China's 21st Century

The Inquirer caught up with Ted C. Fishman this week to find out what he had to say about China. Fishman speaks often about the country and has authored China, Inc.: How the Rise of the Next Superpower Challenges America and the World (Scribner, 2005), which has been translated into 25 languages.

The Inquirer: Let’s cut to the chase. China: should we be scared?

Ted Fishman: Yes, because facing the gallows focuses the mind. There has been a tendency to either stand petrified, or to analogize China to Japan in the 1970s as a benign and ultimately ineffectual challenger to U.S. economic interests. Both impulses are wrong. We should fear China as we did Japan, because out of that fear come solutions to every challenge we face.

You argue that the 20th Century belonged to the U.S., and the 21st will belong to China. Has the U.S. dropped the ball?

We need to know what game we’re in before we can even drop the ball. Right now our country is so divided on what China will mean for us and how to address it that we are nowhere near formulating a national approach to economic competitiveness to strengthen our role as an exporter, innovator, and producer of the world’s greatest, most valuable workers.

Contrary to popular understanding, China is hardly a slow-moving, bureaucratic communist state. In a capitalist sense, would you say China is more nimble when it comes to economics, industry, and innovation?

China is most nimble in the economic realm where decisions are made relatively quickly and resources from the state—money, expertise, tax and regulatory relief—are marshaled to propel the manufacturing economy. In other realms, especially in the soft, idea-driven corners of the economy, China cannot get moving because there are no enforceable laws that protect ideas.

The Chinese state can bulldoze whole neighborhoods overnight to make way for new plants, but it will take years before its very creative and brilliant population enjoy the same incentives and protection that other industrialized nations extend to their own innovators.

In China Inc., you describe Shenzhen, a city that has ballooned to a population of 7 million. That’s an incredible number. Why so many so fast?

Shenzhen's population is now closer to 10 million, bigger than Chicago and New York put together. The city benefits from its early start as a Special Economic Zone, a status granted by Deng Xiaoping. Deng saw in the small agrarian village a potential competitor to Hong Kong. Once Shenzhen opened for business, more than 90 percent of Hong Kong manufacturing—much of it light manufacturing like toys, garments, and consumer electronics—moved to the mainland.

Foreign investors built so many factories in and around Shenzhen that the zone developed a critical mass of labor and services that still entices the world's producers to build there.  Modern factories in Shenzhen today have tens of thousands of workers and recruit from all over China to fill their benches.

Okay then, devil’s advocate: sure, China’s metropolitan centers are booming, but the rural populations in the west are suffering. China’s no dream come true!

I give the Devil his due on this question. China is working on programs to spread and redistribute wealth, but it is in a race with the disgruntled millions left out of its miracle. So far, most of China buys into the country’s development mantra, and as those left rural parts of the country grow older—their average ages are climbing because the young leave for the cities—they become less potent challengers to the regime.

I’d say the main challenge for China is not drawing the excluded into its economic miracle, but making sure the miracle lasts long enough so that the younger participants who are making the urban journey really do see middle class lives in the future.

Is China’s 21st Century a forgone conclusion? America has always innovated—won’t the U.S. stay ahead of the curve?

Nothing in the future is forgone in a country with 1.3 billion variables. Or is the population 1.6 billion? China is going quite strong, but its problems are also enormous. As a futures trader, I learned that betting on unforeseen setbacks is better than betting on present trends defining the future. China is destined to have a tumultuous time ahead that will interrupt its stunning growth.

But if the free market cat stays out of the bag and is given ever more room to run, the long-term prospects for China are likely to mirror our past. Despite the wars, epidemics, and depressions fate has thrown at the American economy, we get past even serious setbacks and forge ahead. China will likely do the same, but because of its scale, it is nearly inevitable that in size its economy will top ours, and in power China will, at the very least, be an equal rival.

(Fishman photo by Alan Thomas.)

Comments

[shafi]

dont be envious to china. and dont try to fight with them. let grow china and india in their own way. USA is the land of greedy migrants and war lords. world and humanity hate USA becuase they are a danger for rest of world because they are the advocates of wars even in 21st century.