It's really easy to these days to look at the actors on the world stage
and see one dying a tragically slow death while the other ― the
original gangsta, so to speak, of superpowers ― is being resurrected.
Of course, the former is the United States whose eclipsing preeminence in
the quotidian heave-ho, he-said-she-said of world affairs is only fueling
China’s ascendance to where it once was as a, if not the,
center of learning and innovation. After all, for much of the time that
people in Europe were burning each other at the stake for saying that the
Earth revolved around the sun and such, the Chinese had already settled many
of those questions ― as with Shen
Kou nearly half a century before Galileo ― and I would be
surprised to learn that there was an theocratic blow-back.
For the last couple of months, though, you can’t read a newspaper without
learning that what you and your dog ate for dinner last night came from
China and that both the dog food and the people food was nothing but
highly-processed uranium fried in peanut oil (it’s amazing what a little
food dye and artificial
flavoring will do to cover up that pesky metallic aftertaste).
But on a regular basis ― for longer than we’ve been bombarded with
stories about Thomas the Tank
Engine of Death ― we’ve been told that China’s economy is on
fire and that we better start graduatin’ some more scientists and
engineers or we’ll be left in the proverbial dust.
Don’t take my sarcasm as disbelief (it’s just the way I am). I certainly
do think what’s happening in China is extraordinary, and I do believe that
America’s got it’s work cut out for it when it comes to keep a top-notch
foothold in a game that suddenly has a lot more competitors than say, oh,
fifty years ago when Europe was in tatters, along with Asia, Africa,
and…oh, hell, you get the point, the US didn’t really have any
competition.
Sure, this is considerable. It is important to be cognizant of what’s
happening in China ― good and bad ― but it’s equally important
to remember what happened the last time we were told that an Asian country
was going to take over the world.
From a great little article
in TIME a couple of weeks ago:
And as we all know, Japan went on to become the new superpower. American workers now sing Japan's national anthem and do calisthenics every day before going to work in Japanese-owned companies, while little girls all over the world learn the tea ceremony and wear kimono.The author goes on to talk about China’s newfound and oft-touted “soft power” ― no, no, no, not those, silly ― which is at least just as exaggerated as when people were talking about Japan. A truism that can be displayed by the fact that China’s best and brightest don’t stay, creating the “worst brain drain in the world.”
OK, I made that [that] paragraph up... In the late '80s and early '90s, as a bureau chief in Tokyo, I did my bit to help forge the conventional wisdom about the grim future of the U.S. That we were wrong about Japan's supposed soft power — that's to say, a nation's ability to get other countries to do what it wants without coercing them — became laughably obvious about halfway through the '90s. Journalists then spent the latter half of the '90s writing about Japan's "lost decade."
The fact is, as the author points out, having a little dough to wave in front of people’s face isn’t the same as the people actually liking you.
It's one thing to say China's economic clout is rising, but quite another to say that its soft power is on the rise. The two aren't the same: soft power is not about a government's inherent attractiveness, but a society's — of which a government is only a part.Sure, the US has taken a lot of criticism lately, deservedly so, and seen it's "soft power" diminish as a result, but that doesn’t change the fact that people not only love it but are drawn from every part of the world to be a part of it. It’s one of the few places in the world where you’ll see people of every color, descent, and class succeeding in every field (see also India, below).
That's why the talk about China's soft power is exaggerated. There's no question that China's economic success, coupled with its ongoing political repression, is a godsend to a lot of governments, particularly despots. It says to them: see, your citizens can be economically satisfied without you having to worry about this democracy stuff. China ostensibly offers an economic model in which state-owned companies continue to play a big role. And when things go wrong — when, say, companies obsessed with cost cutting contaminate food exports — you can swiftly execute (as China did on July 10) the head of the country's Food and Drug Administration. Forget the tiresome headache of drawn-out legal proceedings; you can show a mortified populace at home and abroad a bloody head on a pike and get on with things. If you're a developing world dictator, what's not to like?
But soft power's real potency comes not from what other nations' governments think of you, but what their citizens think. It's about how a country is perceived, what it stands for. And a lot of people know there's more to China than just 10% GDP growth. They know it has now, by some estimates, overtaken the U.S. as the world's largest source of CO2 emissions. That 13 of the world's 20 most polluted cities are in China. That Beijing censors its press and the Internet with withering efficiency.
This isn’t some rosy, city-on-a-hill picture. I know there is a LOT about America that is sordid, backwards, hypocritical, pretentious and conniving. That doesn’t change the fact that it’s probably easier for a minority to succeed in America than he is in most European countries or that a kid from a poor family can grow up to be the President (yeah, so can a kid from a rich, well-connected family with lots of ties to oil companies) whereas the political elite in most other countries come from a pretty small circle.
China’s still got a lot of hurdles to jump ― environmental, political, and economic ― not the least of which is treating your citizens like human beings.
