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A friend writes:

A few notes on the implications of China displacing the United States as the world’s number one country over the course of the 21st Century:

1. The Chinese business cycle will become the world’s business cycle (replacing the U.S.). It will be a huge shock the first time a recession hits the U.S. because China goes into a downturn. How might this work? A recession in China slashes Chinese demand for imports. Some of those imports are from the U.S. Others are from other countries, that in turn buy less from the U.S.

However, all of this is a bit indirect. The more likely (and powerful) mechanism is that a financial panic starts in China and spreads. There is plenty of history showing that financial panics typically don’t stop at national borders. The East Asian crash of 1997 was one example. The Great Recession was/is another. By contrast, the Argentine Great Depression of 2001-2003 was mostly limited to Argentina (Argentina is not a global economic power). Note that even in the 19th century, economic crises swiftly spread around the world.

2. China’s incessant demand for commodities drives global commodity prices up, and China’s exports drive the prices for manufactured goods down. Of course, this is already happening. Given that the U.S. is a net importer of commodities (by far) and an exporter of manufactured goods this is bad for U.S. terms of trade. Basically, China is a direct competitor to the U.S. in world trade and China’s growth tends to impoverish the U.S. Note that many economists already believe that the gains from cheap imports from China, have been more than offset by China’s impact on commodity prices (food and fuel).

Tangentially, does it seem like restaurant prices are going through the roof? A Cobb or chef salad at a diner now seems to start at $13.95. And how much am I supposed to be tipping these days?

3. At some point, China may become a political model for countries around the world. Given that China is a one-party state with a mixed economy, this will pain all sorts of folks on the left (and the right). Basically, the western political and economic model will lose credibility in favor of China’s. Of course, this is already happening. Notably, the ability of the West to influence the third-world, has substantially declined because of the willingness of China to provide political and economic support without the strings demanded by Europe and the U.S.A.

An NYT op-ed writer is already denouncing India’s new prime minister Modi for showing an interest in how things are done in China.

4. China may emerge as a dominant military power. History says that military power cannot be separated from real economic power. The dominant military power of each modern period has been the dominant manufacturing power. That meant the UK until around 1900 and the U.S. until around 2000. China is the leading manufacturing power of the world today. The gap separating China and the U.S. will only grow (much) larger over time. Manufacturing is crucial for war for two reasons. First, manufacturing provides the national wealth required to pay for war. Second, manufacturing (the manufacturing infrastructure) provides the means for actually producing the weapons needed for war. Note that services are not a substitute for manufacturing in this context. Services are not (typically) tradable and don’t provide the convertible currency income needed to fight international wars.

More specifically, the U.S. may end up fighting an aircraft carrier war with China at some point in the future. History suggests that the U.S. Navy could lose just quickly as Britain did in WWII. On December 10th, 1941 the Japanese sunk the Prince of Wales and Repulse in just a few hours ending British naval power in the Pacific. Conversely, the U.S. ended Japanese naval power with the destruction of Kito Budai (the main Japanese fleet) in the Battle of Midway. Like it or not, America’s carrier fleet could be destroyed just as quickly and just as decisively [and without nuclear weapons]. In one day (less), both the reality and perception of American global power could essentially evaporate.

5. China may become a dominant setter of technology standards. After all, if China is the dominant producer and consumer of some technology, why wouldn’t China’s standard(s) become the world standard(s). Of course, the dissemination of technology standards is never that simple. The rest of the world is metric, but that hasn’t driven metrification in the U.S. Conversely, the U.S. uses 120 volts, 60 cycle power. Most of the rest of the world does not. Even when the U.S. electric utility business dwarfed any other country, the ROW (Rest Of World) didn’t rush to embrace U.S. standards (120 volts is too low, 60 cycle is correct). All that having been said, China may become influential with respect to new technology standards even if the old ones don’t change much.

