Wrestling With China’s Future

4

November 11, 2010 by David Gillaspie

Thanks to Mr. Fitz-Gerald at http://keithfitz-gerald.com/

from visualizingeconomics.com

Every dollar has a story.  So does every euro, pound, and peso. 

If past performance indicates the future, a happy ending belongs to the Chinese yuan (renminbi.)

The chart above shows China leading the world GDP for nearly four hundred years.  The last bar shows the sort of growth that creates fear in some, opportunity in others. 

Which one you are depends on your take on history. 

GDP, or gross domestic product, is the market value of all goods and services within a given year.  What were China’s goods and services in 1500?  1600?  1700?  Don’t ask Marco Polo.  He was there in the late 1200’s.

The Ming Dynasty took China to the top with exports of silk, cotton, and porcelain, along with rice and tea.  Chinese shipping lanes replaced overland routes,  stretching from Asia, to southern India, to Africa with the world’s greatest commercial naval fleet of the time.

Shipping was the Chinese trading power that kept them at the top of the world’s GDP for nearly four hundred years.  Shipping is what they do today.

The ebb and flow of world economies resemble a wrestling match between the titans of any given era.  Both competitors put on a fierce face, but only one has history on its side.

Today, China is poised to assume its former position at the top of the GDP pyramid.  It produces the most steel in the world, builds the third most cars behind the U.S. and Japan, and holds the title as the world’s biggest adult toy manufacturer. 

At two billion dollars a year, that’s not an industry to shake a stick at.

The list of China’s trading partners include the U.S., Japan, South Korea, Russia, and Wal-Mart, which according to U.S. records on wiki is China’s seventh largest export partner.

Further evidence of China’s ascendency comes in the number of busiest shipping ports in the world.  Whether judged by tonnage or number of containers aboard ships, Shanghai and Hong Kong crowd the top spots.

If that’s not enough, consider the number of billionaires in China; only America has more.  Here’s the money question: if Beijing University is the Harvard of China, did any of China’s billionaires drop out to work toward making their billions like Bill Gates? 

That we live in a connected world is evident.  We see it in the goods of every day life.  Is that a China-problem or an opportunity to learn?

To misquote Horace Greeley: Look East, young man, and grow with the world. 

The informed word says smart people headed for London in 1807, to New York in 1907, to China in 2007.  Why?  Because big things happened in those places.  The rules haven’t changed.  Big Timers go to the Big Time, or get lost in the shuffle.

When a country of 1.3 billion gets on the train to the future, with stops at better living conditions, better jobs, and less poverty, getting lost in the shuffle would be too easy.

Some look East and see another Red Scare.  They see Mao.  They see the shadow of Stalin.  In other words, they see communist domination. 

Hasn’t that domino already fallen?

You can read accusations of Chinese manipulating the yuan; or Thomas Friedman writing about disputed islands in the South China Sea and East China Sea.  Is it any more than a growing economic power testing the boundaries?  Is it an attempt to convert other nations to Chinese communism? 

Mr. Friedman writes “China has also muscled Vietnam into halting its oil exploration in what Beijing claimed were Chinese territorial waters.”

When two communist nations discuss territorial issues, do they talk politics or money? 

Place your bets.

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4 thoughts on “Wrestling With China’s Future

  1. mark munson says:

    We in the west are seldom taught non-western history. In school we learn a little bit about the Egyptians, the Greeks, the Romans then skip to Columbus and dive into American history. Entire ancient civilizations, from the Sumerians, Hittites and Babylonians in Mesopotamia and the Vibrant societies in the Indus Valley and China to the later empires of the Byzantines, Abbasid’s and Ottomans are, at best, only briefly touched on. I think this contributes to Americas often ill-informed and misguided foreign policy. We have no perspective. That being said, China was by all criteria, a second rate power by the middle of the 19th century. Their foreign and trade policies were dictated to them by the Europeans until the 1930s when Imperial Japan barged in and brutalized the country. Mao’s attempts at social engineering in the 1960s killed 10s of millions and drove the country to destitution. In 1972 China needed us more then we needed them. Now the balance of power seems to be shifting.

    • David Gillaspie says:

      The surprising thing was a Red Baiter like Richard Nixon would be the one to ‘open’ China. No one accused him of being soft on communism.

      The flow of history moves faster than geologic time, but those who can get a grip on what the Chinese economy promises are worth listening to.

      Good stuff Mark. I’m listening.

  2. mark munson says:

    Nixon thought that we could tame China by engaging them economically and bringing them into the world community. I am afraid that we instead awoke a sleeping giant.

    • David Gillaspie says:

      It turns out that the sleeping giant wasn’t sleeping for five hundred years. I was surprised to see the graph Keith Fitz-Gerald pointed me toward that shows early domination.

      Now might be a good time for real rodeo cowboys to saddle up on China for their eight second ride.

      Dave

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