Death By China

A Presentation by Peter Navarro

Whats Your China Exposure?

1. 2. 3. 4. 5. Produce in China Sell into China market Compete with China All of the above 2 & 3 only
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A BIG Country
1.4 billion people most populous
Chongqing v. Canada

Land mass same size as U.S.

Less livable space because of desertification

20% of the people, 10% of arable land, 7% of the water

Half of Chinas people are peasants and remain in poverty

Adding 300+ million people to manufacturing work force over the next decade

A BIG Economy
Growing at 8% to 10% a year
2nd biggest economy and will overtake U.S. within a decade or less

Consumes of the worlds steel and cement, 1/3rd of copper, and 1/4th of its aluminum
Oil consumption will rise to a level of total current world output by year 2050

Needs an entire new planet to feed its resource needs by mid-century.

A Rising China Poses:

1. No threat to the United States 2. A modest threat to the United States 3. A significant threat to the United States
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The China Threat Is Primarily:

1. 2. 3. 4. 5. 6. Economic Military Consumer Safety Political All of the above None of the above
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Todays Goal
Understand the broad scope of the Chinese threat our economic and national security
Mobilize support for a sustained political, economic, counterintelligence, and military response to this threat.
This is both good for the country AND good for business

Always Remember: Its not China bashing if its true

CHINA AND THE U.S. ECONOMY

Clip: #1 Water gets hotter

The U.S. Economy Is:

1. In a short term cyclical downturn curable by more Keynesian stimulus 2. In a long term decline that can only be addressed through structural reforms
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U.S. GDP grew 3.5% annually from 1947-2000. What rate did it grow from 2001 to 2011?
1. 2. 3. 4. 5. 6. 3.5% 3.0% 2.6% 2.0% 1.6% 1.0%
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The Big Growth Picture

Annual GDP Growth Rate

1947-2000 2001-2011

3.5% 1.6%

One point of GDP growth = One million new jobs

Losing almost two points per year= Over 20 million jobs

The Biggest Drag on GDP Growth Is:

1. 2. 3. 4. Consumption Investment Govt. Spending Net Exports
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GDP = C + I + (X M) + G

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GDP Breakdown: A Sample Quarter

GDP Drivers Consumption (C) Investment (I) Government Spending (G) Exports (X) Imports (M) GDP Growth Rate Q3-10

Contribution to Growth Rate 1.7% 1.8% 0.8% 0.8% -2.5% 2.6%

Deficit a HUGE drag on GDP growth!

The Best Jobs Program Is:

1. More Fiscal Stimulus 2. More Monetary Stimulus 3. Trade Reform With China
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Clip: #2 Balanced Trade

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China accounts for what percent of the U.S. trade deficit in goods excluding oil?
1. 2. 3. 4. 5. 15% 30% 45% 60% 75%
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Major Sources of U.S. Trade Deficit

China accounts for 75% of deficit when oil excluded!!!
Trade Balance (Billions of Dollars) Oil Imports China Total Net Exports -204 -227 - 501 Trade Balance by Percent of Total 41% 45%

THE POINT: The best U.S. jobs program is trade reform with China!!!

Chinas competitive edge is primarily due to:

1. Cheap Labor 2. Unfair trade practices

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Clip#3: We are in a trade war

Chinas Weapons of Job Destruction

Cheap Wages Web of Illegal Subsidies Currency Manipulation Counterfeiting & Piracy Lax Health & Safety Regs Lax Environmental Regs Unfair Trade Practices Total 40% 17% 11% 8% 2.5% 2.5% 41%

Weapon of Job Destruction #1 ILLEGAL EXPORT SUBSIDIES

Chinas Illegal Subsidies

Land
Energy & utilities Capital Export tax rebates Income tax breaks

Clip#4: Illegal Export Subsidies

Weapon of Job Destruction #2 CURRENCY MANIPULATION

To manipulate its currency, China buys:

1. 2. 3. 4. 5. U.S. bonds U.S. stocks U.S. companies U.S. housing U.S. commercial real estate 6. U.S. farmland 7. All of the above

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Clip#5: Bye Bye Kansas

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Chinas currency manipulation:

1. Acts like a tariff on U.S. exports to China 2. Acts like a subsidy on Chinese imports to U.S. 3. Prevents market forces from balancing our trade 4. All of the above
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Weapon of Job Destruction #3 COUNTERFEITING & PIRACY

What does China steal?

1. 2. 3. 4. Copyrights Patents Brand names Proprietary designs & processes 5. Business plans 6. Whole companies 7. All of the above

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Have you or your organization been a victim of Chinas counterfeiting & piracy?
1. Yes 2. No 3. They tried & failed
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How does counterfeiting & piracy provide China with competitive advantage?
1. Reduces Chinas R&D costs 2. Reduces Chinas marketing costs 3. Eliminates foreign rivals 4. All of the above

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Weapon of Job Destruction #4 POLLUTING FOR PROFIT

If China wants to pollute its environment to gain competitive advantage, it doesnt affect me

1. True 2. False

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Clip#6: Pollute for Profit

A Global Tragedy of the Commons

Air pollution
16 of 20 dirtiest cities in China 700,000 Chinese citizens die annually Jet stream carries to U.S.

Severely polluted waters

70% of lakes, rivers, streams 90% of groundwater

Soil contamination (How you like dem apples?)

Arsenic, lead, mercury, nickel Pesticides

Global warming & E-Waste

Weapon of Job Destruction #5 WORKER ABUSES

To increase its labor cost advantage, China uses:

1. 2. 3. 4. 5. Child labor Prison labor Slave labor Union busting Non-payment of wages 6. All of the above
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Clip:#7: Labor Abuses

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THE POLITICS OF TRADE REFORM

Our Politicians Have Not Addressed The China Threat Because:

1. Some dont believe there is one 2. Some believe the threat is modest 3. Many finance their campaigns from interests that benefit from the China trade so they ignore the threat. 4. All of the above 5. #3 only
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Clip:#8: Democracy Hijacked

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China Joined the WTO In 2001

Supported by Democratic President & Republican Congress
Opened the floodgates to illegally subsidized exports 57,000 factories gone 6 million manufacturing jobs offshored A gutted industrial base

Clip:#9: Company or Country

The Unkindest Offshoring of All

WILL CHINAS RISE BE PEACEFUL?

Clip#92: war machine

Peaceful? Not!
Building a five-dimensional war machine air, land, sea, space, and cyberspace
Increasingly aggressive in pursuing territorial claims on land and sea and in space

A Five-Dimensional War Machine

Largest army in the world Best air force money can buy from Soviets and steal from the Pentagon Skillful use of asymmetrical weapons, e.g., the BAMer Construction of deep water navy and James Bond sub base suggests force projection capabilities Most aggressive space program dual civilian/military use Most sophisticated cyberwarfare nation war is ongoing
Clip#93: Enter our markets

DEATH BY CHINESE JUNK

When you pick up a product made in China, what do you think about?
1. 2. 3. 4. Price Product safety Your job The budget crisis in your state 5. The budget crisis in America 6. National security 7. Most/All of the above

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Clip#94: Walk into Walmart

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Clip#95: Dilemma

Americas Dilemma
China has used its weapons of job destruction to capture our markets
The more we buy from China, the more risks our families face and the more jobs we lose We are buying Chinese products with borrowed money China will use that money to buy up pieces of America

Do we want to be owned by a ruthless totalitarian government?

What Is To Be Done?
Shop responsibly
Vote responsibly
Make balanced trade the number one issue in the 2012 elections!!!!!

For More Information: WWW.DEATHBYCHINA.COM