6. China may become a dominant source of technology innovations. That hasn’t happened so far. Only a handful of new technologies can be said to have been “invented in China”. However, this is to be expected. The early years of U.S. economic growth were mostly imitative. Indeed, the U.S. was notorious for violating foreign copyrights and patents and refusing to pay for the privilege (Dickens hated the U.S. for years). Japan was widely derided for years (decades) as a producer of cheap copies of American goods. When that stopped being the most profitable model for Japanese firms, they (Japanese manufacturers) invested heavily and successfully in innovative products and moved upscale. The same process can be observed in South Korea and Taiwan now. China will inevitably follow.

The notion that America has some inevitable advantage in “creativity” is popular, but I have a hard time even defining “creativity,” so I don’t put all that much faith in this theory of American dominance.

7. China will almost certainly become the dominant financial power in the world. China is already the world’s largest creditor and holder of foreign exchange reserves ($3.95 trillion). The U.S. is the world’s largest debtor. It’s obvious that creditors gain power and debtors decline. Sadly, the “supply-side” right is so obsessed with tax cuts for the rich and “free trade” (unlimited outsourcing) that they deny what’s self-evident to everyone else. Of course, the welfare-state left is just as unwilling to admit that debt and deficits aren’t free and hobble a nation over time.

8. More subtly, the Chinese language and culture may gain influence worldwide. At some point, Chinese authors, playwrights, movie producers, musicians, and artists may become highly influential globally. Chinese may become the mandatory second language for everyone (as English is now). In my view, the Chinese language is likely to gain global market share (for economic reasons) considerably faster than Chinese artists and musicians.

“Mandarin immersion” grade schools are popular among SWPLs since they act as NAM Repellents, but I haven’t seen much evidence that white people are actually learning to speak Chinese. For example, in 2013, only 520 high school students in America who say they didn’t grow up speaking Chinese got a 5 on the Chinese Language and Culture Advanced Placement test, which is higher than I would have thought, but still not much.

It remains to be seen if China can produce books, movies, songs, etc. that the rest of the world yearns for. Conversely, their no doubt at all about China’s ability to produce globally competitive goods.

A decade ago it looked like the Chinese would become competitive in movies. Zhang Yimou’s film “Hero” was spectacular, but the Chinese film industry hasn’t made much of an impression since.

Lately, Hollywood blockbusters have routinely included a segment filmed in China (with perhaps a shout-out to Russia in the plot), because China and Russia are developing American-style movie-going cultures where youths go to opening weekend movies. For example, Transformers: Age of Extinction opened this weekend with $100 million in America and $92 million in China (with $22 million in Russia). (Here’s my 2011 review of the previous Transformers movie.)

So, Hollywood’s strategy is simply to assimilate China into the Blockbuster Borg. So far, it seems like it’s working to head off the Chinese threat.

The American college admissions system is an important leverage point. The Chinese crave the status of American university degrees, which allows Americans to encourage the Chinese to learn to jump through the various SWPLifying hoops they choose to erect. Or they can just accept the Chinese money and test scores, no questions asked.

• Category: Economics, Foreign Policy • Tags: China 
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India has just had a remarkable election. An Italian lady led India’s left-of-center Congress Party to an upset triumph over the Hindu nationalist BJP, which, in a curious echo of the GOP’s failure to adopt the Sailer Strategy, had apparently been neglecting its base. [See Steve Sailer's blog: Scroll down.] This has reminded Americans of two things:

  • India, with its billion people and awakening economy, is awfully important.
  • We don’t know much about it.

With the help of my many South Asian readers, I’ve been trying tobrush up on India for the last five years, so let me share a few perspectives that you might not hear elsewhere.

It’s helpful to compare India to the other giga-country, China, which is India’s opposite in so many ways. China isn’t as simple as it looks, but it’s far less convoluted than India.

China’s ancient history is superbly documented and fairly simple, in its repetitive dynastic cycles of consolidation, decline, and chaos. But don’t bother trying to learn India’s history. It would be insanelycomplicated … if anyone had bothered to write it down while it was happening.

