China is in the midst of a global strategy to move its products to market and obtain the natural resources it needs to fuel its red-hot economy.
The Chinese have deals with Cuba, Iran and other oil-producing countries to supply its industries and people with fuel for its growing fleet of cars, trucks, trains and planes. In addition, they have invested billions in places like Angola and Peru to bring needed minerals to their factories. And, if you’ve got coal and uranium, they’ll buy it for their power plants.
Now China is bailing out Greece. It is pumping billions into rebuilding the Mediterranean Port of Piraeus to make it the gateway to southern Europe and North Africa for China’s consumer goods. The Chinese shipping giant Cosco assumed full control of the port’s major container shipping dock and is spending $700 million to upgrade existing facilities and build a new pier.
But there are strings attached. In exchange for Chinese cash, the Greek government must take on its powerful unions to eliminate inefficiencies and improve productivity. According to the Washington Post, the Piraeus port project is emerging as a bellwether for Greek plans to pay down its crippling national debt and reinvent its economy by privatizing inefficient government-owned utilities, trains and even casinos.
While some Europeans are alarmed by China’s plan to flood its markets with cheaper Asian imports, the Greek government sees it as a necessity.
The broader question for the European Union is how are other uncompetitive economies in Portugal and Spain going to reinvent themselves to avoid a Greek-style melt down and a Chinese bailout?
Before Americans get too smug and dismiss what’s happening as just a European problem, they should realize that we’re on the same path.
Ninety percent of the 440,000 jobs created in the U.S. last month were government jobs. Public and private sector unions want more government control and fight even the most modest efforts to privatize government services. Here in Washington, unions have vowed to defeat initiative campaigns to allow private companies to sell liquor and write workers’ compensation insurance.
Even cash-strapped states want a federal bailout. Last January, governors from Wisconsin, Massachusetts, New Jersey, New York and Ohio, on behalf of their 41 counterparts with budget shortfalls (Washington included), were dispatched to meet with the president and Congressional leaders to seek $1 trillion over the next two years.
The only problem with that strategy is our country can’t afford more bailouts. Our national debt stands at $13 trillion, but according to a report by the Treasury Department, it will jump to $19.6 trillion in five years. Yet President Obama and Democrats in Congress continue to spend.
While the folks in our nation’s capitol may turn a blind eye to the consequences, most folks I know stew about the legacy of crushing debt we are leaving our children and grandchildren for generations to come. Right now, each man, woman and child in America owes $42,332.65. Yet the debt continues to climb.
If you think we won’t have to turn to cash-rich countries like China to bail us out, think again. As of March, China holds $895.2 billion in U.S. Treasuries. That means every American family owes China $10,000. Americans now owe foreign countries $3.88 trillion.
David M. Walker, who headed the Government Accountability Office under presidents Clinton and George W. Bush, says by 2040 our entire federal budget will go to paying just the interest on what we owe.
Where and when will this spending spree end? Do we have the political will to reverse course and avoid the same fate as Greece? Or will we sell America’s sovereignty to China in exchange for a bailout?
Don Brunell is the president of the Association of Washington Business.