Orville Schell on China’s contradictions

We’ve heard it before, the pluses and minuses, the maze of contradictions that is present-day China. Schell itemizes these in two convenient lists to show how China is, on the one hand, incredibly robust, and on the other hand frighteningly brittle. He then concludes:

How can such contradictions be reconciled? The best everyone can hope for is steady piecemeal change. For the Chinese the contradictions don’t really bite so long as they have continued economic growth to focus on and to absorb some of the problems. But what happens when there’s a break in that growth? It could come from inside China or from outside (such as a disruption in the US economy).

It’s hard to look at the China boom now without thinking about the Japan boom in the 1970s and ’80s, remembering how everyone knew the Japanese were going dominate the US and world economy, and we all had to study Japanese methods to learn how to compete. Then that went away, and it hasn’t come back.

The leadership of China is highly aware of the environmental problems and is enlightened and ambitious about green solutions, but that attitude does not yet extend beyond the leadership, and until it does, not much can happen.

That’s China: huge, consequential for everybody, and profoundly unresolved.

When the day of reckoning finally comes, that inevitable “break in the growth” – inflation, deflation, recession, whatver – we’ll have a far clearer picture of just how sustainable and meaningful China’s undeniable rise really is. Until then, I expect to hear more of the same, including parents rushing to teach their children Mandarin and a never-ending stream of articles salivating over the New China. Those articles may well be justified, but for now we just don’t know.

Via CDT.

The Discussion: 5 Comments

Though I would agree that decline in growth would be a threat to Chinas stability I am not very happy with the Japan-comparision. Espacially what concerns the implications for Europe and America this comparision is misleading.

September 25, 2006 @ 6:08 pm | Comment

Why are you not happy with the japan comparison? I don’t think it’s unreasonable to assume that China will be just become another big player among many, like Japan today. Japan is huge, but it’s not everything, and few in america care about learning japanese now. Why? Because Japan never became the Japan we thought it would. Economists have brought up topics that would conclude China will be the same. Corruption, crappy bank system, environmental issues, and political instability are all just waiting to possibly dump China’s economy on its rearend.

September 26, 2006 @ 7:51 am | Comment

Aside from the fact that the size of China matters a lot (as a potential advantage as well as a potential disadvantage for China), the one critical point is the internet, I think. We will see a lot of outsourcing to China and India in the future because of the internet. Not only the manufacturing industries but also the service industries will be globalised and that will have a bigger and different impact on European and American job markets than Japans rise had. Segments of these markets that in the past were protected by space and time will be part of the global competition so that also the middle classes in Western countries and those with colleage degrees are affected. This is one big difference, I think.

September 26, 2006 @ 5:34 pm | Comment

The size difference isn’t just a trivial matter. China’s development is roughly following that of the Asian Tigers — authoritarian government, high savings rate, export led growth — but it has one crucial difference: it’s population and potential market is bigger than all of the Asian Tigers put together.

That means that eventually China can benefit from economies of scale without having to rely only on exports. Japan’s shrinking and aging population means it will always be dependent on exports for growth.

And people gunning for China’s fall probably don’t realize how devastating that would be to the world economy. Right now it’s running on two engines — the U.S. and China — but because they are so interlinked, the collapse of one would ruin the other. Who do they think has become the number one lender to the U.S.? Will China continue to buy U.S. bonds and finance Bush’s deficits if their economy collapses? Not even if they wanted to…

September 27, 2006 @ 1:38 pm | Comment

right, danfried.

September 27, 2006 @ 4:36 pm | Comment

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