As the rest of the world struggles to recover from the most severe global economic crisis since the Great Depression, China’s powerful economic miracle has created, effectively, a gradual reverse-flow of economic power from Western to Eastern capitols. Witness, for instance, the emergence of Japan as the second largest economy in the world after having replaced Germany last decade as the former number two economy. And if you believe recent World Bank reports, China, the fifth largest economy just four years ago, will soon replace Japan bumping it to the number three spot; and somewhere in the next decade or so will be poised to displace the U.S. economy as the leading global economic power. When measured on a purchasing power parity (PPP) basis,[4] China is already the world’s second largest economy after the U.S. with a GDP of $7.8 trillion (2008). In fact, according to a recent NY Times article, impressive new economic records, it seems, are being reached daily by the large Emerging Market economies – known more commonly as the BRIC nations. In this remarkable environment of global trade and economic competition – and helped along by foreign direct investment (FDI) of approximately $80 Bn(US) in 2009, foreign currency reserves of $1.6 Trn in U.S. Treasury notes, and a declining greenback – China in particular has surged past the United States to become the world’s largest auto manufacturing Market according to recently released data. To boot, in rapid succession of that amazing feat, China also toppled Germany as the world’s largest exporter of manufactured goods according to preliminary 2009 year-end trade data released last week.
All this is impressive. Yet, as a casual observer of mainstream sentiment, and judging by feedback & reactions to some of my recent posts, it appears that China’s success and emergence is unsettling to many and is becoming the source of collective angst toward China. I mean, you can just read the headline of the above referenced NYTs article to sense the anxiety; or check-out this ‘BloggingHeads’ debate about ‘Fearing China’ from the NYT’s online video series. But this is by no means unusual. It is a prime example of the latent economic nationalism that exists in the national character of many nations — especially competitive ones like ours.
This type of underlying negative sentiment toward China , however, is not new. China has been in the process of emerging for over three decades now – ever since Deng Xiaoping’s economic & Market reforms liberalizing State control of China’s economy began in 1978. Consider also the fact that in that same time period China has lifted 300 million of its citizens out of poverty and subsistance conditions into a working and middle-class economic engine for the nation. During the same time period, twelve million more Americans slipped into poverty — an increase of 33%. And as long as I have been on ‘the Street’, analysts, strategists, pundits, investors and arbiters from ‘the City’ and other financial centers in the West, using Japan as its best example, have been prognosticating the “unsustainability” or imminent economic implosion of China’s remarkable economic growth and performance. And, of course, no doubt it is bound to happen: after all, even a broke clock is correct twice a day.
But my larger point is simply this: Rather than jumping on the 30-year long “China’s-growth-is-unsustainable” bandwagon, observers would be better served tending to our own acre of diamonds by supporting and advocating for aggressive financial and economic reforms necessary to making the West – and the U.S., in particular – more globally competitive, economically viable and sustainable over the long haul versus newly emerging world players like China & Brazil, among others. That begins by holding Wall Street and the financial industry accountable for the practices and over-leveraged risk-taking that precipitated the global financial crisis and the resulting economic shocks – shocks that have devastating human costs that leave deep impacts on people, lives and struggling families. If you haven’t been to Shanghai, Beijing or Guangong province lately to marvel at China’s planning and infrastructure acumen, then asked yourself: ‘Why can’t we accomplish the same thing in the West since we pioneered development?’ a trip would be well advised.
The gradual transition of the global competitive landscape from West to East, in particular to China, has occurred partly because economic growth & performance as measured by GDP, FDI, Currency Reserves, job growth, balance of payments, etc, has remained remarkably robust while the world’s wealthy nations and leading developed economies continue to endure the most precipitous decline in global competitiveness, international trade and gross economic production since the Great Depression – rescued, interestingly, only by the advent of WWII. Hmmm…
As a casual observer of mainstream sentiment, and judging by feedback and reactions to some reports, it appears that China’s economic success and emergence is unsettling to many and is becoming the source of collective angst in the West toward China.
And lest I be misunderstood, I’m not an apologist for things Chinese — although I have a weakness for shrimp mei fun. All I’m saying is that China has five-thousand years of recorded history — and much longer when you consider the archeological record: we might have something to learn about economic sustainability and long-term planning from their ancient civilization, rather than nascently resenting their economic emergence.
In any event, my other point is this: as the NY Times article pointed out, the competitive transition from West to East – contrary to common punditry – did not happen by chance. China’s managed brand of State capitalism, its assiduous implementation of specific five-year economic plans, its efficient State intervention in the national economy without the “advice and consent” of a legislative bureaucracy – as is often the case in Western democracies – combined with the “defiant optimism of its companies and consumers, has propelled an economy that until recently had seemed tethered to the health of its major export markets” – primarily the U.S. This brand of ‘State capitalism’ – Tea party fanatics to the contrary – is yet another form of capitalism that, thus far, has yielded far more benefits, in far shorter a period of time, without the economic shocks common to capitalism’s development trajectory in the West. Maybe, just maybe, we could endure a little humility in the West and learn a few things from the Chinese.
By contrast, the global financial crisis, in general, and the U.S. ‘Great Recession’ in particular, China Daily’s website noted recently (and as I have written about prolifically on this blog), has laid bare the unsavory and harmful nature of Western-style, or Laissez-faire, capitalism.
Of course, China’s State-run media not missing a beat to whip up nationalist sentiments, indulged in a measure of self-aggrandizement, hailed China’s emergent economic prominence as proof of superior global competitiveness. The country’s economic miracle, the State-owned newspaper, People’s Daily, boasted last week, exists because China’s State system — unlike those in the West — can make and implement economic policy quickly & efficiently.
Say what you will, but the proof is in the pudding.
Source: NY Times, IMF.com, Wiki Image: english.pravda.ru
