Big China, Little China

[Note: This isn’t breaking news; the link is from 8 weeks ago, but I just saw it today and it definitely merits a mention.]

This is one of the most talked about subjects in the Asia-focused blogosphere, and also one that tends to generate the most misconceptions: Is China now or will it soon be a superpower? Looking at some recent China Daily threads (from whence cometh all truths), you’d think most Chinese believe they are right on the verge of toppling America from it’s No. 1 spot on the Superpowers Top Ten List. But in a recent speech, Federal Reserve executive Richard W. Fisher, who has immense experience dealing with China, applies some numbers to the equation, reminding us that it’s important to stay rooted in reality.

One can paint two starkly different pictures of China right now, the Big China view and the Little China view.

The Big China view centers on China’s manpower and prowess in manufacturing, and it uses purchasing-power-parity adjusted dollars to embolden its case, a convention adopted by economists to adjust for local purchasing power, which has its utility but may or may not be a useful tool in measuring comparative geopolitical power.

Here are some statistics to support the Big China view:

* America has a labor force of 147 million; China’s is 761 million—five times as large.
* China’s factories produced just 200 room air conditioners in 1978; today, they produce 48 million. Back then, they turned out just 11 billion meters of cloth; last year, 35.4 billion meters (over 3 times as much).
* Chinese households have a rapidly increasing abundance of appliances and electronic products—refrigerators, TVs, DVDs, cell phones, etc.—at ownership rates not far below those in this country.
* They have 28.3 million broadband users and 98.8 million Internet users, according to their Ministry of Information and Industry.
* There are 28 billion square feet of floor space under construction in China, compared with just 5 billion in the U.S. Five of the world’s largest shopping centers are now located in China.
* The U.S. manufacturing sector produced goods worth $1.5 trillion in 2004; China’s produced $3.4 trillion, adjusted for purchasing power parity.
* And the grand statistic of them all : On a purchasing-power-parity adjusted basis, economists put China’s gross domestic product at $7 trillion, compared with our $12 trillion—making it already 60 percent of our size.

That’s the Big China view.

The Little China view has many more statistics in its support:

* U.S. productivity in agriculture is 33 times that of China; productivity in U.S. industry is five times that of China.
* The U.S. has 19,497 airports; China, just 126.
* We have 150,000 miles of petroleum pipelines; they have less than 10,000.
* We have 481 cars per 1,000 people; they have seven.
* We have much, much higher levels of education, technology …

I could go on and on with statistics to show where China comes up short. But here are two good summary statistics: On a straight U.S. dollar basis (not adjusted for purchasing power parity), their economy is roughly the size of California’s! China’s GDP per person is just $1,300, compared with our nearly $40,000. That’s just 1/30 of our per capita GDP.

I personally think we overstate the current prowess of China by emphasizing the Big China view. But from either perspective, China has room to grow. To do so, they will have to deal with infrastructure and other problems, which present significant challenges.

The various parts of any and all economies are constrained somewhat to grow in proportion to one another—not in totally rigid ratios, but not in completely flexible ones either.

I’m just scratching the surface; there’s a lot of wisdom to this piece, backed by real statistics (not collected from a local cadre). I don’t agree with him on everything, and I was a little surprised at his lack of visible compassion for America’s working class. But that doesn’t detract from the value of his insights.

At the end of his long speech, Fisher summarizes:

We’re better off if China is rich than if it’s poor. China’s ascension is our opportunity. We have much to sell the Chinese, and they, us. Trade with China is helping raise our productivity and lower our prices. Competition with China keeps us on our toes and sharpens our wits, forcing us to move up the value-added ladder to new and better jobs with higher pay. And as they become more like us, their incentives become more in line with ours every day. This is cause for celebration, not condemnation. And to that, I’ll raise a glass of Chinese beer and say “Good on ’ya.”

The Discussion: 4 Comments

“We have 481 cars per 1,000 people; they have seven.”
With 1400 new cars on the streets in Beijing every bloody day, let’s hope it stays like that for some time! There’s already too many cars owned by too many people who don’t know how to properly use them!
Again, he’s focussing on China as a whole. That’s like like telling people only 7 people live in every sq. km. in Canada, considering the Yukon and the Northwest Territories. I’m more interested in where the growth is occurring, not the fact that farmers in some obscure region are falling behind in state of the art hoovers and washing machines.
I’m sure such analyses of the UK would be vastly different if London was taken out of the equation…

August 12, 2005 @ 2:19 am | Comment

A “Big China” statistic I read in the New York Times last year. The U.S. has 9 cities with a population of 1,000,000 or more. China has 166!

August 12, 2005 @ 12:39 pm | Comment

As if living in a densely populated country was a good thing? Ask the Norweigians and the Canadians if that’s a good thing–the countries with the number 1 and number 2 highest standards of living in the world.

August 12, 2005 @ 1:27 pm | Comment

That implication is yours. I am simply amazed that China has so many large cities. I doubt that most Americans can name 5 Chinese cities yet China has 160 more with populations greater than St. Louis or Boston.

The phrase “standard of living” makes my eyes glaze over but note that Japan has more than double the population density of China and enjoys a very high quality of life.

If I was remotely intersted in Canada or Norway I would be reading another blog.

August 13, 2005 @ 7:45 pm | Comment

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