Content Tagged: china

Controversial Political Ad About the National Debt

Tagged: , . | Category: Blog

October 29, 2010

Citizens Against Government Waste (CAGW) recently released a controversial political advertisement about government spending and the national debt.  A CAGW press release posted on BusinessWire.com describes the ad as “a chilling look at one potential future scenario if we continue on our current destructive fiscal trajectory.”  Though the ad is currently running on FOX News, FOX Business News, CNN, CNBC, CNN Headline News, and NBC, other networks like the History Channel, A&E, and ABC have chosen not to air this advertisement.  According to the CAGW press release, the History Channel deemed the content “too controversial.”

The ad depicts a Chinese professor in the year 2030 discussing the fall of great nations.  The professor contends that the United States of America fell because it tried to “spend and tax itself out of a great recession.”  The professor states that stimulus spending, health care reform, and government takeovers of private industries led to “crushing debt.”  He concludes his lecture by reminding his students, “We [the Chinese] owned most of their debt… so now they work for us.”

As of the posting of this blog, the “Chinese Professor” ad has been viewed over 660,000 times on YouTube, in addition to the millions of potential viewers the ad has reached through its network airings.  Students should critically analyze this commercial by exploring the claims made in the ad, the facts upon which those claims are based, and the reasons for the controversy surrounding this depiction.

Students should begin by exploring the professor’s claim that the Chinese own “most” of the United States’ debt.  An earlier Understanding Fiscal Responsibility blog, “Foreign Owned Debt and the Economic Balance of Power,” asked students to investigate this very topic.  The blog cited US Treasury department statistics from December 2009, listing China as the largest foreign holder of United States debt.  The statistics also show that China holds only slightly more US debt than the next highest nation, Japan, and that China’s holdings represent less than 25% of all foreign held debt.  While the numbers have changed slightly since the publication of that blog, a recent article at Bloomburg.com reports that in August 2010, China owned $860.1 billion in United States debt – a figure that represents roughly 10.5% of the $8.18 trillion of tradable US debt.

In light of this information, students should discuss the following questions:  The Citizens Against Government Waste ad claimed that the Chinese owned most of the United States government debt, was this a fair statement?  Why did CAGW choose to word their claim in this way? Could it have been worded another way to make it more accurate?  What affect would this have had on the tone of the ad?

Students should also consider the ad’s criticism of America’s “enormous so-called ‘stimulus’ spending.”  The decision of CAGW to portray a Chinese professor critiquing the fiscal stimulus is interesting given China’s successful use of government stimulus in its own economy.  In an interview with CNN’s Fareed Zakaria, Chinese Premier Wen Jiabao commented that China’s stimulus package (10 times larger as a percentage of GDP than the US stimulus package), “has helped maintain the good momentum of China’s economic development in the past 30 years and it has helped us avoid major fluctuations in the process of China’s modernization because of a severe external shock.”  According to CNN, “China reported that last year it recorded an 8.7 percent GDP growth, defying global economic trends. That was largely achieved using a 4 trillion Yuan ($586 billion) stimulus plan that was allocated to boost government spending, create jobs and boost domestic demand.”

Students should discuss whether or not this report from CNN changes their impression of the ad.  Why did Citizens Against Government Waste choose not to include this information in the professor’s lecture?  In what ways would that have changed the message of the ad?  Would the inclusion of Wen Jiabao’s praise of China’s stimulus have supported the message promoted by CAGW?  Why or why not?

Ultimately, students should discuss the purpose of this commercial and debate the effectiveness of the commercial in reaching its goals.  Does this commercial advance the debate about the appropriate course of action in solving our fiscal crisis?  Why do many people consider this ad to be controversial?  If you were in charge of a television network, would you run this ad?  Why or why not?

As the largest foreign holder of US debt, China’s role in the United States economy deserves our attention.  This issue raises questions about power and influence that students should examine so they are prepared to participate in the national discourse about our troubled economy.  This lesson will help students critically analyze political ads about the federal budget deficit and national debt.

