Path to Economic Recovery: Made in China

The Chinese economic model could save America from its debt-ridden quagmire.

It's no secret that the U.S. economy has fallen on hard times. Decades of overspending borrowed money to buy imported goods had to end badly, and it did. Now, Americans are looking for a new economic model that can nurse the country back to health. Maybe China has the right idea.

Two Chinese paths to prosperity

As wrong as it sounds, the Chinese economy is doing much better than the USA's. The Middle Kingdom has made a lot of money manufacturing goods for Western consumers, far cheaper than Americans could do it themselves. With lots of freshly made trinkets flowing out of the country in exchange for euros and dollars, China's economy is thriving. The middle classes are growing like bamboo shoots, and the government is lending money to deficit-happy spenders, like the American consumer.

Consumers shouldn't worry, though-capitalism is still alive and well. It just doesn't fire on all cylinders when running on low-octane fuel, like artificially inflated home prices and complicated loan-related bonds.  The Chinese might just have some spare nitrous oxide to lend.

Long shot option

The first thing that the U.S. government could do is to emulate the Chinese model of economic success. They have the greatest cache of high-tech know-how in the world, and if the United States begins to manufacture its own inventions, there would be jobs aplenty.

American workers might have to adjust their expectations on income and benefits compared to today, when outsourced manufacturing is the order of the day. The government would reap direct benefits through higher tax revenue. The average American would be more likely to have steady employment, and money would feed back into the local economy rather than out on the global market, or back to China.

Bailout packages are a tentative first step in that direction, as the government plays a larger and more direct role in how the rest of the economy develops. Maybe they'll follow through and nationalize the entire banking system, the carmakers, or other industries.

Reality check: Look to China for trade

It's probably more doable to start a serious trade partnership with the eastern dragon. Stimulate the burgeoning Chinese economy, and the result could be an explosion of consumer activity. Given the proper tools and access to research that China currently isn't allowed to see, two billion people with newly bulging pockets should return the favor and buy the American goods that they want.

It would be difficult for Chinese leaders to say "no" to a reasonable partnership arrangement, even if they'd have to make a few changes of their own in areas like human rights. In an open and trusted exchange of trade, ideas, and capital, both sides win. That's the essence of capitalism, after all.

The future might just be Chinese-one way or the other.