Initially, after reading several articles on the downward spiral of America’s economy, (i.e. the debt ceiling issues, unemployment, decreasing capital) and watching countless YouTube speeches on how “America is not the greatest country in the world anymore,” (that of course, being a direct quote spoken by actor, Jeff Daniels, on HBO’s, “The Newsroom”) I wanted to further investigate these claims. I have read the data about how America’s budget is screwed up (too much unnecessary spending) and opinions on how Americans lack empathy and a multi-national conscience. Which, I admit, there may be some truth to it, but we will get to that later. Even with all of America’s fiscal problems my initial arrogant reaction was that China’s classless culture (my opinion, not fact) could NEVER take the place of, or even join America as a dominant world power. However, after spending time in Hong Kong and in China, I have found that my initial reaction was in fact, arrogant and ignorant.
One would have to be blind to not see the flow of capital quickly leaving the Western World and heading to the East. China is already pretty much producing all our goods and soon (approx. 10-20 years) they will not need to import from the Western World at all, and will be completely self-sufficient. Good for them, right? But, what will become of the Western World’s economy when this comes to pass?
First of all, its funny to think that 10 years ago in, Shenzhen, a major City in China, people couldn’t even figure out how to use traffic lights and now, this highly traditional and not so refined society (from my observation and in my western point of view of course) are buying exotic cars and according to Bloomberg, replacing Japan as a global superpower. Now, China’s economy is particularly interesting to me because in my lifetime, I have never seen a country’s economy grow so fast and most likely never will again. So, assuming that this growth continues, which evidence suggests that it will, what will the next 10 years of the global economy be like? Can the Western World and the United States survive economically? How can we adapt, or stop this in order to preserve our way life and maintain our status as the most powerful and wealthiest country in the world?
Let’s take a look at the facts because we all know that people are fallible, meaning that people lie. Though, lucky for us realists and truth-seekers, numbers do not. First, let’s compare China’s GDP data with America’s. Currently, according to The World Bank, USA GDP is $15.68 trillion with a GDP growth rate of 2.2% annual change. Now, compare that number to China’s GDP which is $8.2 trillion, still not more than America’s. So, we are good, right? WRONG! They have a GDP growth rate of 7.8%! (Which is almost 4 times our economic growth rate.) Furthermore, China is now investing in more sustainable transportation such as subways and trains, which they manufacture entirely by themselves, therefore, in the very near future improving mobility. Thus, jobs will be booming even more so, and with it, the nation’s economy.
China has also recently purchased a lot of land in Africa. Which is, also, according to the United Nations World Tourism Organization, gaining popularity amongst travelers as a destination, and is expected to rise drastically in the future as a popular tourist destination. The land will also be used for farming and agricultural purposes. And like the great American writer, Mark Twain, once stated, “buy land they aren’t making it anymore.”
I also feel it is important to discuss the differences between Hong Kong and China. Yes, there is a big difference between Mainland China and Hong Kong. What you ask? Well, for years now Mainland China people have viewed manners, or etiquette, as we know it in the Western World, as pointless and unnecessary. For example, a Mainland Chinaman is likely to spit on the street 3 inches from your feet. Whereas, a Hong Kong Citizen, or a “Honkie,” would have a bit more class than to perform such an act. “The Honkies” actually take pride in saying that they are not “Mainlanders,” being that Hong Kong is known as a much more socially advanced, educated, and classy society. In fact, Hong Kong University is even labeled as one of the top schools in the world. (No, not just Asia, the entire world.) However, since China now owns Hong Kong (because the British gave it back to them about 20 years ago, and let Hong Kong stand alone as a colony/country and the economy flourished. Weird how that happens, I guess Adam Smith was right about that whole “Laissez-faire” theory) one can easily see that the “Honkie way” is making its way into Mainland China. The Mainlanders are getting more educated and they are learning manners. Not so much by choice, but by force. (But, whatever works, right?) The Chinese Government has actually gone as far as issuing a handbook instructing the Chinese citizens how to act when traveling abroad because there have been so many negative complaints (via the media of course) about their egalitarian behavior. Note, that 20 years ago, it was the Americans with the peaking 90’s economy, who were pissing off the locals of popular tourist destinations in Europe with their behavior. But, today, since China’s economy is doing so good, this increase in disposable income to its citizens has naturally led to more Mainland Chinese people venturing out to see the world. In fact, according to the UNWTO, “China became the number one source market in the world in 2012, spending $102 billion US on international tourism.” The organization also stated that because of, “rising disposable incomes, a relaxation of restrictions on foreign travel and an appreciating currency, Chinese tourism spending has increased almost eightfold in 12 years” (up from $13 billion US in 2000). Conversely, according to the UNWTO, American international travel and tourism are down 7%. In fact, the UNWTO confirms that “In 2005, China ranked seventh in international tourism expenditure, and has since overtaken Italy, Japan, France and the United Kingdom. Additionally, with the 2012 “surge,” China jumped to first place in international tourism expenditure, passing both long-time top spender, Germany ($84 billion) and second largest spender, The U.S. ($ 83 billion). (Which are now 2nd and 3rd in the ranking.) The United Kingdom ($ 52 billion) remains 4th.
