Hi Keith et al, Keith, I think that overtaking the US will be difficult for China because the reason that China is now an attractive manufacturer of goods is the low wages and freedom from environmental restrictions.
But as conditions improve, China will lose its edge and will, like Japan, discover that manufacturing will migrate towards other, lower wage countries. The Chinese do have one big advantage. That is that their culture values education highly. I would hope that is education for education's sake, not just for the added income that it might produce. However as they 'modernize' and 'Westernize', that may suffer just as it has in the Western countries. Dennis Paull At 12:06 AM 10/10/2002 Thursday , Keith Hudson wrote: >Karen, > >At 14:34 09/10/02 -0700, you wrote: ><<<< >Keith, I've attached a current Associated Press article concerning the EU >that has a good, brief history and basic items concerning the eastward >expansion of both the EU and NATO. It's always good to read your >projections and observations about Europe. Do you really think China will >be in that position in 4-5 years on its own steam, or are you implying that >the US economy will continue to lose ground, making the race to #1 easier >for China? - Karen Watters Cole >>>>> > >Let's put it this way. If Paul Krugman is right in that America is now >falling into deflation (and I'm inclined to believe this -- because Europe >is fast heading that way, too), and if China manages to start cleaning out >bad debts from its state banks in the next few years, then I assume that >China's economy will continue to grow at about 6-8% p.a. for at least a >couple of decades. Almost certainly, China is going to overtake America at >some stage in the not-too-distant future (before 2020) unless some >momentous breakdown occurs in the country. > >I was perhaps being provocative in talking about a crossover in the next >4-5 years, but I think the present Western economic recession will last at >least this long and, if so, I suggest that China will be overtaking America >psychologically by then* if not quite then in terms of GDP/capita. China is >already third only to America and Europe in terms of receiving direct >investment and could easily become first in the next four/five years. >Investment is no respecter of nationality, only of security and profitability. > >(*Everything that I've read recently about the growth of private schools in >China -- and of the excitement and dedication of the pupils towards >learning -- is strongly reminiscent of mid-19th century England before the >dead hand of the state fell upon schools and universities. At that time, >mechanics and miners' institutes teaching everything from classical Greek >to Engineering were springing up in every city and many small towns, new >municipal universites were starting (e.g. Birmingham), most parents were >paying for their children to go to school, public lectures on science were >vastly oversubscribed, private and municipal libraries were springing up >everywhere, etc. It was chaotic but vastly exciting. > >(The education situation seems very similar in coastal China now (compared >with increasingly dumbed-down state education in America and western >Europe) and speaks volumes to me about the likely differential effects on >its economy and America's within a few years. Now I know that some FWers >will opine that 'true' education is not about serving the economy -- and I >agree -- but in fact, intellectual vitality has always gone hand-in-hand >with economic vitality, such as the dependence of the Renaissance on the >successful merchants and bankers of 15th century Italy or the dependence of >the intellectual leisure class of the Enlightenment on the increasingly >prosperous European mercantile economies of the 17th century.) > >As for Europe, I'll be brief. Although the present EU-15 countries have >been gracious enough to say to 10 middle-European countries that they are >now qualified enough to join, the really difficult problems have not yet >been negotiated. Over the past two years negotiations have stalled time and >again. (Note that the public in the EU-15 countries have little idea what >is being negotiated on their behalf.) The tactic now is that as the end of >the year draws near and things become more desperate then the EU-15 and the >10 will be forced to compromise on matters such as farming subsidies, and >free movement of the 10's working population into EU-15 countries (which is >what really frightens the populations of the latter). However, no-one can >judge the effect of these compromises on the populations of the EU-15. They >could take it placidly -- much more likely, some issues will be explosive. > >Of course, it's impossible to predict exactly what will be decided or what >will happen. My guess is that the 10 will join the EU but that they won't >gain full benefits for at least another 10-15 years -- they'll be on >probation and many matters will still not be finally negotiated! However, >in the meantime, immense strains are already appearing within the present >EU-15 (e.g. large individual budget deficits and bankrupt state pension >funds [Italy, Germany, Portugal, France] -- and the consequent refusal of >the better-off EU countries [England, Scandinavian, Nordic] to subsidise >these) and, in my view, it is this which will actually break the back of >the EU in the next few years. > >Keith > > >---------------------------------------------------------------------------- >-------------- >Keith Hudson,6 Upper Camden Place, Bath BA1 5HX, England >Tel:01225 312622/444881; Fax:01225 447727; E-mail: [EMAIL PROTECTED] >________________________________________________________________________
