Many people in the West believe that China is already a superpower, or will quickly replace the United States to become a superpower. A recent poll by the Pew Research Center reveals that 44 percent of Americans believe that China is the top global economic power, while in reality, China’s economy is barely one-third the size of the U. S. economy. This kind of misconception has engendered many unrealistic fears about China.
The truth is that China is not a superpower, and I doubt it will ever become one.
Fareed Zakaria, CNN host and Washington Post columnist, defined in his bestselling book The Post-American World that a superpower is a country that achieves dominance in ideas or ideology, an economic system, and military power. Continue reading Myth of China as a Superpower
An interview with Stephen Roach by Clay Chandler, the McKinsey publishing group’s Asia editor in Hong Kong.
In China’s rush to join the global economy, the country stoked exports and government-led investment but neglected to build social and economic institutions needed to encourage consumers at home. Stephen Roach, Morgan Stanley Asia’s chairman, says its time for the world’s fastest-growing economy to find a “back-up plan.”
People often compare China’s urbanization to Western industrialization in the 19th century. In both cases, a large population moved from the country to the city. Society advanced from agricultural to industrial via manufacturing on a massive scale.
However, there is a key misconception about China’s manufacturing prowess.
In the United States and Europe, the manufacturing industry was created due to technology innovation. For example, railways came into existence because of the invention of the steam engine and automobiles were created because of technology breakthroughs in automobile engines.
In China, the manufacturing industry is being created in response to global demand. Chinese manufacturers take orders from Western companies that have designed products for their home markets. They have no involvement with product development, innovation, market research, and even packaging. Chinese manufacturers have no experience in bringing their own products to overseas markets.
News is out that China overtook Germany to become the largest exporter in 2009 (not surprisingly). Its share of world exports increased to almost 10 % – about the same slice as Japan’s exports in 1986. A recent Economist article predicts that if China continues its current pace, its share of the world’s exports will increase to about 25 percent in ten years.
As I dug deeper, however, I saw a different side of the story. China’s exports actually fell by 17 % in 2009. Its imports, fueled by a burgeoning middle class, have been stronger than exports, increasing by 27 percent while exports were falling. Continue reading Myths about China’s Exports
A recent McKinsey Global Institute report “Preparing for China’s Urban Billion” says that the country’s unprecedented urbanization will continue over the next 20 years, and by 2030 China’s urban population will reach 1 billion. Here are some numbers that are indeed mind-bogging:
-By 2025, China will have 221 cities with more than one million inhabitants – compared with 35 in Europe today.
-China’ urban population will expand from 572 million in 2005 to 926 million in 2025. Over 350 million people will move from rural areas to the cities – more than the population of the Unite States. Continue reading China’s Urban Billion