Do you think that multi-national corporations have traded countries from US to China?

Question

Is this how China has become so powerful?
that seems to be the biggest craze now, how China is full of really clever economic managers and they are "out-smarting" the dumb USA. But what has really happened, after all US loaned all kinds of money and gave away a lot as well all over the world, do you think it is just mult nationals from US trading countries that has enabled "China" to become the World Bank almost to the US? I mean it just doesnt make sense to me how th primary victor out WWII who lent so much money to other countries is now the biggest debtor to countries like China. Anybody with a clear, independant understanding to this phenomenon who could explain to me?
Thanks.

Answer 1

There are two parts to this question.
1) Multinationals: Yes I believe they have traded countries. In that they feel that can operate anywhere in the world and do not feel beholden to one government. They will seek the lowest taxes, the cheapest labor, the cheapest resources. Companies can no longer said to be "American" or "Chinese."

2) The US: This part of your reasoning is incorrect. It is not the fault of the US. Note, the US did not give all this aid to China. China got all the money from US corporations and not the US government. So you cannot blame the government for China's rise, other than their lack of control over (formerly-)US companies.

Lastly, just to provide a further example: Alot of companies in China (the state owned ones) are suffering alot too because they cannot compete with these multinational companies. They will have to lay off alot of workers and that will cause alot of social disorder. The Chinese government is much more attentive to the problem of displaced laborers than the US government has been.

Answer 2

China adopted a policy in 1978 they called "communism with Chinese characteristics". To the rest of us, it's capitalism with state interference.

Ever since then the Chinese economy has been booming (growth of 8% a year plus) on the basis of a vast abundance of cheap labour and rapid and mostly sane infrastructure development. Companies, initially those based in Hong Kong and later those from all over the world, moved basic manufacturing to China and kept design and management in their country of origin. They then exported the finished products from China at more competitive prices than they could have made them for anywhere else.

That's basically the whole story, apart from one other fact. The mediaeval Chinese regime hoarded gold and the habit stuck, the only difference being that they now hoard "paper gold" ie US dollars. China never imported as much as it exported, because it continued to regulate imports. They run a large surplus on current account and refuse to revalue their currency -- so the surplus carries on.