Global Intelligence Briefing for CEOs - Emergence of China
by Herbert Meyer, 2007
Herb Meyer served during the Reagan administration as special assistant to the Director of Central Intelligence and
Vice Chairman of the CIA's National Intelligence Council. In these positions, he managed production of the U.S.
National Intelligence Estimates (NIE) and other top-secret projections for the President and his national security
advisers.
Meyer is widely credited with being the first senior U.S. Government official to forecast the Soviet Union's
collapse, for which he later was awarded the U.S. National Intelligence Distinguished Service Medal, the intelligence
community's highest honor. Formerly an associate editor of FORTUNE, he is also the author of several books.
Four Major Transformations
Currently, there are four major transformations that are shaping political, economic and world events. These
transformations have profound implications for American business owners, our culture and our way of life.
This page discusses the emergence of China.
2. The Emergence of China
In the last 20 years, China has moved 250 million people from the farms and villages into the cities. Their plan is to
move another 300 million in the next 20 years. When you put that many people into the cities, you have to find work for
them. That's why China is addicted to manufacturing; they have to put all the relocated people to work. When we decide
to manufacture something in the U.S., it's based on market needs and the opportunity to make a profit. In China, they
make the decision because they want the jobs, which is a very different calculation.
While China is addicted to manufacturing, Americans are addicted to low prices. As a result, a unique kind of economic
codependency has developed between the two countries. If we ever stop buying from China, they will explode politically.
If China stops selling to us, our economy will take a huge hit because prices will jump. We are subsidizing their
economic development, they are subsidizing our economic growth.
Because of their huge growth in manufacturing, China is hungry for raw materials, which drives prices up worldwide.
China is also thirsty for oil, which is one reason oil prices have risen dramatically. By 2020, China will
produce more cars than the U.S. China is also buying its way into the oil infrastructure around the world. They are
doing it in the open market and paying fair market prices, but millions of barrels of oil that would have gone to
the U.S. are now going to China. China's quest to assure it has the oil it needs to fuel its economy is a major factor
in world politics and economics. We have our Navy fleets protecting the sea lanes, specifically, to guarantee that the
tankers can get through. It won't be long before the Chinese have an aircraft carrier sitting in the Persian Gulf as
well. The question is, will their aircraft carrier be pointing in the same direction as ours or against us?