China and Our Infrastructure

The leaders of China want to turn some of the debt that the US owes China into an investment in US infrastructure. They have said that they believe updating our infrastructure will improve our productivity and inspire a rise in our economic growth. They say that this can help spur global economic growth. They have expressed a similar desire to improve infrastructure in Great Britain.
It is clear that our infrastructure needs to be tackled. The demands on a system that date back to the 50’s and 60’s are apparent, especially to commuters near large cities. Highways are crowded with bumper to bumper traffic. Commute times are unpredictable and much slower than the distance should dictate. Public transportation is often late and gets stalled while passenger trains wait to find a second track around slow freight trains. According to The Economist, America’s transportation systems are ranked 23rd in the world. Ouch!
But the idea of letting China invest in our infrastructure raises a lot of questions. One question is, how do you translate debt into investment? It sounds like you are just doubling the debt. If we owe money to China, let’s say $2 billion and China decides to invest $2 billion in American infrastructure, don’t we then owe them $4 billion? Investments imply profits. How does China stand to profit from paying for America’s infrastructure improvements? Will Chinese workers do the work? Will the materials for the improvements come from Chinese factories? How will this help our workers? If American workers do the building how does China profit? Are they thinking about the big economic picture, one that says keeping the American economy healthy is good for Chinese business and global business? The Daily Feed at Minyanville.com quoting an article from People’s Daily Online suggests that “[t]he country may be using its economic power to create the impression that it can “save the world economy.” Does it turn America into a third world economy? Will China own the infrastructure it builds? Will China end up owning huge swaths of America? This seems like a pricey way to “repay” our debt. It’s tempting because we can see the benefits of streamlining our infrastructure, but is this the way we want to go? It may be too “expensive” in ways that are not at all financial.
Chen, the Commerce minister of China, said in an Associated Press article that “Beijing wants to see the Chinese and U.S. cooperate more closely on clean energy, environmental and energy-saving technology, information technology, biotechnology, pharmaceuticals and medical devices.” Is this just double-speak for a desire on China’s part to rip off more of America’s successful innovations.
I believe, as you may already know, that a global economy is inevitable. Jets take everyone everywhere. Computers communicate around the world with voice, text, and pictures. They allow for almost instant two-way communication. We can’t stop globalization unless we get rid of jets and computers, and probably TV and telephones. It should not really be a bad thing to have a world where standard of living discrepancies are less extreme and the market place is expanded. There are dangers, however, and we all see them and fear them. Something could go wrong and a country like China could start to think about world domination. How do we grow a global economy while holding onto our hegemony and discouraging imperialism in emerging powers? Keeping the balance of power requires careful decision-making. Given all this, it may be too risky to let China get its hands on our infrastructure, no matter how tempting it seems.

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