When China Will Be Able To Pwn The US
The moment when China becomes a consumer driven society is the moment when the US loses its leadership of the world, and when if it’s economy isn’t in good shape, it crashes out. Right now the US has numbers in terms of balances of payments, outstanding debt and so on, which in any other country, would have caused not an "financial crisis" but an economic crash, at best looking like what happened to Argentina at the beginning of the decade. That is to say, an actual significant contraction of GDP, massive unemployment, collapse of the dollar, and probably an inflation crisis. At worse, and this is not an unlikely scenario, it would have a crisis similar to Russia after the collapse of the USSR—which is to say, a crisis so severe that getting food is an issue, an actual decline in the population and so on.
Why? Because the US needs massive inflows of money from nations like China and Japan in order to finance both the government and private consumption. China and Japan, and other countries, for that matter, have amassed holdings of US securities, cash and so on, in the many trillions, as a result. They have been willing to buy assets that they know they will probably not see a full real return on because the US buys their exports, and in China’s case, is busily shipping American jobs to China, thus industrializing China.
The world needs the US because the US is the "consumer of last resort". It buys everyone else’s stuff, issues a pile of securities and dollars in exchange, and exports industrialization to China in exchange for deindustrialization and cheap consumer goods at home, which kept down inflation for a very long time.
When China has a large internal market which has reached takeoff, it can sell mostly to itself, and will no longer need the US as much. Neither will any other country, since they can sell to China, with a much larger market. Sure, everyone’ll be happy to sell to the US, but they won’t need to. At that point, when the US has a financial crisis (and it will, unless things are cleaned up) China doesn’t have to keep buying up treasuries or see its own economy crash out. It can say "no thanks". It can even start offloading all the crap securities it has. If it, or other countries do so, the US dollar crashes the floor.
At that point China has the US over a barrel. It is no longer a Mexican stand-off, no longer "sure, you can shoot me, but you go down too". That’s a really bad position to be in—China, or anyone with significant security stocks (and that’s almost everyone) can destroy the US’s economy any time they want to. With that many nations able to do it, odds are one of them will. And if one of them does, everyone will stamped for the door, sending the dollar the US economy not just into the toilet, but into the sewers.
At the current time, China is not ready to have a consumer society. As Stirling points out, it’s about 2 economic cycles away from being able to switch to one. If it gets to buy up a US car company, it’s probably one cycle away. Since the US is in a really really deep hole and currently digging deeper at a ferocious rate (the five trillion spent on the financial crisis will add to the US’s outstanding debt) when this happens is a big deal. Two economic cycles gives America longer to get its house in order and fix things so that when China does take off, it doesn’t find itself unarmed with every major nation in the world able to annhialate its economy whenever they feel like and take only minor losses themselves.
Decoupling from the US has not happened yet. The very idea was laughable when idiots were floating it a couple years ago. But the fact that it is laughable now does not mean it is laughable forever. Not only are graveyards full of indespensable men, as Charles De Gaulle once noted, but history books are full of hegemonic powers that thought that the sun would never set on them.