The great fall of China

LA Times ^ | December 30, 2007 | Walter Russell Mead

[Parmenio]

The most important story to come out of Washington recently had nothing to do with the endless presidential campaign. And although the media largely ignored it, the story changes the world. The story's unlikely source was the staid World Bank, which published updated statistics on the economic output of 146 countries. China's economy, said the bank, is smaller than it thought. About 40% smaller. China, it turns out, isn't a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size.

[Parmenio]

This is based on revisions in the way purchasing power parity is calculated, and the same analysis applies to India and Sub-Saharan Africa too.

Worth reading the entire article.

[Cringing Negativism Network]

One word:

“Denial”.

China is REPLACING America economically, and we’re subjected to clueless, sleepwalking bluster like this.

How completely. Absurd.

[Zuben Elgenubi]

How did you read the article and respond in less than 2.5 minutes?

[Parmenio]

Did you read the article?

[aruanan]

How did you read the article and respond in less than 2.5 minutes?

Why should he read it when he already knows that he already knows the truth: if the article agrees with him, it's true and reading it was a waste of time; if it disagrees with him, it's not true and reading it would be a waste of time.

[Zuben Elgenubi]

This U.N. Millenium Development Goals program is new to me. Looks like they require a LOT of funding.

[PapaBear3625]

There is more bad news. U.S. businesses and entrepreneurs hoping to crack the Chinese and Indian markets must come to terms with a middle class that is significantly smaller than thought.

They don't have enough of a middle class to be a viable market for US products. We have no real reason to have granted them Most Favored Nation status, which should have been reserved for countries that buy from us about as much as we buy from them

[Zuben Elgenubi]

China's political stability may be more fragile than thought. The country faces huge domestic challenges -- an aging population lacking any form of social security, wholesale problems in the financial system that dwarf those revealed in the U.S. sub-prime loan mess and the breakdown of its health system. These problems are as big as ever, but China has fewer resources to meet them than we thought.

Did not know this.

[Clemenza]

I'm sure you believed the same about Japan back in the 1980s.

1980s: "The Japanese are taking our JAHBS!!!"

1990s: "The Mexicans are taking our JAHBS!!!"

2000s: "The Chinese are taking our JAHBS!!!"

BTW: Don't the wannabe proletarians realize that industrial employment as a share of total employment has DROPPED WORLDWIDE, even in China?

[Cringing Negativism Network]

IMHO the author has no clue of which he speaks.

Quoting here:

“China’s political stability may be more fragile than thought. The country faces huge domestic challenges — an aging population lacking any form of social security,...”

The author then rolls out a version of that ubiquitous, over-used tired fortune cookie curse “may you live in interesting times”. How profound.

(yes, sarcasm intended)

I doubt the author is familar with the more appropriate term: “Iron Rice Bowl”. The Chinese system, is itself a gigantic social security program.

It’s a pandering, “nothing to see here” puff piece. Yet more pablum, from those who send our jobs and industry overseas, for a few dollars more.

China is a huge, growing dragon. A very powerful, very cunning, and very resourceful dragon.

Pretending otherwise, is dangerously, traitorously foolish.

This sort of naive puff, helps nobody.

We need to open our eyes. Now.

[snowsislander]

I also think it is worth reading this related thread http://www.freerepublic.com/focus/f-news/1945579/posts for another analysis of the World Bank revision.

[Clemenza]

China’s main problems are demographic AND economic (economy being too closely tied to the export economy AND the value of the dollar). Don’t get me started on their recent “scramble for Africa” for basic resources.

[aruanan]

For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States.

Services, too. In places like China, Brazil, and the Dominican Republic, you can have a live-in maid for next to nothing.

[Parmenio]

Thanks for directing me to that thread. I had missed it. Seems like there are conflicting opinions about the meaning of these new numbers. I myself lean toward the “sky is not falling” position. But with economic numbers, it’s difficult if not impossible to know what’s really true.

[A.Hun]

Be careful, you will take away the isolationists’ biggest boogie man.

Very few people know that the even while we have been setting records for imports our exports are at record levels also.

With a reasonably valued dollar, our mfgs are going to kick ass this year internationally.

[aruanan]

China's political stability may be more fragile than thought. The country faces huge domestic challenges -- an aging population lacking any form of social security, wholesale problems in the financial system that dwarf those revealed in the U.S. sub-prime loan mess and the breakdown of its health system. These problems are as big as ever, but China has fewer resources to meet them than we thought.

There is the gross domestic product and then there is accumulated wealth. The accumulated wealth of a nation, especially one like the United States, dwarfs the GDP. If you have a huge population that is dirt poor, you have a whole lot of nothing. And when, as a government, you have destroyed the ability of that population to care for itself in its old age by destroying the traditional means of doing so in exchange for some socialist future promise, you've bitten off a huge chunk of indigestable trouble. Of course, the Chinese government may choose to do to the overpopulation of old people what it did on the infant side and mandate death for seniors with all their property reverting to the State. It would fit in with the utilitarian chic of Communism.

[Kozak]

You sure live up to your screen name.

[Cringing Negativism Network]

LOL.

Not a bad retort, I have to admit! :)

I wish I could believe, I’m being alarmist. I don’t think so. I think we are sleeping.

I would imagine this sort of conversation was happening in the 1930’s. Right here in America.

As the summer Olympics approached...

In Berlin.

[kabar]

Having visited China, it is far from being absurd. China is still very much a third world country. Hell, more than 40 million people don’t even have access to electricity.

[bajabaja]

The article’s claim that goods are cheaper in places like Mexico is not necessarily accurate. One of the reasons Mexico remains poor and underdeveloped is the oligopolistic market its politicians and wealthy families perpetuate. Many goods are more expensive in Mexico. When Walmart came along, it lowered the price of a bollilo (a common bread), for instance, to less than a peso (about ten cents). The price before had often been 2 to 4 pesos. Certainly Telmex, the near monopoly phone company owned by the richest man in the world (Senor Slim) is doing very well. Residential internet line around $50. In the US internet services start at around $10 per month and increasew from there. Technological services are not cheaper than in the US and food you feel safe eating is more expensive here. That is why many Mexicans travel to the US side Walmart, where the food prices are better and so is the quality. (Import taxes keep many products out of the Walmarts inside Mexico.)

Third world countries are not the uniformly less expensive — except when it comes to real estate. And this author is getting data from someplace other than the real world if that is his conclusion.