Let's see here... China and the USA are playing this little dance. China makes stuff and sells it to people in the USA. People in the USA can afford to buy the stuff from China because they borrowed the money, from China...
We could look at it this way: China, as the world's largest emerging market and also the world's manufacturing centre is pretty well set. At any point, they can just stop buying US debt, double or triple their internal financial support (either through infrastructure projects or direct welfare), and let their own people be their own manufacturer's market. Of course, they would have to prevent their now-rich people from buying non-Chinese products, but a nice trade-war would accomplish this fairly easily.
Or, we could look at it this way: China has been busily manufacturing all this stuff and selling it to a counterfeiter. The US is, after all, just printing money to buy this stuff. What is this money actually suppose to be worth? Thus, the people in the US have all this Chinese stuff and the debt accrued while paying for it will simply disappear with hyper-inflation. Hyper-inflation will happen when people realize that US money is worthless, which will happen as soon as China stops buying it. China will be left with a pile of worthless money, polluted rivers, and air they can't breath. The US, not being able to import anything, will have to ramp-up local manufacturing and, in the process, create local jobs. It's not like there isn't the know-how available to do this. US businessmen have been setting up factories all over the world and staffing them with unskilled labour. Doing it at home will be easy.
So, who wins?
Well, I say China. If they had let things go, contented themselves with just being the world's biggest emerging market, then they would be the ones with debt right now. Instead, they played with the currency such that the majority of their people never really got to the point of being consumers. They exploited their impoverished people, US manufacturing competition, and global trade liberalization such that China became the world's manufacturing centre instead. Yes, all that money they bought to keep their own people poor will become worthless. However, worthless money is still better than debt. The old China could not have ramped up internal production to meet the needs of their people that had become spoilt on imports. Now, they already have the manufacturing. They don't really need an export market because they already have a billion people emerging from poverty. Those people have a lot of things to buy.
I don't think it will be all that bad in the USA, certainly not as bad as the doom-sayers expect. There will be some turmoil, and the embarrassment of no longer being the economic powerhouse of the world. Britain survived this, and the British people seem fine. The US is still a military superpower, and this isn't likely to go away, not when their arms manufacturing is mostly internal anyway. Manufacturing will return and jobs along with it. Really, as all things economic are relative, when China bows out, goes internal as in the Middle Kingdom days of old, the rest of the world will probably get back to normal. Again, after the turmoil subsides.
Really, all that happened is that China screwed the world out of being able to exploit it as the world's biggest emerging economy. They industrialized without being exploited. It's a pretty neat trick when you think about it that way.
I'd start with a series of pocket computers, all doing basically the same thing but with different performance and sizes. There would be tiny ones, about iPhone sized, middle ones, something as small as the Nokia N810 all the way up to the iPad, and even bigger netbook sized ones. They would have options for built-in hardware keyboards if people wanted them. All would have WiFi and Bluetooth, none would have GPS, accelerometers or fancy cameras. Sure, maybe something like the N810 webcam, but nothing more.
Next, I'd have a wristwatch voice-controlled cellphone with built-in GPS. In stand-alone mode, it would offer basic voice communication and direction-finding. It might even tell the time. However, it should tether to the computer and give it full Internet access over the cellular network. The computer should be able to call people on the contact list or allow typing and reading SMS communication. It should also be able to display full navigation maps and other GPS features.
Next, I'd have a camera, maybe a little point&shoot, maybe a full DSLR. Whatever I want to use and am willing to pay for. This too should be tethered to the pocket computer. If I take a picture, it should automatically geo-reference from the wristwatch GPS data. It should transfer pictures to the pocket computer with a touch of a button. The pocket computer should allow full remote-control of the camera, with a full remote-viewfinder.
Next, I'd have a TV at home. If I tether the pocket computer to the TV, the TV should become the monitor for the pocket computer. Maybe this TV has a keyboard/mouse interface attached as well. Movies could be played from the pocket computer on the TV or, alternatively, the pocket computer could be the remote control for the TV with other media sources.
Next, I'd have similar TVs in the hotel room when I'm traveling. Maybe, this TV is in an airport kiosk and I pay by the minute via my cellphone contract to use it. Thus, all my personal computing goes with me, all my media, all my contacts, everything, yet I have access to a full monitor and keyboard when I want to get something done. Why should I have to lug around a screen and monitor while traveling? All I need is the computer, and maybe a little screen for casual use while I'm waiting around.
Next, I'd have a mass-storage device that tethers to the pocket computer. Maybe it's a cheap hardrive, or maybe it's the latest in solid-state. Again, my choice, any size I want and easy to upgrade.
Next, I'd have little I/O modules and sensors: Maybe a cheap accelerometer inside a tennis ball, maybe a weather-station. Whatever I want to buy, sort of like Wii game controls. The more to choose from the better. After all, while there is an iPhone app that allows you to see who can toss the iPhone up the highest, do you really want to do this with your expensive monolithic smartphone? Why not put the stupid little sensor in something that costs $20 and tether it to the expensive part? Put it inside a baseball and see how hard batters are hitting it, whatever comes to mind.
Next, I'd have some motion-powered battery chargers. I'd make all of these devices use the same small batteries, small enough to fit in the GPS watch. Larger devices would just use packs of them. These batteries would go in the motion-powered battery chargers that are worn on the wrists. Yes, they would be heavy, but that's the point. They are for exercise. As you exercise, you charge your batteries. It wouldn't have to be that practical, as most of the battery charging would be done at home on a base charger, but the idea would get people moving.
The basic idea is to break up the monolithic smartphones into individual devices. The advantages of doing this are many:
- People can build the exact system they want. If photography is important, get the expensive camera, if movies are important, get the better screen, or more processing horsepower, or smaller size, or... Rather than trying to find the perfect smartphone, and settling for deficiencies as there can never be perfection for everyone, all the best components can be put together as desired.
- Individual components could be upgraded as the user wants. Rather than forking out big-bucks for a new monolithic device, each component could be replaced as something better comes along. New sensors or game controllers can be bought whenever they come out.
- People don't have to carry everything if they don't want to. If they're going for a jog, do they really want to carry a pocket computer just because they need a cellphone? If they're not planning on taking pictures, maybe they won't carry the DSLR, maybe they'll slip a cheap point&shoot in their pocket instead.
- Companies can keep selling devices, over and over again, as each component won't be too expensive. Alternatively, really expensive components can be sold as they won't become obsolete like a monolithic package would. The fabulously-expensive DSLR could outlast several pocket computers, for example. Thus, discriminating customers would be willing to pay quite a lot more for some of the components.
This idea is now published and, as such, is free to the world. Feel free to take this idea and do with it as you wish. I expect no remuneration, but do expect attribution. Please tell people where this idea came from.