China: A world leader in many ways
Washington, D.C.: Chinas a big-number nation. The worlds largest population (1.3 billion people); the worlds most valuable company (PetroChina); the fastest-growing economy (9.7% rate annually since the 1970s), which will probably surpass Germany as the worlds biggest merchandise exporter in 2008.
Whats more, when researchers at Georgia Tech recently graded the high-tech competitiveness of 33 countries on a 100-point scale from 1996 to 2007, China skyrocketed to the top ranking while the U.S. fell from its 1999 peak. If this trend continues, China could soon replace the U.S. as the main engine of the worlds economy, the study suggests.
Small wonder pundits have long said the 21st century belongs to China. And perhaps theres no better way of getting a sense the countrys size and ambitions than by looking at the numbers. Viewed through this lens, you see that China already leads the world in a host of critical categories.
China has $1.53 trillion in foreign exchange reserves, about $500 billion more than Japan, the next largest holder. It produces more clothing, cement, gold and steel than any other country. In 2006, it had 2.4 million university graduates, more than the United States, Japan and France combined. By 2011, China is expected to become the worlds largest energy consumer, a title now held by the United States.
According to government statistics, China manufactured 8.8 million autos in 2007, a 22% increase from the previous year. Thats still far behind the U.S., but one analyst estimates China could catch the United States in auto production by 2012.
The industrial boom has put China on pace to surpass the U.S. in energy consumption shortly after 2010, according to the Paris-based International Energy Agency. In addition, a 2007 report by the Netherlands Environmental Assessment Agency found that China is now the worlds leading producer of harmful carbon dioxide emissions.
Need more examples of Chinas headlong growth? According to official statistics from the Chinese government, last year economic growth increased by 11.4%, Chinas state-owned companies posted a 32% rise in profits and foreign direct investment in China amounted to $11.2 billion - a 110% increase from the previous year.
All this, and the World Bank recently reported that the countrys growth is actually slowing down, albeit gradually. In January, Beijing announced that consumer inflation rose by 7.1% in 2007, the highest level in 11 years, due largely to rising food prices. And Chinas worst winter in two decades is causing blackouts, highway closures and crop destruction - so far, the economy has taken a $15 billion hit, the government says.
The Chinese would probably welcome a mild slowdown. Since 2004, China has tried with little success to rebalance its economy by promoting more consumption at home and less investment and export-led growth. The best way for China to adjust, experts say: Spend more, save less.
Despite occasional spats over trade and the exchange rate between the dollar and the yuan, Washington and Beijing are working together to help China manage its growth and to become a more integrated member of the world economy. In 2006, the U.S. and China began their “strategic economic dialogue,” which has become the centerpiece of U.S.-China relations. On the U.S. side, Treasury Secretary Henry Paulson Jr. - who traveled to China frequently when he was chairman of Goldman Sachs - has led the effort.
In spite of its impressive gains, China still has a long way to go before it becomes a full-fledged market-based economy. According to Wing Thye Woo, a senior fellow at the Brookings Institute, China needs to take a more assertive role in international trade negotiations. There is concern that the Chinese bureaucracy could stunt growth of its industries. And with rapid growth always comes social change, which China is keenly aware of.
“The Chinese have to set up social and political institutions that could mediate competing interests,” Woo says. “Unless they can do that, the economic growth might not be sustainable.”