Not to mention, the UNWTO also predicts that, by region, the strongest growth will be seen in Asia, where arrivals are forecast to increase by “331 million to reach 535 million in 2030 (+4.9% per year).” Thus, by 2015, the “total Chinese spending abroad will exceed total global luxury sales, having been only one-third of the total in 2008” (UNWTO). (My how the mighty have fallen.)
But, to get back on point, as I stated above, before I came to Asia, I could not see China replacing America as a global superpower. However, I had to look at China’s economic development logically and not emotionally, or arrogantly. I also had to acknowledge the fact that sustainability, pollution, and overall quality of life is a BIG problem in China, and without innovation, could potentially slow economic growth in the future. In fact, according to the Beijing Health Bureau, lung cancer is at an all-time high, and the life expectancy in China, itself, is only about 50 years. This is directly caused by the poor quality of life, mainly pollution. So, I asked myself “How could an economy with such pollution and lack of long-term sustainability thrive?” Then, it occurred to me, as the poor in China begin to get more educated, and earn a higher income they will soon DEMAND a better quality of life. I mean that’s what happens, isn’t it? Poor people have no clout to complain therefore they don’t feel that they can, and are forced to conform and do what they are told to keep the status quo. However, with this shift in global capital from the West to the East, the Chinese society is quickly getting richer. One can already observe this in the way their society is mocking trends of Western society, and with money also comes higher demands. Consumerism has told them that it is “cool” to buy and wear Louis Vuitton, so they do, because that’s what the media says rich people do, right? Pretty soon they may even start maxing out their credit cards on fashionable material items they cannot afford. (Sound familiar, America? Cough. Cough.) In 10 years time, not only will China have a strong control of their wealth and economy, but their education and work ethic will also be driving forces for a thriving future economy.
Children in kindergarten in China and Hong Kong are already learning 3 languages: Mandarin, Cantonese, and English. Note, that there are approx. 40,000 characters in the Chinese language and the people tend to learn about 5,000-6,000 of them for everyday use. Compare that to the Western World where we learn an alphabet of 26 letters; they learn one of 40,000. Therefore, as the Chinese society progresses and each generation become wealthier and more educated, the once super poor Chinese factory or rice field workers will evolve into the new comfortable middle-class. Once this happens, again in approx. 10 years time, the Chinese will be extremely educated “super minds.”
So what can we, in the U.S. and Western World, do to retain power, or possibly slow down the growth of China? Or do we really want to? Well, honestly, the answers are, “nothing,” and “no, not really.”
As stated previously, China produces everything, from dollar goods to our technical devices that we rely on in our day-to-day lives, and this just continues to increase. We could stop having them produce our gadgets, but that wouldn’t be very economical being that if we did produce in America, the retail product price for the consumer would go up dramatically just to cover production costs. However, it is important to note, that China is slowly becoming uncompetitive for manufacturing and production. With that being said, if it gets too expensive for production there we could always start looking for other countries to produce in.
So, is the Western world just screwed? My answer, “No, of course not!” The data does show that China’s economy WILL, in fact, be equal, if not bigger, than America’s in the next 10- 20 years. In fact, The Economist Intelligence Unit predicts that China’s economy will be as big as America’s by 2016. (America, it is time to WAKE-UP!)
However, while there are definitely negative aspects of China’s economic growth, there are also a few positives too. One negative aspect would obviously be our lack of control due to lack of capital. (Oh No! Could Rome fall? Oh No! Not Change!) Nevertheless, there are major benefits to their growth as well. Such as, once they become a superpower, U.S. firms will have to invest more in research and development in order to compete, thus improving the quality of goods and services, which is good for the consumer, You and I. Just as, Art Blakemore, a moderator for the China Global Trade, wrote, “the growth of China does not require or even imply the decline of the U.S….. In the end: China is richer. The U.S. is richer.”
There is, however, one monumental thing we can do to prepare for what the future holds. We can adapt. How can we adapt? We can learn their language. (Yes, you read right.) We can learn Mandarin! We can create a truly win-win trade situation for both economies and a “comparative advantage,” as economists refer to it. There is plenty of capital for everyone to have a piece of the pie. Working together with these “superminds” will make a brighter economic future for the entire globe. Communication is key in any business and learning their language is crucial to the future success of our Western economy. In short, language can be the bridge that connects these two great empires. (Two minds are better than one, right?) Furthermore, recruiters at big banking institutions have already stated that candidates whom can speak multiple languages, especially Mandarin, are put at the top of the “hire list.” In my opinion, the Western World has been spoiled because we have never really had the need to learn another language. However, in today’s competitive job market, being multi-lingual is not only an asset, but also an absolute necessity, and will better prepare business professionals for what the future global economy holds. This also means we need to start teaching Mandarin to children at a young age, and it becoming as common as Spanish and French in a Western classroom.
So in conclusion, to my first blog post, China produces everything and soon (10-20 years) may no longer need the Western World for anything, then what? The Western World must drop the ego and learn their language, and while doing so, try to develop more of a multi-national conscience, and awareness. We must, in order for our economy to survive and thrive, view the world and the global economy with just that, a GLOBAL point of view instead of a Nationalist point of view.