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Gatsby
Joined: 09 Feb 2007
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 Posted: Sun Jul 27, 2008 5:13 am Post subject: Is China the future? Or is it all down hill from here? |
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A Long Wait at the Gate to Greatness
By John Pomfret
Sunday, July 27, 2008; B01
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Too many constraints are built into the country's social, economic and political systems. For four big reasons -- dire demographics, an overrated economy, an environment under siege and an ideology that doesn't travel well -- China is more likely to remain the muscle-bound adolescent of the international system than to become the master of the world.
In the West, China is known as "the factory to the world," the land of unlimited labor where millions are eager to leave the hardscrabble countryside for a chance to tighten screws in microwaves or assemble Apple's latest gizmo. If the country is going to rise to superpowerdom, says conventional wisdom, it will do so on the back of its massive workforce.
But there's a hitch: China's demographics stink. No country is aging faster than the People's Republic, which is on track to become the first nation in the world to get old before it gets rich. Because of the Communist Party's notorious one-child-per-family policy, the average number of children born to a Chinese woman has dropped from 5.8 in the 1970s to 1.8 today -- below the rate of 2.1 that would keep the population stable. Meanwhile, life expectancy has shot up, from just 35 in 1949 to more than 73 today. Economists worry that as the working-age population shrinks, labor costs will rise, significantly eroding one of China's key competitive advantages.
Worse, Chinese demographers such as Li Jianmin of Nankai University now predict a crisis in dealing with China's elderly, a group that will balloon from 100 million people older than 60 today to 334 million by 2050, including a staggering 100 million age 80 or older. How will China care for them? With pensions? Fewer than 30 percent of China's urban dwellers have them, and none of the country's 700 million farmers do. And China's state-funded pension system makes Social Security look like Fort Knox. Nicholas Eberstadt, a demographer and economist at the American Enterprise Institute, calls China's demographic time bomb "a slow-motion humanitarian tragedy in the making" that will "probably require a rewrite of the narrative of the rising China."
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One important nuance we keep forgetting is the sheer size of China's population: about 1.3 billion, more than four times that of the United States. China should have a big economy. But on a per capita basis, the country isn't a dragon; it's a medium-size lizard, sitting in 109th place on the International Monetary Fund's World Economic Outlook Database, squarely between Swaziland and Morocco. China's economy is large, but its average living standard is low, and it will stay that way for a very long time, even assuming that the economy continues to grow at impressive rates.
The big number wheeled out to prove that China is eating our economic lunch is the U.S. trade deficit with China, which last year hit $256 billion. But again, where's the missing nuance? Nearly 60 percent of China's total exports are churned out by companies not owned by Chinese (including plenty of U.S. ones). When it comes to high-tech exports such as computers and electronic goods, 89 percent of China's exports come from non-Chinese-owned companies. China is part of the global system, but it's still the low-cost assembly and manufacturing part -- and foreign, not Chinese, firms are reaping the lion's share of the profits.
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http://www.washingtonpost.com/wp-dyn/content/article/2008/07/25/AR2008072502255.html?hpid=opinionsbox1
And here's a story about China with a lesson for Korea, too:
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China has spent the last 15 years rebuilding its cities to be aggressively, almost desperately, modern. As the Summer Olympics focus the world's attention on the Middle Kingdom, its new architecture is turning cartwheels to send the message: Look. We've arrived.
But Americans and other tourists rarely bother with these monuments to the future. They seek out historical sites and those last few neighborhoods where an old way of life can still be glimpsed. I did the same when I first traveled to China to start a textile business in 1977. I was constantly snapping photos of rice paddies and water buffalo, even as embarrassed Chinese tried to redirect my attention to what then passed for modern buildings and factories.
