Irrational Fears of China

The most recent headllines might confirm our worst fears about the rise of China - and the decline of the U.S. and Europe.

It seems China is poised in the next few years to overtake the U.S. and become the largest manufacturing nation on Earth.

In Europe, the spectre of Greece-like outcomes in nations like Spain, Portugal, and Italy make it difficult to see a bright spot across the Atlantic.

At home, Americans face a potential meltdown of public finances, spiraling Federal Government debt, and a continued stall in job-creation.

Most recently, China decided to allow its currency to float, signaling greater confidence from the Middle Kingdom.

It seems power within the global economy and all that goes along with it is inexorably shifting towards Beijing.

Don't bet on it.

The last twenty years have been easy for China's leaders. They went from almost nothing to their poisiton today. This was fueled principally by US, Japanese, and European investment.

Now it gets hard. Foreign direct investment will continue, but it will not be without strings: very tight strings.

Further, China is facing rising prices in all sectors. An asset bubble is looming. Other issues like environmental degradation and the country's Byzantine migration laws haven't even been touched.

For Americans, we always are fearful that we will lose our edge. Rremember the irrational fear about Japan during the 1980's?

It is exactly this fear that keeps us on sharp. We will overcome and effectively manage the rise of China, as we did with Germany, Japan and the EU after World War II.

America is still the best business nation on Earth. And, it will remain so long after the irrational fears of China subside.