China's Rise Is Inevitable -- So Deal With It

Forbes Magazine ^ | 6-28-02 | Mark Lewis

[AIG]

NEW YORK - A decade ago it was Japan that touched off nationalistic fears among Americans who worry about being out-competed by Asian industrialists. Now it is China's turn to generate the scare stories. The reflex cannot be helped, but nor should it be indulged in any policy sense. China's rise is inevitable and should not be viewed as a threat.

Consider this front-page story in today's New York Times: "China Emerges as Rival to U.S. in Asian Trade." That sort of headline will become commonplace in the next few years as China increases its dominance of East Asia's economy. Yet at the same time, U.S. exporters will benefit from the growth of China's internal market, and U.S. consumers will benefit by buying China's low-priced and increasingly high-quality exports.

China's rise does call for an adaptive response from Washington, which must find a graceful way to accommodate itself to the new regional superpower. But in terms of trade, the key policy already is in place--China was last year ushered into the World Trade Organization, under whose auspices this formerly closed society will be fully integrated into the global economy.

Of course, there's still the little matter of Taiwan, which the U.S. is pledged (in vague terms) to defend. The best-case scenario: China's embrace of capitalism forces it to evolve into a full-fledged democracy, as people who gain economic control over their lives insist on political control as well. If that happens, Taiwan will end up clamoring to merge with the mainland in order to avoid the fate of China's other small neighbors, which will find themselves overshadowed by the revitalized Middle Kingdom.

Let's minimize the hand-wringing over this situation. Would anybody seriously prefer that China had remained shackled to the Maoist precepts that kept its economy small and weak? In any case, that's not an option. China's emergence is a fact to be recognized rather than fretted over. And it is also an opportunity, because America with its flexible economic system is well positioned to adapt to new realities and benefit from them.

The supposed threat from Japan generated a lot of concern in the early '90s, yet nowadays the scare headlines are all about Japan's economic decline, which is seen as bad for the United States. If China's economy runs into serious trouble, that too will be bad news for America.

But China, even if it stumbles along the way, is a much better bet than Japan to eventually achieve regional dominance, both politically and economically. This will make some Americans nervous. They may as well start getting used to the idea now--and make plans to take advantage of it.

[AIG]

China, even if it stumbles along the way, is a much better bet than Japan to eventually achieve regional dominance, both politically and economically.

Unlike Japan, China's economic potential is not limited by population size. Japan's per-capita GDP today, even after 10 years of recession, is still the highest in the world at $39,000, higher than even America's. For Japan's GDP to have surpassed America's in the early 1990's, Japan's per-capita GDP would have had to have been about $45,000+, which is too much to ask for. Japan's population is 130 mil. while China's is 10 times bigger. The 100 mil. richest Chinese living in China's largest cities already enjoy living standards on par with Taiwan or S. Korea. With each passing decade, another 100 mil. or so will attain this standard of living.

[Jhoffa_]

Of course, there's still the little matter of Taiwan, which the U.S. is pledged (in vague terms) to defend.

Translation: "Screw them.. I mean, this is your 401K we are talking about here!"

When the China "reunification" happens (sometimes refered to as an invasion, but never by politicians, diplomats or investors) you will see a whole bunch of people generating random excuses to just let it happen and shut up about it.

[anymouse]

AIG signed up 2002-06-28

Pound sand chicom sympathizer.

[AIG]

There's the military aspect and then there's the economic aspect. Taiwan's economic lifeblood, its hi-tech businesses, are moving to the mainland of their own free will and hurting Taiwan's economic vitality. It's doubtful these firms will ever return. It makes an invasion less necessary when all these Taiwanese businesses are moving to the mainland and hurting Taiwan itself and its ability to pay for its future defense budgets. The migration of these businesses hurts Taiwan's future economic viability as an export-based economy, which is vulnerable also because it does not have much of a self-sustained domestic market in anything.

[Dialup Llama]

As soon as China's workers realize that they don't have to be slaves to make those 100 million rich Chinese rich, wages will rise. The reason why the world's CEOs love China so much is that you can put a gun to the workers' heads to hold costs down. When this is taken away what will happen to China's wage arbitrage strategy?

[AIG]

It's American consumers themselves that are helping make China rich. Maybe you ought to start blaming yourselves.

[happytobealive]

PAPER TIGER -- There so far behind us in everything!

[antidisestablishment]

The best-case scenario: China's embrace of capitalism forces it to evolve into a full-fledged democracy, as people who gain economic control over their lives insist on political control as well.

And the real world scenario?

[Vidalia]

China, even if it stumbles along the way, is a much better bet than Japan to eventually achieve regional dominance, both politically and economically.

It was written thousands of years ago, and believed by the Chinese Elite, whether Imperial or Communist, that the Chinese will be the Rulers of the World, regardless of the "size of the World".

Odd how this prediction of thousands of Chinese philosophers is never spouted on the History Channel, but the never-ending recitals of the Quatrains of Nostradamus are.

[AIG]

China's wages have been rising the fastest in the world for the past 20 years. 20 years ago, the poverty rate was over 50%, but today it's just 16%. The increase in wages was the result of the normal capitalist process of the rich getting richer raising all boats. 20 years ago, those 100 mil. richest who exist today didn't even exist. In the next 20 years, there might be 300 mil. Chinese with a similar, First World standard of living. The wages of the workers in China's coastal cities have risen so much in recent years that capitalists are having to set up factories gradually more inland into the interior of China to access cheap labor.

[AIG]

Chinese may aspire to be rulers of the world, but Americans already are rulers of the world for the most part. I don't see America willingly giving up that position anytime soon.

[AIG]

China is merely following the proven one-party, authoritarian path of development that the rest of E. Asia took over the past several decades to leap from Third World to First World status in a generation (Japan, S. Korea, etc.). This is the better path than today's chaotic, dysfunctional Third World democracies which never seem to be able to get their act together and wallow in poverty for generation after generation after generation (India, Indonesia, Russia, S. Africa, Argentina, Brazil, etc.).

[happytobealive]

the poverty rate was over 50%, but today it's just 16%.

Aren't all Chinese statistics wild guesses?

[applemac_g4]

>Would anybody seriously prefer that China had remained
>shackled to the Maoist precepts that kept its economy
>small and weak?

Yes, actually.

China is our enemy. They know it, and don't hesitate to say so.

[Jhoffa_]

There's the military aspect and then there's the economic aspect.

You are overlooking the nazi aspect.

The chineese ruling class are quite possibly the most arrogant race on the planet. They are self centered and they will not stop until their rogues are brought under control, imho.

Personally, I could care less about trade.. if it comes down to selling out taiwan then that's not acceptable. If they re-unify on their own, from economic pressures, as you alude to then it's on their own head.

[happytobealive]

China is far less powerful than the Soviet Union was, and we now know what a sham that communist country was.

They just bought DEISEL submarines.

[Jhoffa_]

Pound sand chicom sympathizer.

Oh my.. Yet another moronic "fiscal" conservative..

(they are like a bill clinton who knows how to balance his checkbook)

[AIG]

You fear China more as a capitalist country than as a communist one?

[AIG]

The 16% poverty rate comes from the CIA World Fact Book.

[Libertarianize the GOP]

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