Factories? No way. I wanted the China I saw in my mind, romantic and mysterious. |
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/25/AR2008072502257.html?hpid=opinionsbox1 |
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visitorq
Joined: 11 Jan 2008
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| Posted: Sun Jul 27, 2008 5:27 am Post subject: |
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I agree with that article. China has a lot of labour, but it's unskilled. The workforce of the US is still the most innovative and flexible, and is likely to remain so for a long time. China simply doesn't give people the kind of freedom necessary to be as innovative as Americans are (doesn't mean we're smarter or anything, just that we have a more flexible system). It also has yet to prove that it can continue to develop itself at this frenzied pace on its own without foreign expertise, investment, and technology from the US and Europe. Simply put, it's easy to jump on the bandwagon and follow the path forged by the US and Europe, but a lot more difficult actually be in the lead.
(this is all merely my rather superficial opinion on the matter, but there it is). |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jul 27, 2008 7:09 am Post subject: |
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China has 1.6 trillion dollars in reserves. Do not underestimate how many storms the country can weather with that much savings.
Yes, the demographics suck. China will get old before it gets really wealthy. But it doesn't need to be really wealthy for significant economic power due to her population size.
Anyways, the article in the OP missed the biggest threat: Water.
Water, or a lack thereof, more than anything has the potential to bring the China story to a grinding halt. They are in a serious crises in the north and a looming crises in the west. This presents a huge investment opportunity for the West as China dumps her reserves in a technological search for a solution. If you're thinking about going back to university, study a discipline that deals with water and then move to China. You'll get rich. |
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blaseblasphemener
Joined: 01 Jun 2006
Location: There's a voice, keeps on calling me, down the road, that's where I'll always be
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| Posted: Sun Jul 27, 2008 2:28 pm Post subject: |
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| visitorq wrote: |
I The workforce of the US is still the most innovative and flexible, and is likely to remain so for a long time.
(this is all merely my rather superficial opinion on the matter, but there it is). |
more than germany? more than Korea?
I'd beg to differ. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jul 27, 2008 3:38 pm Post subject: |
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| blaseblasphemener wrote: |
| visitorq wrote: |
I The workforce of the US is still the most innovative and flexible, and is likely to remain so for a long time.
(this is all merely my rather superficial opinion on the matter, but there it is). |
more than germany? more than Korea?
I'd beg to differ. |
Yes, the United States has more flexible labour markets than Germany or the ROK. Also, the US has a massive technology lead over ROK and a smaller one over Germany. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Sun Jul 27, 2008 3:54 pm Post subject: |
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| mises wrote: |
| blaseblasphemener wrote: |
| visitorq wrote: |
I The workforce of the US is still the most innovative and flexible, and is likely to remain so for a long time.
(this is all merely my rather superficial opinion on the matter, but there it is). |
more than germany? more than Korea?
I'd beg to differ. |
Yes, the United States has more flexible labour markets than Germany or the ROK. Also, the US has a massive technology lead over ROK and a smaller one over Germany. |
Totally. Who do you think invents everything? The Germans and the Japanese may make some things better (cars and electronics), but they don't pave the way; that's America's job 
(and forget Korea, it's not even in the same league). |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sun Jul 27, 2008 5:00 pm Post subject: |
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| mises wrote: |
| blaseblasphemener wrote: |
| visitorq wrote: |
I The workforce of the US is still the most innovative and flexible, and is likely to remain so for a long time.
(this is all merely my rather superficial opinion on the matter, but there it is). |
more than germany? more than Korea?
I'd beg to differ. |
Yes, the United States has more flexible labour markets than Germany or the ROK. Also, the US has a massive technology lead over ROK and a smaller one over Germany. |
True. But the US is in a massive infrastructure clusterfuck. Our local transit systems are underfunded while we have roads do all the work.
I think the thrust of Pomfret's article is that we have this obsession with elevating China's potential. China has good potential, but it will not be a superpower.
A superpower can send its military forces anywhere within the world within no time, and has economic forces spanning the globe. America may lose superpower status in a decade or two, but that doesn't mean another power will be able to take its place.