The Chinese have seen themselves as one nation, with one rightfulruler, going all the way back to the first emperor 2200 years ago. But no Indian ever thought of India as a “nation” until Gandhi visited South Africa at the end of the nineteenth century and found himself classified as an Indian.

Before then, India seemed to Indians not like a country or even asubcontinent, but like a world. The opening pages of Kipling’s Kim spectacularly depict India’s kaleidoscopic variety.

Ethnically, around 94 percent of the population of China is plain Han Chinese. Racially, China’s a little more complex, with northern and southern Chinese being somewhat different. L.L. Cavalli-Sforza, Stanford’s great population geneticist, has hypothesized that the north was settled by early modern humans coming out-of-Africa who took the northern route around the great mountains of central Asia. The ancestors of southern Chinese took the southern route along theIndian Ocean, and the two groups met up around what’s now Shanghai.

In any case, the two Chinese populations remained fairly similar inlooks. Moreover, the civilization invented by the northerners proved highly attractive to the southerners, who often peacefully assimilated.

India and its satellite countries share a long border with China. But the Himalayas are second only to the Sahara as a forbidding land barrier. Thus the sharpest racial divide on earth is found along the southern edge of the Himalayas. Mongoloid Tibetan Buddhists, such as the famous Sherpas of the Everest region, are found at high altitudes. Caucasoid Indo-European Hindus are found directly below them, in the warm lowlands where the East Asians won’t venture for fear of malaria, for which they lack resistance.

Indian immigrant businessmen successfully petitioned the Reagan Administration back in 1982 to be lumped in with East Asians so they could get minority business development loans. But in fact India is more or less Caucasian. Genetically, Cavalli-Sforza found that Indians are about three times closer to West Europeans than to East Asians.

Still, making racial or ethnic generalizations about South Asia can be a mug’s game. It is the most anthropologically complex region on earth. Arguably, its democratic stability rests in part on its infinite divisions. Indians couldn’t arrange to hold a civil war because they couldn’t coalesce into just two sides.

There appear to have been three major waves populating India.

  • Several tens of thousands of years ago, an early out-of-Africawave left behind a substratum of modern hunter-gatherer tribes, and many of the 160 million Untouchables, at the bottom of the Hindu pyramid. They come in a variety of looks,from Caucasian to Negrito to Australoid. Thus they are hard to generalize about.
  • The second wave seems to have consisted of early Middle Eastern farmers. They now speak Dravidian languages and aremost concentrated in the South. These typically small and dark Caucasians were largely ignored by the rest of the world—until the last two decades when word of their upper castes’ impressive skills at math, science, and technology caught the attention of the business world. The center of India’s burgeoning software industry is Bangalore in the southernhighlands.
  • The last and most famous of the three waves were the Indo-European-speaking Aryan invaders—tall, light-skinned Caucasians from somewhere to the northwest. They introduced Hinduism and its accompanying system of social stratification: four major castes (plus the poor Untouchables), along with countless occupation-based inbreeding subcastes, allfurther divided by region.

The Aryan conquests are still clearly visible in skin color, in two dimensions: geographically and socially. Northerners and the upper castes tend to be fairer. And despite the impressive economic growth among some of the darker southerners, the northerners remain the social ideal. Bollywood movie stars are about as fair and tall as Greeks. Indian marriage ads are very choosy about how dark a prospective mate can be.

Although nominally outlawed a half century ago, the continuingoppression of the Untouchables in rural India may be the most brutal case of racial discrimination in today’s world, outside the Sudan. The Indian government runs a massive affirmative action program for Untouchables and is accordingly roundly criticized by Thomas Sowell inhis new book Affirmative Action Around the World. The program was originally supposed to be limited to 20 years duration and only to the lowest castes. But it has since become—surprise!—permanent and open to many higher up the social scale.

On the other hand, it’s not clear what else could be done to deal with diversity so severe.