A-gu recently outlined some of the issues from this article:
AIR POLLUTION: "The country is home to 16 of the world's 20 most polluted cities.... Particulates are responsible for respiratory problems among the population, and acid rain, which is caused by sulfur dioxide emissions, falls on one-quarter of China's territory and on one-third of its agricultural land, diminishing agricultural output and eroding buildings.... Levels of airborne particulates are now six times higher in Beijing than in New York City."
WASTING POWER: "Chinese buildings are not energy efficient -- in fact, they are roughly two and a half times less so than those in Germany. Furthermore, newly urbanized Chinese, who use air conditioners, televisions, and refrigerators, consume about three and a half times more energy than do their rural counterparts."
FOOD SAFETY: "Meanwhile, much of China's arable soil is contaminated, raising concerns about food safety. As much as ten percent of China's farmland is believed to be polluted, and every year 12 million tons of grain are contaminated with heavy metals absorbed from the soil."
(You think they throw 12 million tons of grain away? I don't think so. Someone's getting the short end of that stick.)
DESERTIFICATION: "The Gobi Desert, which now engulfs much of western and northern China, is spreading by about 1,900 square miles annually; some reports say that despite Beijing's aggressive reforestation efforts, one-quarter of the entire country is now desert."
WATER SHORTAGE: "... two-thirds of China's approximately 660 cities have less water than they need and 110 of them suffer severe shortages. According to Ma Jun, a leading Chinese water expert, several cities near Beijing and Tianjin, in the northeastern region of the country, could run out of water in five to seven years."
WATER WASTE: "The agricultural sector lays claim to 66 percent of the water China consumes, mostly for irrigation, and manages to waste more than half of that. Chinese industries are highly inefficient: they generally use 10-20 percent more water than do their counterparts in developed countries. Urban China is an especially huge squanderer: it loses up to 20 percent of the water it consumes through leaky pipes."
WATER POLLUTION: According to one report by the government-run Xinhua News Agency, the aquifers in 90 percent of Chinese cities are polluted. More than 75 percent of the river water flowing through China's urban areas is considered unsuitable for drinking or fishing, and ... 30 percent of the river water throughout the country to be unfit for use in agriculture or industry. As a result, nearly 700 million people drink water contaminated with animal and human waste."
SEWAGE DUMPING: "A 2005 survey of 509 cities revealed that only 23 percent of factories properly treated sewage before disposing of it. According to another report, today one-third of all industrial wastewater in China and two-thirds of household sewage are released untreated.... The Yangtze River, which stretches all the way from the Tibetan Plateau to Shanghai, receives 40 percent of the country's sewage, 80 percent of it untreated."
BIO-DIVERSITY: "In early 2007, Chinese officials announced that over one-third of the fish species native to the Yellow River had become extinct due to damming or pollution."
GLOBAL WARMING: "Chinese and international scientists now warn that due to rising sea levels, Shanghai could be submerged by 2050."
IT'S EXPENSIVE! "Several studies conducted both inside and outside China estimate that environmental degradation and pollution cost the Chinese economy between 8 percent and 12 percent of GDP annually."
CANCER: "a 19 percent rise in urban areas and a 23 percent rise in rural areas since 2005." Holy shit, that's a lot of cancer! People who die of respiratory diseases related to air pollution number between 400,000 and 750,000 a year.
POLITICAL IMPACT: "In the view of China's leaders, however, damage to the environment itself is a secondary problem. Of greater concern to them are its indirect effects: the threat it poses to the continuation of the Chinese economic miracle and to public health, social stability, and the country's international reputation. Taken together, these challenges could undermine the authority of the Communist Party."
PROTESTS: "... 51,000 pollution-related protests in 2005, which amounts to almost 1,000 protests each week..... in 2005, 30,000-40,000 villagers from Zhejiang Province swarmed 13 chemical plants, broke windows and overturned buses, attacked government officials, and torched police cars. The government sent in 10,000 members of the People's Armed Police in response."
Need I mention that Chinese are people? There is bound to be social unrest, which could be a very destabilizing factor in the future.
And of course, underlying all these problems are local officials unwillingness to do much about pollution regardless of the central government's orders because of the race for economic development. If you're a Chinese (or international) manufacturer, do you build your plant in the city that requires treating water, or the one that winks and looks the other way?Sure, it’s great to do business with people who don’t care about anything but the money your lining their pockets with, but I don’t see it as being sustainable. China’s going to have to change a whole lot before it becomes an enduring player on the world stage.
Meanwhile, there’s India, the world’s largest democracy, and so few people (including myself) seem to be paying attention. In Amartya Sen's great little book Identity and Violence, he notes
India, with more than 80 percent Hindu population, is led today by a Sikh prime minister (Manmohan Singh) and headed by a Muslim president (Abdul Kalam), with it's ruling part (Congress) being presided over by a woman from a Christian background (Sonia Gandhi).Again, no rosy pictures. Two bombs exploded today in Hyderabad. There are tensions between different groups there, but my bets are still on India.
