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An Unfriendly #2

February 14, 2011

Hey, we have a new car in the rearview mirror.

China passed Japan in 2010 to become the world’s second-largest economy after the U.S., a historic shift that has drawn mixed emotions in the two Asian powers: resignation tinged with soul-searching in long-stagnant Japan, pride but also caution in an ascendant China wary of shouldering new global responsibilities.

There’s a lot packed in that fine paragraph.  When I was starting to pay attention to economic and world topics, it was all about Japan.  We were going to get spanked by the new management styles, and their manufacturing skills beat ours to the punch… the US was going to crash and burn because we JUST COULDN”T MATCH the might of Japan.

Well, fast forward, and now we’re still 3x the GDP of either Japan or China — so we’re bigger than #2 or #3 combined — and now we JUST CAN”T MATCH the might of China as it rises to prominence.  So before we decide to make this a China vs. US gig, let’s actually look at a couple realities for now.

For the U.S., while Japan was in some ways an economic rival, it also has been a geopolitical and military ally. China, however, is a potential challenger on all fronts.

China’s ascent has been the main source of popular legitimacy for the ruling Communist Party. But Beijing worries that the mantle of economic titan comes with unwanted obligations for a country still in many ways poor. “China Surpassing Japan to Become World’s Second Biggest Economy—But Not the Second Strongest,” said the headline on a recent article on the website of the People’s Daily, the party’s flagship newspaper.

China per-capita income is still a tenth of Japan, forget the US.  And if you go to Japan, you’re seeing some solid innovations in terms of hybrid vehicles, computer technology, and maybe even some economic policies.  China still seems to be focusing on schooling up China in how to innovate beyond what it’s given.  Even if you look at the copycat technologies, such as the recent activity on China’s new stealth plane, it’s a bit wanting.

All that said, there are still some pretty depressing signs.  The top 10% of students in China are around our top 10%… except there are 10 times as many.  So catch that point.  China’s top students are greater in number than all of ours.  They also seem to be interested in using the natural resources that they have, rather than letting some random environmental group protect the spotted grasshopper in the interests of crippling resource acquisition.  We may be comfortably cruising in the lead, but we should be aware that one of those two dots in the background is hard on the accelerator.  The finish line is a still a while away.

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