Saturday, August 09, 2008

Thoughts on China

I spent a month in Beijing in January of 2007. While I was there, I spent a good amount of time composing a blog post in my head (that I never did get around to writing) about why I didn't think China was going to become a superpower to rival the United States any time soon. My thoughts can be boiled down to these few key points.

China's economy is able to overcome structural inefficiencies with a vast amount of cheap labor. China is able to maintain a super-heated export economy by virtue of an undervalued currency that doesn't float on the international market and deflates the price of Chinese goods. China has a large butcher's bill coming due for its despoiling of the environment in the form of modernizing its industry and the looming health costs to its citizenry. China still has 900 million people living in rural poverty.

In the July 27th Outlook section of The Washington Post I found this excellent article which makes several of the same points and which goes into great detail about the demographic time bomb lurking in the Chinese population. I highly recommend it.

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