Last edited by Kuros on Sun Jul 27, 2008 5:11 pm; edited 1 time in total |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Jul 27, 2008 5:09 pm Post subject: |
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| Very much agree Kuros. Did you see the Atlantic piece about suburbs being the future ghettos? The middle classes will move into the cities and will demand upgraded MT. I think this is very likely. |
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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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| Posted: Sun Jul 27, 2008 8:28 pm Post subject: |
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There's a documentary here about the suburbs:
http://www.youtube.com/watch?v=Q3uvzcY2Xug
I only watched the first half because I was curious about the history of the suburbs moreso than oil prices, and one thing I never knew is that suburbs used to be created with a contract that railway lines had to be created along with them so that people could get back and forth. Afterwards they were built without them on the assumption that people had cars and that gas was cheap. |
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Tjames426
Joined: 06 Aug 2006
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| Posted: Wed Jul 30, 2008 6:44 pm Post subject: |
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1960's US Diplomat to a Russian Diplomat after the Apollo Moon landing:
Our former Nazi Germans are better than yours', damn it.
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Nowhere Man
Joined: 08 Feb 2004
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| Posted: Wed Jul 30, 2008 7:17 pm Post subject: |
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| A superpower can send its military forces anywhere within the world within no time |
The Soviets could do that? |
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Tiger Beer
Joined: 07 Feb 2003
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| Posted: Wed Jul 30, 2008 7:29 pm Post subject: |
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| China's still the future. Sure, they are horrible at taking care of their people, but so was the United States when it was an industrial engine mass-producing everything. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Jul 30, 2008 8:10 pm Post subject: |
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| Nowhere Man wrote: |
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| A superpower can send its military forces anywhere within the world within no time |
The Soviets could do that? |
Nuclear submarines, the ships sent to Cuba during the Cuban Missile Crisis, Soviet intervention in Central and South America, etc, etc. |
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Gopher
Joined: 04 Jun 2005
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| Posted: Wed Jul 30, 2008 9:10 pm Post subject: |
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All of this "China is the next superpower" talk sounds an awful lot like the old "China Market" mythology. And this thread's title poses a false dilemma.
| Kuros wrote: |
| Nuclear submarines, the ships sent to Cuba during the Cuban Missile Crisis, Soviet intervention in Central and South America, etc, etc. |
Besides Berlin, Czechoslovakia and the rest of Eastern Europe, which the Soviet Army dominated during the entire Cold War, besides the Soviet-backed North Vietnamese Army and virtually Hanoi's entire air-defense system, and besides the Red Army's decade in Afghanistan and, at times, cross-border incursions into Pakistan, add the Soviet naval base at Cam Ranh Bay (post1975), which deployed and directed substantial naval and recon forces stationed from there to the Indian Ocean to East Africa, and add various incidents in subSaharan Africa -- such as the Congo crisis, which involved Soviet supply units, especially trucks -- a region where Soviets airlifted and deployed Cuban forces in the 1960s and 1970s. And moving into the 1980s, where do people think the Sandinistas' Soviet tanks and helicopters came from? Who advised/trained the Sandinistas' to drive and fly them?
We should also expand this to include political direction, advising, and funding: the Comintern and Bucharest.
Further, the Soviets were, at first, ahead of us in the space race. And they trailed just behind us in nuclear weapons, especially post-Missile Crisis.
China has never been in the same league, Mao's talk about backing "wars of national liberation" notwithstanding. Remember when Beijing invaded Vietnam, "to teach the Vietnamese a lesson" after Hanoi had invaded Cambodia in the late-1970s? China could barely handle that. Finally, the last intel I read estimated that China did not even possess the military power to retake Taiwan at present -- any and all political considerations notwitstanding.
Last edited by Gopher on Thu Jul 31, 2008 2:15 pm; edited 3 times in total |
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OneWayTraffic
Joined: 14 Mar 2005
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| Posted: Wed Jul 30, 2008 10:29 pm Post subject: |
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| Gopher wrote: |
All of this "China is the next superpower" talk sounds an awful lot like the old "China Market" mythology. And this thread's title poses a false dilemma.
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False dichotomy. And you're right.
IMO the enviroment will be the big thing pulling up China. Bejing's only 70km away from being swallowed up by the Gobi. And that 70km is shrinking. |
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