{"id":560,"date":"2009-06-15T21:42:30","date_gmt":"2009-06-15T21:42:30","guid":{"rendered":"http:\/\/www.department99.com\/bobamter\/?p=560"},"modified":"2012-09-14T17:26:54","modified_gmt":"2012-09-14T17:26:54","slug":"where-is-china-heading","status":"publish","type":"post","link":"https:\/\/bobamter.com\/?p=560","title":{"rendered":"Where is China Heading?"},"content":{"rendered":"

Mark Leonard<\/a>\u2019s book\u00a0\u201cWhat Does China Think?\u201d<\/a><\/em> presents China\u2019s challenges and struggles with some surprising priorities its leaders have set to correct them.<\/p>\n

For the first time in China\u2019s history its 11th five-year plan does not list economic growth as its first priority. The plan:\u00a0\u201cput people first\u201d\u2026\u201crespecting the natural environment\u201d<\/em>\u2026introduces a Scandinavian model of social welfare to eliminate its existing problems.<\/p>\n

China\u2019s most pressing problems:<\/p>\n

1. The rise in protests,<\/p>\n

2. The gap between rich and poor,<\/p>\n

3. The near bankruptcy of the rural economy,<\/p>\n

4. The lack of domestic consumption,<\/p>\n

5.The pervasive corruption of the political elite,<\/p>\n

6.The environment.<\/p>\n

Official records cite 87,000 protest demonstrations in 2005, a ten-fold increase from 1993. The actual number is higher.<\/p>\n

China wants to develop into an\u00a0\u201cAsymmetric Superpower\u201d<\/em> \u2013 which argues that the USA\u2019s obsession with military hardware is its greatest weakness blinding policy-makers to the wider picture of military strategy which for China must include the use of economic, legal and political weapons as well, labeled:\u00a0\u201cnon-military warfare\u201d. \u201cEconomic Warfare\u201d<\/em>includes investing billions of dollars in \u201cSpecial Economic Zones\u201d in other countries.<\/p>\n

However, China invests billions to improve its military, as its leaders believe economic power without military power equal to the USA\u2019s reduces China as an overall power.<\/p>\n

\u201cChina is attractive to other nations because of its economic power but this attractiveness will not last. It will need to change its political system to become a \u2018Hyper-Power\u2019 equal to the USA\u201d. But China will need to eliminate its incongruous and obsessive policy toward four minor issues that it has elevated to threats to its survival: Taiwan, Dalai Lama, Falun Gong, Muslim Enclaves.<\/p>\n

China \u201cwill never be supportive of multi-party elections and human rights.\u201d It will not become a democracy, it will become a \u201cdeliberative dictatorship\u201d. Today China is governed by \u201crule by man\u201d. Will it become a \u201crule of law\u201d? It believes that democracy will increase the number of protests and poses a threat to Communist Party control.<\/p>\n

\u201cIt is possible that Beijing\u2019s formula of state capitalism, open markets and a closed political system will not last the course. However, it is worth noting that it took three generations for a Soviet economic model that did not work in theory to actually fail in practice. Those who argued that the People\u2019s Republic would become more Western with its growing wealth have been proven wrong.\u201d<\/p>\n

China’s greatest risk is that its government will lose the ability to hold things together. Its population is becoming increasingly assertive.<\/p>\n

Will China unseat the USA as the world\u2019s largest economy? Not in the twenty-first century.<\/p>\n

In the 1980s, Japan was expected to dominate the world economy. But because its institutions and political system failed to modernize, Japan went in to a fifteen-year slump. Japan was a wealthy first-world country in the 1980s. China, while not a third-world country, is a poor country and will encounter many of the challenges that derailed Japan.<\/p>\n

Mark Leonard is Executive Director, European Council on Foreign Relations. He spent three years studying China.<\/p>\n

My personal experience in working in China leads me to predict that the pendulum will swing. China will stumble, similar to the historic decline of Japan, due to cost increases from unfavorable currency changes, productivity declines, wage increases, and social unrest. China’s low birth rate and aging population are two additional factors that will negatively affect its economic growth. Capital will be diverted from infrastructure and commercial investments, to solving intractable environmental conditions.<\/p>\n

