China has more than $3 trillion in currency reserves, more than any other country in the world. They've decided to use some of their reserves to invest in the euro, the currency of the European Union. In putting money behind the euro, China says that despite the challenges posed by financial problems in Greece, despite worries that the euro is weakening, in the words of Premier Wen Jiabo, it has "confidence in the economies of Europe and the euro-zone".
This isn't the first time that China has played rescuer in Europe. In April, it bought bonds and some debt in Spain. We should be clear that China bought more than bonds and debt, though. China is in the process of purchasing goodwill in Europe, goodwill that they can't buy in the United States. They are also diversifying their holdings, and tilting away from the dollar and toward the euro, which many see as the alternative global currency. Is the dollar too big to fail or to undermine? Not with a stable euro!
We have already seen the oil-producing nations tilt toward the euro, partly in response to their perception that the United States has been biased against Arab nations. We have seen the dollar weakened, and we have seen our nation's mounting debt. Consider the contrast. While the United States struggles to raise our debt ceiling, China has money to burn, and they are burning it by bailing out the euro and displaying their confidence in the ways Europe will help build the world economy.
While China is supporting the euro, the United States has been critical of the European Union. With votes on several international finance positions coming up, could China's support of Europe buy them a bigger role in the World Bank or the International Monetary Fund, or could it open up the possibility that some in Europe might be more open to having leadership from countries other than the United States and Europe in those roles?
There are so many signs that China is in its ascendency, while the United States is in a downward spiral. While China is investing in higher education, the United States is divesting in education. While the number of engineering graduates in the United States is stabilizing or dropping, the number in India and China is rising, if not soaring. China's increased investment in Europe, when coupled with its growing investment on the African continent, signals its commitment to be a player in world economic policy, and its willingness to use its investment strategy to find allies. This does not bode well for the United States.
To be sure, China should play the world economic game to the best of its ability, even as it invests internally to provide the best education they can for their citizens. But the United States should be doing the same thing. Instead, we have basked in the glow of being world leader for so long that we don't realize that the rules of the game are changing and that China is nipping at our heels and our influence is waning. While other countries are shoring up education, we have a growing achievement gap. African American youngsters enter the educational system disadvantaged too often, and the gap rises as these young people attend underfunded inner city schools. While much of the attention around the achievement gap focuses on boys, black girls, too, have an achievement gap, but it has been less frequently researched than that gap for boys.
Some of the gap has to do with public policy, but some has to do with personal habits. While only 40 percent of African American households have at least 100 books in the home, about 80 percent of white households have at least 100 books. White parents are more likely to read to their children than African American parents are. And the average African American youngster watches about 8 hours of television a day. We don't need to pass a law to turn the television off! There is a policy gap, but also a personal gap, that contributes to the waning of US influence in the world.
The United States global position will continue to erode unless we choose to invest in people, in education, in jobs. African Americans, too often at the periphery, will also see our status erode unless we are creative and, indeed, combative, against trends that weaken our community. China is doing what it needs to do to secure its world position. What are we doing to secure ours?
Dr. Julianne Malveaux is a noted economist and president of Bennett College for Women. She is the author of Surviving and Thriving: 365 Facts in Black Economic History, available at www.lastwordprod.com.
