– China, Growing Superpower

The dragon awakes, breathing industrial fire
By STAN TINER

Oh, to be a car dealer in China where sales have doubled since 2002 and where several hundred million Chinese are still without an automobile.

Of course, the same could be said about almost every other retailer in China as its white-hot economy sizzles, causing the rest of the world to ponder where this remarkable boom will lead.

The Economist magazine, in a thorough examination of the world economy, concludes that it is the American consumer who, together with Chinese producers, has led an explosion of growth that is the headline story in the 21st century. The combination of U.S. consumer spending and Chinese production accounted for nearly half of global growth in the past year.

"Let China sleep, for when she awakes she will shake the world," Napoleon warned, and surely that awakening has occurred.

Within the period of most of our memories, at least those of us whose experience goes back to the middle of the 20th century, China was very much an isolated nation, by choice and practice.

It is, therefore, easy to overlook the fact that, prior to that period of isolation, China was the world's largest economy for much of known history, with the highest incomes per person, and clearly the leader in technology development.

But China's leaders suddenly closed its doors to the world, shutting off most international contact and controlling new technology.

The Economist report said that by 1500 Europe had overtaken China in terms of gross domestic production per person, but China continued to be the largest economy for centuries, and by 1820 still accounted for 30 percent of the world's GDP.

By 1950, however, after a century of internal discord that included domination by warlords, civil war, the suppression of foreigners and bloody conflict with Japan, China's share of world production had fallen to 5 percent.

The revolution led by Mao Tse-tung's Communist forces took power in 1949, but by no means opened the doors to outsiders.

The first crack in that door was made by Deng Xiaoping who in 1978 started China on the road toward new economic policies and openness.

In that same year he was Time magazine's "Man of the Year," and I was present in Atlanta when he addressed a group of civic leaders and journalists from the South during an American tour.

In 1983 I made my first visit to China and was astonished at its backwardness. I awoke in my hotel room in the heart of Beijing on my first morning in the city of 9 million and was struck by the sound of silence. I didn't hear the roar of automobiles such as you would expect in New York or Tokyo. Looking out my window I saw tens of thousands of morning commuters gliding silently through the streets on the conveyance of choice and availability - the bicycle.

Much of China was heated by coal, and during that cold January visit when you wiped your face at night the washcloth would be black with soot. In the old cities across China many homes were without plumbing and human waste was evident in open drainage ditches.

But a vast part of the Chinese nation then comprised peasant farmers who tilled the good earth as their forebears had for thousands of years, and they worked communal lands, producing for the state.

When I returned a dozen years later, China had begun a transformation that was breathtaking. Dozens of giant building cranes marked the rebirth of the big cities, new superhighways carried great streams of vehicular traffic.

The new China was being built, and in every place commerce was alive. Whether you were in a rooftop restaurant atop a five-star Swiss hotel, or at Beijing's Hard Rock Cafe, businessmen from L.A., London, Paris and Tokyo were making deals.

A great many of those deals have fueled China's incredible comeback.

Already, now, China's GDP accounts for 13 percent of world output, exceeded only by the U.S. It is what The Economist calls the "new workshop of the world," producing two-thirds of all photocopiers, microwave ovens, DVD players and shoes; more than half of all digital cameras; and about 40 percent of all personal computers. Simply astonishing, isn't it?

Not only is China a huge producer, it also has become a huge consumer nation. Its imports grew by 40 percent just last year, and it accounts for one-third of all worldwide import growth.

The Economist predicts if China continues at this pace it will enjoy faster growth than America ever achieved and in time may supplant the U.S. as the world's largest economy.

This will be achieved in part due to the almost unlimited supply of cheap labor. Remember all of those peasant farmers I saw on my visits to China? There are estimates of nearly 200 million underemployed workers in rural areas who are available to go into industry. It is predicted it will take two decades to utilize them, which will continue to hold down wages in China, where the current wage is still less than 50 cents per hour.

All of this growth in China has not been without consequence here in the United States and other parts of the world. Clearly China's energy use has been the leading cause of oil prices exceeding $50 a barrel. The same is true of its demand for building materials, such as concrete.

The new jobs being created in China are not coming from the U.S., but from other emerging economies - Mexico, in particular. In spite of NAFTA, Mexico has already been overtaken by China as the leading exporter to this country.

A positive factor on consumer pocketbooks is that the "China effect" has pushed down prices. The Economist cites in average price savings of 30 percent for shoes and clothing in the U.S. during the last 10 years.

So the slumbering dragon that Napoleon contemplated has awakened. The nation of 1.3 billion is becoming the manufacturing engine of greatest power in the world.

At the same time China has reformed the ranks of economic prowess in the world, it has also steadily developed as a military force to be noticed. While it is often said that the United States is the lone standing Superpower, it is not too difficult to see that China could very well replace the former Soviet Union as the second.

Even as China readies to host the 2000 Olympics, that nation's first, we closely watch the words and deeds of those at the helm of this giant.

The Chinese hold the long view of history, seeing the future not in a few months or even a few years. Whereas the 20th century belonged to the United States, this current century will more likely be China's.

The dragon has galloped off the starting line at warp speed. How far and how fast it goes no one knows.