trade surplus in the world (the United States ranked dead last).
Of course, the idea of China “ taking over the world ” has provided those in the fi nancial media with plenty of fodder over the past three years or so. One such writer is James Areddy, c04.indd 64
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rade Commission.
cit Chart
Trade Defi
4.1
U.S. International T
Figure
Source:
65
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66 The
Mission
who was part of the Pulitzer Prize – winning team at the Wall Street Journal that chronicled the effects of China
’ s rush to
capitalism.
“ China ’ s probably the biggest global economic story that there is going right now. It affects everything from big business, Wall Street, to down - home America, ” Mr. Areddy told us in his offi ce in Shanghai.
We traveled to Shanghai, China, to get a fi rsthand glimpse of this economic boom. The country was bounding with energy. As we walked through the streets, we got the feeling this is what it would have been like to witness the United States ’ Industrial Revolution. Around every corner was a construction crane, putting in new skyscrapers.
While we were in China, we were introduced to one gen-tleman, David Chia, who embodied what most would consider the American entrepreneurial spirit.
“ I have a mission, ” he told us, while we drove to visit the worksite of his new factory. “ We want to make a brand name, we want to make a good factory. We want to make some nice
We noticed
something that is products. We want to catch up with somebody in front of us.
uniquely Chinese: We know what our future is, and frankly, I never imagined By and large, they
I could own such a land and make such a big building. ”
save their money —
While the Chinese may embody the pursuit of the even if it means
American Dream, we noticed something that is uniquely living with a sort of
frugality that would Chinese: By and large, they save their money
— even if it
never cross most
means living with a sort of frugality that would never cross Americans ’ minds.
most Americans ’ minds.
While touring Mr. Chia ’ s existing factory,