The average IQ of India and China is crucial to the future of the world. But the question is far from settled. Richard Lynn and Tatu Vanhanen’s IQ and the Wealth of Nations found three IQ studies of China, which averaged out to 100 on a scale where the U.S. average is 98. As I’ve tried to emphasize, single-country averages from that important book should be taken with a grain of salt, but regional averages are more reliable. The more advanced and better-documented countries bordering China feature even higher average IQs. So the future looksbright for China.

In contrast, Lynn and Vanhanen found four studies of Indian IQ thataverage out to only 81.

Anecdotal evidence suggests that the variance in IQ is greater in India than in China. There may be more geniuses in India than in China but the average level of competence seems lower.

However, putting together a nationally-representative sample is harder in India than anywhere else on Earth. The caste system, by discouraging intermarriage, has in effect subdivided the Indian people into an incredible number of micro-races. In India, according to Cavalli-Sforza, “The total number of endogamous communities today is around 43,000…”

So I would keep an open mind on just what the IQ of India is. And, of course, better nutrition, health care, education, and more outbreeding could all work to raise it.

China focuses on giving the masses a solid basic education that prepares them for manufacturing jobs. The Chinese are building superb infrastructure to support their manufacturing economy. Indeed, the Chinese are building factories so fast, that more than a few observers have joked and/or warned that the Chinese intend in the future to manufacture everything in the world. They won’t ever quite get there, but the trend is remarkable … and alarming.

This could have dire consequences for America’s current political and military hegemony. But the cult of free trade, combined with the fact that nobody in the American media cares about factory work, means that the long-term Chinese challenge is seldom discussed. You might think that if America had to shed manufacturing jobs, we would prefer they go to Mexico to keep down the illegal immigration rate rather than to China, America’s strategic competitor. But no one seems to care enough to discuss this either.

India, outside of cyberspace, remains chaotic and impoverished. India focuses more on giving outstanding university educations to the meritocratic elite.

The top Indian colleges are by now probably the most selective in the world. And because they teach in English, their graduates are more of a competitive threat to American journalists and their spouses andfriends than are the Chinese, who are merely hammering blue collar Americans. And who cares about them?

Accordingly, over the last year, the press has devoted far morecoverage to outsourcing white collar jobs to India than the loss of blue collar jobs to China—or, of course, the insourcing of jobs in America to immigrants, legal and illegal.

Apparently, reporters instinctively sense that Indians in Bombay could do their jobs of rewriting press releases into news articles.

At the elite end of the journalism racket, I have more than a few Indian readers who could step in and write this column for me (Peter, please forget I said that!). But fewer Chinese readers could do the same. The language barrier is a big factor. But Indians also seem more interestedin the human biodiversity topics that I specialize in. Further, Indians tend to be of a more speculative and discursive turn of mind than the hard-headed, practical-minded Chinese.

Indian development has been held back until recently by their overly metaphysical focus. Fortunately for them, recent demands in the business world for extremely abstruse and abstract reasoning power have finally played into the Brahmins’ traditional strength.

Still, in the long run, homogenous China looks more formidable acompetitor for American than diverse India. One of my Indian correspondents wrote me:

“China has an enormous advantage over India: relative homogeneity. In China there is no significant difference in racial appearance between the rich and the poor. They come from the same people. In India, you can see a colour line dividing classes every inch of the way. Sure these lines aren’t cut and dry like black and white, and there are overlaps, but the trends are easy to follow for anyone willing to observe. The fact that the Chinese don’t have 4000 year old caste hatreds gives them an enormous advantage over India.”

As late as 1960, the U.S. looked like China— it was nearly 90 percent white. But now whites are down to some 75 percent—because, since the 1965 Immigration Act, public policy has been bent on making us interesting, like India.

How odd.

[Steve Sailer [email him] is founder of the Human Biodiversity Institute and

movie critic for The American Conservative. His website features his daily blog.]

(Republished from VDare by permission of author or representative)
• Category: Foreign Policy • Tags: China, India 
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Steve Sailer
About Steve Sailer

Steve Sailer is a journalist, movie critic for Taki's Magazine, columnist, and founder of the Human Biodiversity discussion group for top scientists and public intellectuals.

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