#2. China...the next economic super power?

Our developing worry over an ascendant China is short-sighted.  The Chinese have their own issues that will cause them—in the end—many more problems than we are facing today. 

First—and this is more on our end—relying too heavily on linear projections will lead us toward errors that can develop into follies (I didn’t realize I could work in a Stempelian argument this early).  Linear projections leave out things that cannot be measured—intangibles; things like natural disasters, looming political crises, etc.  Also, the fact that data from China is heavily filtered—almost obfuscatingly so—makes any projection faulty and rife with pitfalls. 

Second, China is heavily Sino-Centric.  The Chinese are very much anti-immigration and in essence insular.  Many ethnic minorities, in particular the Uighurs, face persecution on a regular basis.  Essentially, they are second class citizens.  The riots across the Northwest provinces indicate there is a substantial amount of tension lying just below the surface.  One of America’s many strengths is our overwhelmingly open immigration policy (no, not our illegals).  It allows new perspectives and ideas to influence our economy.  Innovation has always been central to a strong economy.  Granted China has seen great innovation over the last two decades—and more than likely will see great innovation over the next ten years—but without immigration the Chinese will reach a plateau in innovation. 

Third, as we cope with and attempt to wrap our head around our own “stimulus,” the Chinese government has—continuously—engaged in similar behavior.  They have consistently bailed out, stimulated, paid off, etc. any businesses, industries, or even political opponents that become problematic for one reason or another.  This makes much of the analysis of the ascendancy of China look rather difficult to support. 

Fourth, most rhetoric fails to even discuss the prospects of a rising Chinese middle class.  As the Chinese economy grows—it undoubtedly will, it is only a matter of time, after all for much of history it is believed they had the largest economy, of course with the exception of the last 300 years—it is inevitable that there will be a rising and presumably more boisterous middle class.  We have seen the same thing through out the Middle East.  A growing middle class means several things, but most importantly it means that China will be facing calls for more democratic reforms.  Middle Classes across history have pressed their governments for more reforms and freedoms.  It’s only natural for that to happen.  More people can afford education; more people can afford leisure time; more people desire basic freedoms.  They no longer are solely focused on just providing a living for themselves. 

Fifth, the Chinese are used to growth near 10%.  No doubt this is a fantastic record, but can it be sustained.  What happens when their economy stops growing at that high rate?  Say there are several years of 6% growth—a marvelous growth rate to say the least—the Chinese would see their economy grow a rate that would be 40% slower than normal.  Something tells me the Chinese citizens would not react well to slower growth of their money.  The hyper-consumerism that is taking hold in China could be slowed, which would in turn slow growth.  We know this all too well.

Lastly, reliance on GDP alone to dictate our analysis of the Chinese economy is shortsighted.  Instead we should focus on GDP per capita—essentially average income per person. China's is about 14% of the US’s.  In other words, each American earns 700% more than their Chinese counterpart.  In short, they have a long way to go to reach our standard of living.   Additionally, there are large swaths of the country that live in abject poverty--poverty that would remind people of Sub-Saharan Africa or Haiti.  Leading economic powers don’t have those types of issues. 

All of this is not to say that we don’t have our own set of issues.  We most undoubtedly do.  Most importantly, rather, China has its own set of issues they need to work out, before they can ever reach our status.  I’m not entirely convinced they have the ability to do so.  Instead of focusing our ire on the Chinese, we need to focus on getting our economic house in order.