Poor planning for efficiency and productivity will prove problematic as well. A vivid example, is the current pattern of the rapidly constructed manufacturing buildings in China. These are still being built several stories high, with poorly designed freight elevators, which are far too small and slow. Surprisingly, many plant owners do not build the more proficient single story buildings. The principal reason for this lack of attention to effectual strategy, is largely due to the extremely low hourly wages. However, some in China are simply unaware of traditional low-cost manufacturing initiatives. Manufacturing knowledge remains rather poor, perhaps equal to the USA\u2019s in the 1970s.<\/p>\n

The eventual need to expand manufacturing arenas in China will prove difficult as well. The reluctance in moving business to the Western provinces has many factors. For instance, many plant owners will not want to locate operations further inland to the West. They seem to prefer the heavily populated, higher wage, land restricted East Coast, for all manufacturing facility locations. Simply because, so many reside in nearby Hong Kong \u2013 which is a short ferry ride from the Mainland. Most high-income owners still see Mainland China as an unattractive place for their personal residence.<\/p>\n

Another major obstacle to maintaining growth, is the sincere lack of freight forwarding capability within the country. Although China has invested heavily in infrastructure, it does not have the trucking capability to deliver components in an economical manner. There are no real substantial Trucking Companies in China which are regularly employed in the United States, as of yet. They simply do not have the Trucking Industry potential, with common capacity sizes of a Class 6 to 8 available, (often referenced as an “18 Wheeler” in the USA). Most deliveries are made in “light to medium duty” sized vehicles\u2013 similar to a common ‘one room’ rental unit commonly found in the United States: closer to Classes 1 through 4 in GVWR. Also, using the Chinese Railroad for product shipment is a common problem, because of the exorbitant charges, uncertain train schedules, and costly damage rates.<\/p>\n

Additional problems for the relocating of operations in the West, which will be essential for productive growth, is the difficulty in recruiting quality management to live far from the conveniences from the major Urban environments. Management can be persuaded to reside in a remote location, but this proves to be quite an expensive exchange. Furthermore, management has a tradition when working in the more remote areas of China to work four days per week. They will arrive Monday at 12:00 PM, and depart on Friday at 12:00 PM. The long-term commitment is often a serious concern. As wages rise throughout the Nation, to continue to maintain China\u2019s economic engine running at this level, the need will rise to locate plants in remote areas, with more abundant and less expensive labor sources.<\/p>\nTweet<\/a>","protected":false},"excerpt":{"rendered":"

Mark Leonard\u2019s book\u00a0\u201cWhat Does China Think?\u201d presents China\u2019s challenges and struggles with some surprising priorities its leaders have set to correct them. For the first time in China\u2019s history its 11th five-year plan does not list economic growth as its first priority. The plan:\u00a0\u201cput people first\u201d\u2026\u201crespecting the natural environment\u201d\u2026introduces a Scandinavian model of social welfare […]<\/p>\n","protected":false},"author":1,"featured_media":905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44,36,3,5,16,29,27,34],"tags":[49,223,50,51,52,53,54,230,40,55,56],"class_list":["post-560","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-books","category-china","category-india","category-manufacturing","category-mexico","category-peter-drucker","category-the-art-of-war","tag-analysis","tag-china","tag-culture-change","tag-foreign-markets","tag-free-markets","tag-investment","tag-japan","tag-manufacturing","tag-mark-leonard","tag-political-influence","tag-usa-industrial-power"],"_links":{"self":[{"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/posts\/560","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bobamter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=560"}],"version-history":[{"count":18,"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/posts\/560\/revisions"}],"predecessor-version":[{"id":1030,"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/posts\/560\/revisions\/1030"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bobamter.com\/index.php?rest_route=\/wp\/v2\/media\/905"}],"wp:attachment":[{"href":"https:\/\/bobamter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=560"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bobamter.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=560"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bobamter.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=560"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}