Economic competition from China

The lead story in today’s New York Times is titled, “Deals Help China Expand Its Sway in Latin America.” It describes China’s business dealings with Venezuela, Ecuador and Brazil in return for securing natural resources such as oil far into the future.

The business transactions include support of $6 billion for a development fund in Venezuela, $1 billion for a hydro electric plant in Ecuador and $10 billion for Brazil’s national oil company.

The transactions also include using the Chinese currency as a reserve instead of the traditional U.S. dollars. As such, they are particularly troubling.

One reason for China’s intrusion into our backyard was cited as the neglect of the Bush administration for the past eight years. Typically, the Inter-American Development Bank provided economic support to the region, but its typical size of donations was far eclipsed by China.

A very disturbing remark came from David Rothkoopf, a Commerce Department official in the Clinton Administration. He said, “This is how the balance of power shifts quietly during times of crisis.”

So, while we are trying to convince ourselves of the economic link between China’s investments in the United States and the ultimate outcome of the current economic crisis — e.g., China wants us to recover because they are dependent on their investments in our nation — China is beginning to diversify and expand its influence elsewhere.

Another problem for the Obama administration to tackle …