Deborah sent me this article from The Independent, provocatively titled China will overtake America, the only question is when. I fear like a bit of a Johnny One Note, but this strikes me as preposterous overstatement, But at the risk of being repetitive, here I go again.
I actually think it's a pretty superficial and not terribly persuasive analysis. First, the notion that economics is a zero sum game is just incorrect. The growth of China is good for the U.S. A wealthier China with hundreds of millions of middle class consumers would be an enormous shot in the arm for the world economy, not a bad thing. (Not addressing the environmental issues, which could be hideous.)
For the reasons I posted recently, I think China has problems that are far more serious than those facing the U.S. -- problems of a kind that could be deeply destabilizing.
Of course China can grow by 10% a year, Its base line is incredibly low --- it's a really poor country. To claim that it will have a bigger economy than the U.S. (If that is what "overtake" means) is not to say that much. It already has a "bigger" economy than Japan -- but there is not a serious question of which nation is wealthier. Given the overwhelming population disparity, China needs to have an economy at least four times the size of that of the U.S. to be as wealthy in the aggregate.
Let me repeat -- China is really, really poor -- it is 111th in per capita GDP versus the U.S., which is 9th. Per capita GDP in China is $5,300, slightly above Namibia and just below Egypt and Guatemala while in the U.S. it is $46,000.
China has not at this point shown that it has the ability to compete in the world of high end, value added products. Right now it is a source of cheaply produced mass goods -- this is a good base for development, but it is a far cry from having an economy that is on the cutting edge. This may yet happen, but it is going to be challenging under the existing political system. (The Russians have yet to figure this problem out despite their well educated populace and a technical and scientific base that gave them a top notch space program and the ability to produce highly sophisticated military hardware -- like a second rate colony, Russia relies almost exclusively on the extraction and export of oil, natural gas, and other raw materials to keep its economy afloat.)
I think the issue for China is whether it can develop its considerable brain power into an economically productive force in the context of a deeply authoritarian regime. Can it permit a level of freedom that will promote the kind of innovation that produces consumer and business products that people want to buy. I think something has to give -- either the prospects for innovation or the CP's monopoly on power.
