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Putting The "China Syndrome" In Perspective

There has been a great deal of speculation and conjecture that China will soon surpass the United States and become the world’s largest economies.  Quite a few British newspaper folks like to put forth the notion that it will happen in the next decade; this of course may be resentful wishful thinking on their parts, but regardless, they are quite wrong and clearly not using facts in their ‘news” stories.

In fact, a recent op-ed piece in the Financial Times claimed that the rest of the world must choose between China and the United States, saying: “the defining geopolitical drama of the next century will be the battle for power and influence between China and America.”  Their opinion piece is very contradictory because on one hand they claim China will be the world’s largest economy by 2020 – yet they then claim the battle for preeminence will be the defining geopolitical drama for the next century (big difference between 8 years and a century).

The notion that the United States is in decline is not a new one – our friends and detractors alike have claimed that many times throughout history – in fact, I believe that people have claimed that every year for at least the last 150 years.  We tend to chalk this up to negativity.  The fact is, some people are not happy unless they are proclaiming doom and gloom.

What many fail to realize is that just because other nations begin to grow and develop, it does not mean that others have to decline – China started out at the bottom, so because their growth so far has been fairly remarkable, it is all relative.   To put this in perspective, there are some who are already claiming that India will surpass China…at some point.  Does this mean China will decline, or does it mean that India will come into her own and experience rapid growth?  Or, does it mean that doom and gloomers are never happy and always need to spread negativity?

Troy Parfitt, author of “Why China Will Never Rule the World,” uses facts and evidence to support his view.  In fact, he boldly states “The notion that China is going to replace the United States as sole superpower is possibly the greatest myth of our time.”

Parfitt points out that while it appears that China posts “impressive bottom-line numbers,” he proves that key facts and stats are routinely omitted when China or pro-China enthusiasts tout China’s economic rise.  For example, he points out:

• In 2010, the IMF ranked China 94th in terms of GDP per capita, with $7,519. It ranked the United States 7th, with $47,284.
• Even the most vocal proponent of China’s impending hegemony, Martin Jacques, author of "When China Rules the World", concedes that approximately 60% of exports from China come from foreign companies and those foreign companies are responsible for 85 percent of all high-tech exports coming out of China.
• Nearly two thirds of China’s populace can be classified as peasants, and, by its own calculation, China has the sharpest rich-poor divide in the world.
• There are tens of thousands of “mass incidents” each year in China, such as demonstrations and strikes – this mass civil unrest consists of thousands of angry civilians and hundreds of armed police. According to China’s Ministry of Public Security, there were 87,000 such incidents in 2005, up from 74,000 in 2004.  China has since made such statistics unavailable.  
• Parfitt points out that the facts and figures associated with China’s colossal boom that are actually the most disturbing, because according to the World Bank, China is now classified as the world’s most polluted nation, having 16 of the 20 most despoiled cities on Earth.
• The New York Times report that only 1% of China’s 560 million urban residents breathe air deemed safe and 500 million Chinese lack access to safe drinking water.
• Pollution in China is so severe, that there are some industrial towns in which the sun is rarely seen due to polluted smog.

We also need to consider that…

• China’s reputation is not improving…it is getting worse.  From theft of intellectual property, to unfair and illegal trade practices, the global community is wary of China more than ever before.  Foreign companies would love access to China’s 1.3 billion people, but wonder if the risk to their brands and products is worth it – it is not uncommon for entire brands and products to be stolen in China, with a Chinese company literally replicating the foreign brand or product without permission; they then sell the product at a much lower cost and most of the time, the quality of the fake is so horrendous, that the real brand risks a ruined reputation.  China also keeps its currency artificially low, thus giving it an unfair advantage in trade – China is the first to file complaints against the United States or EU members at the WTO, yet when complaints are filed against them, they become irate ad insist they are being “picked on.” 

The Financial Times, like many “pro-China” enthusiasts, have jumped on a bandwagon and much of what they espouse is often based on opinion or on questionable facts.  For example, the author of the piece in FT wrote that China “will likely be the world’s largest economy by 2020.”  That is of course completely inaccurate – as of now, China’s economy is growing at about 8.5 - 9% per year, but experts predict it will drop to approximately 5% per year within the next 1-2 years (see link to previous article below).  The U.S. economy is expected to grow at 2.8% - 3.2% per year, on average.  In 2020, China’s total GDP would be approximately $13 trillion, while the GDP of the United States is projected to be $19 Trillion (you don’t need complicated formulas to figure this out.  China adds roughly $665 billion per year and the United States adds $450 - $470 billion per year) 

Regardless though, because what the FT op-ed piece fails to point out is that total size of economy does not necessarily equate to supreme power.    For example, Russia has an economy that is much smaller than Brazil’s, yet clearly, Russia is significantly more powerful that Brazil – Russia, like it or not, is actually still considered a global power.

Consider too that while India has a much smaller economy than China, they can match and even exceed China on many levels.

Ultimately, too many people are obsessed with decline than they are with growth.  The chorus of negativity in the United States and around the world seems to get more attention than those who point out good news.  Ironically, when Americans criticize China, we are accused of being delusional or that we are just afraid of the truth.  On the contrary, Americans are actually some of the most open-minded people in the world – we just believe in looking at facts and not just at opinions.  I for one do not fear China’s rise; in reality, I applaud their hard-work – I just believe in keeping it real and keeping it all in perspective.