Shape of the future: Global Chinatown

Not too long ago, the 20th century was called “The American Century.” Not only was Uncle Sam the world’s military superpower from the end of World War II through the next several decades, he was an unstoppable economic heavyweight. But after years of squandering the nation’s precious human, scientific, technological and economic resources on waging costly, never-ending wars — Cold War, Vietnam War, Gulf War, Afghan War, Iraq War and The War on Terror — Uncle Sam has lost his edge.

Indeed, President Dwight D. Eisenhower, a former Five-Star General and Supreme Allied Commander during World War II, warned American citizens of the consequences of spending vast sums of money on the military rather than directing it to society:

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals.

We pay for a single destroyer with new homes that could have housed more than 8,000 people. It is some 50 miles of concrete highway. We pay for a single fighter with a half million bushels of wheat.

This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.

Many heard Eisenhower’s “Cross of Iron” speech in 1953, but few listened. This was no “pinko-commie,” the label attached to anyone at that time who believed the military was getting too powerful and spending too much. “Ike,” who would serve two terms as a Republican president, knew what it looked like on the battlefield.

The roots of military overspending

Then, in his famous farewell address in 1960, Eisenhower told Americans that the military had taken over the nation. “The military-industrial-complex would cause military spending to be driven not by national security needs but by a network of weapons makers, lobbyists and elected officials,” he warned.

It was a coup d’ état; a military takeover. And after Ike left office, lobbyists and elected officials continued to sell out the nation not only to defense contractors, but to the highest bidders. Breaking down barriers in the name of “free trade,” they exported American jobs and technology to countries where labor was cheap. While enriching the multinationals, the policies dramatically drove down wages and the standard of living for what used to be called “the great middle class.” And to help further widen the wage gap between the classes, lobbyists and elected officials repealed acts and gutted laws that were put in place at the onset of “The American Century” to prevent robber barons and Wall Street sharks from stealing the nation’s wealth.

When Eisenhower left office, the U.S.’s GDP stood at $520.5 billion. Trailing far behind, the United Kingdom ranked 2nd at $72.2 billion, France, at $62.6 billion, was third, followed by China at $61.3 billion, according to the World Bank.

In 2012, while the U.S. still tops the list at $15.6 trillion, China, in second place, reports its GDP at $8.52 trillion. And while the U.S.’s national debt today stands at $17.3 trillion (compared to China’s $2.4 trillion), China, unlike the U.S., is holding $3.7 trillion in foreign exchange reserves. Over the past year, its yuan rose 2.9 percent over the dollar and is expected to rise another 3 percent against the greenback in 2014. Taking inflation into account, the yuan rose nearly 19 percent against the dollar since 2010. Thus, their stronger yuan buys more assets with less money.

Moreover, when it comes to the world’s largest trading nation, China, with annual trade in goods above $4 trillion, has now overtaken the U.S.

Chinese set global sights

With plenty of cash, the value of its currency rising, and a GDP still growing at 7.5 percent, the Chinese will be buying up valuable assets around the world while the U.S. keeps spending on foreign entanglements, a global War on Terror and funneling trillions into Wall Street in the name of “stimulus” and quantitative easing.

In 2014, America has become the “paper tiger” that Mao Zedong had predicted. “In appearance it [America] is very powerful,” Mao said in 1956, “but in reality it is nothing to be afraid of; it is a paper tiger. Outwardly a tiger, it is made of paper, unable to withstand the wind and the rain. I believe that [America] is nothing but a paper tiger … all reactionaries are paper tigers — superficially powerful but prone to over extension leading to sudden collapse.”

Leading investment targets for Chinese investors are countries where there are already a lot of Chinese people, such as New Zealand, Japan, Australia, Singapore, Malaysia Canada and the U.S.

“We go where the people go,” proclaimed Yu Liang, President of Vanke, China’s biggest real estate company. He recently bought a 70-percent stake in a major development on Folsom Street, San Francisco, from real estate developer Tishman Speyer. Elsewhere, China’s Greenland Group, which has entered six countries, including South Korea and Australia, is a major partner in Brooklyn’s $5 billion Atlantic Yard apartment project, which will be the single-largest real estate project in New York in decades.

Ambitious investments in U.S.

There’s no mistaking it, the Chinese are on a buying binge. In the U.S., for example, the rate of investment by Chinese investors is skyrocketing. The examples are many and telling, including: landmark properties and residential real estate in decaying Detroit; restaurant complexes, plants and higher-education institutions in Toledo; big oil deals in Oklahoma; a new textile plant in South Carolina; a proposal to buy up to 600 acres in New York’s Borscht Belt to build “China City,” complete with an education center, 36 dorms with 2,456 units, more than 100 units of housing, a sports arena, performance center and museum; and trophy purchases of One Chase Manhattan Plaza and a 20 percent stake in the General Motors building in New York City.

Already owning AMC theatres and IBM’s PC business, in 2013, Chinese investors bought out U.S.-based Smithfield, the world’s largest pork producer, for $4.7 billion. According to private equity fund A Capital, Chinese investors put $24.7 billion into mergers and acquisitions in all of North America in the just first three-quarters of last year.

Not just commercial or residential

Hungry for metals and minerals to feed its industry and fuel the nation, Chinese companies have been buying up mines and mineral rights from Sierra Leone to Australia, and from Canada to Peru. And with 1.3 billion people devouring about 20 percent of the world’s food — and not enough farms to feed them — the Chinese are buying up and leasing out thousands of square miles of fertile land.

In 2013, some of the bigger deals included leasing 7.4 million acres of Ukrainian farmland for the next 50 years, and roughly 9 percent of arable land in the U.K. Chinese connoisseurs will be washing down their meals with some of the most cherished French Bordeaux’s direct from the scores of French chateaus bought by Chinese investors in the past few years.

The year ahead will also see a growing number of smaller investor groups form to manage investm
ents that often don’t get the attention of the larger, more transformative deals that are routinely reported in the mainstream media.

A $100 million fund by China’s small- and medium-sized developers has been formed to invest in the U.S. real estate market, indicating Chinese developers’ growing interest in expanding overseas.

“Around one to two deals are expected to close soon. We may raise more money after the Spring Festival,” said Gong Yi, director of China Real Estate Chamber of Commerce.

The fund is initiated by the US-China Real Estate Investment Center, which is affiliated to China Real Estate Chamber of Commerce.

“Investment return is not the investors’ major concern,” Gong said. “They just want to diversify their business portfolios, given increasing uncertainties in the home market.” (China Daily USA, December 4, 2013)

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