BTW, China’s Economy is Far Smaller Than We Thought

China, it turns out, isn’t a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

The above story managed to escape major discussion. Like a ship in the night, it passed us by unnoticed. This is unfortunate since it should quell fears in the US–largely perpetrated by the media–over China’s rise.

I’m not arguing that China isn’t rising, it is. Let me put this in perspective though: They were only technically living in the 20th century until the late in 1970’s, so really any advancement beyond that is dramatic. They’ve definitely come a long way in a short amount of time on many fronts. This is indeed impressive, but, it is not necessarily a complete transformation.

China’s economic prowess seems to have obscured its problems. Peasant dissent, social inequity, pollution, water and energy shortages, and an aging population are all lying beneath the surface. Any aspirations to challenge the US for global power are quashed by this constellation of potentially destabilizing problems.

These problems, coupled with the news that China’s economy is not as robust as once believed, suggests that China itself is not as ominous as some postulate. This seems to call on the Chinese to temper global hopes and focus more on internal issues, thus solidifying US global leadership deep into the 21st century.

According to National Geographic, in the past 20 years China has experienced as much industrialization as Europe has in the past 200 years. This observation proves China has come quite a long way, and the difference in person is even more astounding. Shanghai is a modern city that looks more advanced than most other cities in the world, and 20 years ago it looked more like a 3rd world country.

However, while all of this is great for China, the reason for the “overtaking” hype is that there is so much more GROWTH potential there when compared to the rest of the world. For instance, only 3 million of 22 million in Shanghai drive cars, and that is the most advanced city in the country, so one would think the auto market is going to explode.

But having potential and realizing that potential are two different things. The traffic issue in every Chinese city alone is cause for concern (it takes 2 hours to go less than 10 miles at times in Shanghai). Thus, while China will continue to grow, they must soon begin addressing such problems (as you mention) before even thinking about taking global power. IF the U.S. and China continue down similar paths to the ones they are on now, it may be that China takes over power in another 40 years… but that’s quite a big if.