6 comments:
I agree that India is definitely an up-and-comer, even with its own share of problems.
My bet would still be with the Chinese if (and these are BIG 'ifs'):
- The Chinese can replace or transform their government with one allowing free press, open criticism of local and national problems, and responsiveness to popular demands.
- The economy can switch gears to a more openly capitalist (rather than mercantalist) system.
- The foundation of local government is reordered, so that local leaders are beholden to local residents at least as much as they are beholden to central authority.
Of course, the weight of history and culture are very much against these changes. For now, wait and watch.
This post reminds me a little bit of Gordon Chang's The Coming Collapse of China. China certainly does have it's problems, but it's developing a number of different levels and doing so very quickly. Even in the 80's, its growth was far more rapid than Japan's.
The important thing to remember is that for the Japanese to overtake the US, they would each have to become three times as productive as an American. For the Chinese to overtake the US, they only require one third of the productivity each. Which do you think is more plausible?
"There are tensions between different groups there, but my bets are still on India."
Your bets are on India for what? For catching up with China again economically? While India has been the number two growth economy over the last 25 years, China has been growing faster by a sizable margin ever since Deng Xiao Ping's reforms. In fact, India used to be quite a bit ahead of China in terms of economic development, but it's steadily been falling further and further behind.
Mark,
I'm no economist, and I respect your opinion as someone who knows not only a lot more about the system than I but more specifically someone who knows quite a bit about Asian markets.
But, the reason I believe more in India than I do in China has very little to do with the present or the short term. I honestly feel that China has less of a chance in the long term to maintain steady growth than India does.
Again. I'm not an economist. The only books I've read on economics are about development (Stiglitz, Sachs, Sen, etc.).
To me, India seems better prepared to persevere in a globalizing world.
Bear in mind, though, what I'm not saying: (1)I don't believe in China or (2) that I don't have doubts about India.
I posted this because I myself often get caught in the sort of unquestioning acceptance that China and India, despite the hurdles they've still got to overcome, are bound to rule the world. It's just meant to remind myself, if anyone, that there's still a lot left to remedy.
Concerning India and China, from all that I've read, which I could hardly summarize in a comment, I get the impression that the destabilizing factors that seem somewhat more foreboding in the case of China, will lead to relenting growth.
There's also the fact that I know more about China than I know about India. It could be that I just don't know enough of the bad about India.
Finally, the biggest difference between the two is that India has already made the step to become a democratic nation. I feel that China, with more and more protests and less ability to crush dissent and control all channels of information, is going to have to face up one day to the fact that it can't manipulate its population anymore. How that comes about will be critical in regards to how their economy is effected.
I apologize for the disorganization of this comment, I've just woken up and I won't be able to write for the rest of the day (I hate Wednesdays), so I wanted to get this out there.
couldn't resist commenting here.
I'm in the UK studying at a place where lots of international student go.
I met a few Indian's here and a few Chinese. Now I've learned a lot about India from the Indians and I feel like I really want to travel there now. I've probably taught the Chinese a bit more about politics (which is scary since I know very little), I certainly didn't learn much other than how to say a few words in mandarin... which just confused me cause they were different to what I thought..
My vote is on India. I'm also not an economist or anything, but thats my experience anyway. Just that the Indian is very good at critically assessing his government while the Chinese never bring that up and mostly don't want to talk about it.
My vote is on China, if only because I believe a huge population growth in poor Indian provinces coupled with its demographic system will force its government to preserve pro-equality laws to the detriment of economic reform. While it is great to have religious tolerance and democracy, they alone do not guarantee economic growth. Indeed, economic growth often takes place in a background of considerable racism and instability--as evidenced by the 19th century United States, whose economy grew at 6% through slavery, Jim Crow, a Civil War that killed half a million people, and a twenty year long low-level insurgency among the Native American tribes of the West.
"I posted this because I myself often get caught in the sort of unquestioning acceptance that China and India, despite the hurdles they've still got to overcome, are bound to rule the world."
Hmm... I don't think either will "rule the world". China is the fastest growing, most dynamic economy, and India is out-growing everyone else, except possibly Estonia. However, the US has a much nicer age pyramid, is much easier for immigrants (which is changing), and a healthy population growth.
20 years from now, the US will probably still be a force to be reckoned with. There will be about half a billion American consumers. Not peasants, but American consumers. However, China will almost definitely closed much of the gap, not just economically, but also socially and politically. India will be making strides too, but not nearly so quickly, IMHO. The banking system is a mess, and it's a very stratified undemocratic society. In terms of comparative social mobility, China is a land of opportunity.
Since everybody's talking about where their "votes" are, I'll share mine:
http://toshuo.com/2007/stocks-2007-part-1/
Right now most of my net worth is split pretty evenly between Chinese tech companies and American small-caps. I would probably also be investing in Indian, Brazilian and Eastern European companies if I knew as much about them. Outside of Ireland, I wouldn't touch Western Europe with a ten foot pole.