HERMAN CAIN: My China strategy is quite simply outgrow China. It gets back to economics. China has a $6 trillion economy and they’re growing at approximately 10 percent. We have a $14 trillion economy — much bigger — but we’re growing at an anemic 1.5, 1.6 percent. When we get our economy growing back at the rate of 5 or 6 percent that it has the ability to do, we will outgrow China.
Sure, “simply outgrow China,”a nation with 10 percent growth — and with 1.3 billion people. A nation that’s growing so fast that its own economists are trying to figure out how to cool things down without sending the world economy into a tail spin. Then there’s the little matter of China being the largest holder of U.S. debt -- $1.13 trillion as of August 2011 and could go up to $3 trillion by 2015. Meanwhile, the U.S. economic growth is ticking along at an annual rate of 2.5 percent. Not nearly enough to bring down significantly the unemployment rate, which dipped from 9.1 percent in September to 9.0 percent in October. In fact, the Federal Reserve predicts unemployment will be around 8.6 percent a year from now.
“Since 1980, our growth has averaged just under 2.7 percent,” Ryan McConaghy, director of the economic program at Third Way, a centrist think tank here in Washington, told me. “There were some strong individual growth years during that stretch, but nothing that suggests we can consistently grow at 5 percent [or] 6 percent per year as Cain casually suggests . . . particularly if he and the rabid Tea Party base aren’t willing to put revenues on the table to get our fiscal house in order or pay for the investments in infrastructure, innovation, and education we need to get ahead. Over the same stretch, China’s growth has averaged 10 percent and its slowest year in that time was more than a point above our average. China can’t sustain its pace forever, and we certainly need to grow faster than we are right now, but somehow outgrowing China in the near term would be a tall, tall order.”
The reaction of another Third Way-er, Matt Bennett, to the Cain statement was pithy and perfect. “Herman Cain’s answer to a rising China sounds, like many of his campaign ideas, like they came out of a fortune cookie,” he said. “The world is enormously complex, and our relationship with China is fraught in countless ways. Simplistic answers and pat sound bytes are not a wise approach to modern foreign policy challenges.” But with Cain atop the polls, they apparently work like a dream in Republican presidential politics.