How China Benefits the U.S.

That topic is the cover story in this month's issue of The Atlantic (subscribers, go here; i haven't found a non-gated copy yet, but there is an accompanying web-only slide show, with sound, here). James Fallows, who has been embedded in China for a good few months now, does us the honor. I haven't read it yet, but Fallows is a savvy observer of globalization, international markets, and interconnectedness. He discusses the article a bit on his blog. I'm looking forward to getting around to the article itself. I'll probably discuss it more later. Almost everything Fallows writes is dead-on; I expect that this will be a great piece.

Elsewhere, Tyler Cowen points us to the Washington Post, which disputes the notion that China's rising production is to blame for our increased oil prices. Well, not exactly, but kinda:

China's oil imports have increased dramatically during the past five years; the country now imports 3.5 million barrels a day, compared with U.S. daily imports of 12.2 million barrels. But it's far less obvious that Americans are really paying a price for this.

If you've been to the mall lately, you've probably noticed that China is making scads of plastic. As the world's second-largest plastic producer, it is furiously turning oil and petrochemicals into everything from lobster souvenirs to sneaker soles. By embedding oil in products, China is, in effect, importing oil on behalf of U.S. consumers -- as much as 1 million barrels per day.

While China's demand for energy is driving up oil prices worldwide, its cheap goods are having the opposite effect on the cost of living in the United States. A recent analysis by the U.N. World Economic and Social Survey suggests that Chinese pressure on oil imports may have raised U.S. inflation by 0.23 percent from 2001 to 2005, but cheap imports of Chinese goods decreased U.S. inflation over that same period by 0.28 percent. For the moment, the net winners are U.S. consumers.

The importance of China -- as an ally, not an enemy -- is a common theme among geopolitical strategists like Thomas Barnett. The emergence from the Gap to the Core of China (and India) is going to be the story of the 21st century, and that is a good thing.