(maybe) China Will (not) Rule The World

John Pomfret, previous Bureau Chief for the Washington Post, has a great article that summarizes why so much of the hype about China is just that-hype.In this year of hype and media feeding frenzies, it's nice to read a voice of reason.  Like John, I'm not a China basher--I live here by choice and my family are Chinese.  This is my home, and I'll be here for a long while longer, no doubt.  But I'm not deluded by the numbers into thinking that China will be much more of a super power in 50 years than they currently are--which is to say, they are not.Mr. Pomfret's analysis centers on 4 points (all of which have been made by SRI at times in the past on this very blog--maybe he's a reader too?!).  First, China's demographics are terrible.  The county is getting old, fast!  To those of us relying on cheap labor for assembly this means that cheap is realtive and it's already not so cheap.  With the increased development of the inner provinces there will be less and less cheap labor available in each factory (on the east coast).  This is already a problem, last Chinese New Year more than 2 million labors did not return to jobs in Guangdong province.Second, China's economy is huge--but it should be.  With a population exceeding 20% of the entire number on the planet, China's economy should dwarf the US economy.  But it doesn't.  Even if China does pass up the US economy in total size, there will still be hundreds of millions (yes up to twice the US population) living on $1 a day--the UN's poverty line.  China will be a huge economy simply because it's finally risen from the ashes of it's recent history.  With the largest population on the planet and a relatively prosperous economic standard (the goal of communism, no?) China would and should naturally be one of the largest single economies ever.Third, what's worse than the poverty always lurking in the background?  The ever present pollution.  This is what will kill China's dreams of the future, literally.  I was reminded by an old college professor of mine at a lunch last month that the US was pretty dirty in the 60's too and the legislation in the 70's has really done a great job of cleaning it up (and the current administration has really done a great job of pushing back the standards, but that's another story).  The difficult with this analogy is that China in the 21st century is not post WWII US.  In terms of numbers, demand, depth of pollution or ability/willingness to make a change.  China is scary dirty and yet growth is still the number one priority for most governmental agencies and businesses (and individuals, for that matter).Finally, who besides Americans depressed about the current state of the nation, is buying the "China is a soon-to-be world power?"  Outside of China themselves there's Burma, North Korea, Nigeria, Sudan, Lao, Iran and a couple of others that no one can remember without a list.  Now before you say, the EU, South American and the Aussies are hot on the idea too think about this: moving your manufacturing to China to save money and equating that with new superpower status is not the same thing.  For example, quick, how many Chinese brand names do you know of the top of your head?  One?  Two?  Anyone that is not a Chinese scholar or businessman can call me for dinner if you can name more than 5.  This point is, China doesn't export ideology as well as they export low-end goods.Read the article and then, if for no other reason than to balance out the 0lympic year hype, read "The Coming Collapse of China," and "Will the Boat Sink the Water," and "China, Fragile Superpower."Now, before I get all the emails claiming I'm bashing China--remember, my professional goal is to help small and medium sized business move TO China and work here effectively (i.e. spend more money in China!!).  I sell China to the world--but I don't over sell the future or hide the blemishes.  Odd, but I get bashed for "stealing US jobs" when I talk with some (ignorant protectionist) people in the States and I get bashed by (overly nationalistic) Chinese for saying "be careful when you move to China."  Which is it?

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