There are multiple, competing ideas from across the political spectrum on how best to address this crisis.  By critically analyzing the content of the ad, students can explore this issue in a logical and thoughtful manner, reaching conclusions (whatever those conclusions may be) based on factual evidence rather than emotional response.

1 Comments

Economic Ties Between the United States and China

Tagged: , . | Category: Blog

May 19, 2010

Zhang Monan, economics researcher in China’s State Information Center, recently wrote an article in the China Daily arguing that China should use its power as the largest creditor of the United States to “drive a hard bargain” in economic negotiations.  From the article:

What China should do now is ponder how to use its clout as the largest US debt holder and transform its enormous financial power into writing policies to its advantage, and improve its financial capability to fend off pressures from the outside world.

Monan argues that the United States is using its massive national debt as a tool to continue its dominance in the global financial domain.

Photo Credit:  Ng Han Guan/AP

In an earlier blog, I cited an article in Forbes written by Bruce Bartlett, former United States Treasury Department economist.  The blog discussed ways in which teachers could introduce the relationship between the United States and its foreign lenders into lessons about the national debt.  The article from the China Daily represents an opportunity to revisit that topic from China’s perspective.

Teachers could use the article from the China Daily as a complement / counterpoint to the earlier article from Forbes, and ask students to consider how the two articles approach the economic relationship between the two countries.  The teacher could guide students through a document analysis based on the following questions:  Which country benefits more from the economic relationship between the United States and China?  Do both authors share the same opinion in that regard?  How are facts and data used in each article to support the author’s opinions?  What are the recommendations of each article?  Are the authors’ conclusions similar or different?

As an extension to this lesson, the teacher could ask students to research other countries’ examinations of the United States’ national debt and compare it to the articles discussed here.  This lesson will help students begin to appreciate the international influence of national debt.

0 Comments

Foreign Owned Debt and the Economic Balance of Power

Tagged: , , . | Category: Blog

March 12, 2010

In a recent opinion piece at Forbes.com, Bruce Bartlett discusses the history of the national debt and the sharp increase in the percentage of foreign owned treasury bills in recent decades.  Bartlett outlines the interdependence of the United States and China, and the role that US Treasury securities play in each country’s economy.

Teachers may find this article useful in stimulating classroom discussion when teaching the history of the United States’ national debt or the modern relationship between the United States and its foreign lenders.

In his discussion of the role that national debt plays in the balance of power between two countries, Bartlett includes a particularly interesting quote from economist John Maynard Keynes:  “Owe your banker £1,000 and you are at his mercy; owe him £1 million and the position is reversed.”  Students should be encouraged to analyze the meaning of this quote and discuss whether or not they agree with Keynes assertion.

Students should think about Keynes assertion in connection with what they know about the economic relationship between the United States and China.  Who holds the most power in this relationship?  Has that changed over the years?  What might cause it to change in the future?  How does the economy of one country influence the economy of the other?  Through the exploration of these questions, students should begin to understand the complexity of the United States’ economic relationship with China.

2 Comments

NBC Nightly News: Future $hock (Part 2)

Tagged: , , . | Category: Blog

February 10, 2010

In part two of the NBC Nightly News with Brian Williams report “Future Shock”, Andrea Mitchell reports that China is America’s number one banker, holding $790 billion of US debt. This news report raises several interesting questions for students to consider, both about the national debt and the way that debt is portrayed in the media.

Teachers could use this news report as an introduction to a lesson about who holds US debt. Which foreign countries lend money to the United States? Is China the number one banker as the report suggests? Does this take into account money the United States “owes itself”? Should those debts be included when naming the “number one banker”?

Students should also consider the language and tone used in the news report. Is this report meant to inform, entertain, frighten, or persuade? When reporting on the Chinese economy, how do phrases like “when no one was looking” and “flexing their muscles” influence viewers’ understanding of the situation? Are these characterizations appropriate? These questions will help students begin to critically analyze news reports about the national debt.

0 Comments