China's growth model is not a replay of Japan
Of all the mistakes the US is making in dealing
with China's rise, the most obvious is this: Thinking we've seen this
before.
Of all the mistakes the US is making in dealing with China's rise, the most obvious is this: Thinking we've seen this before.
Well, we haven't. Never before has such an underdeveloped economy with such a huge population and history of innovation muscled its way onto the world stage so fast.
To say the complexion of the global financial system will never be the same is a vast understatement. China's rise has rendered the work of John Maynard Keynes and Milton Friedman all but irrelevant. Such economists based their work on the advance of Europe in the 19th century and the US in the 20th.
If they thought those events were something, just wait for Asia's rise in this one. It's not just China, remember, but India, too.
If the Bush administration knows this, it's not letting on.
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For politicians in Washington, China is a perfect scapegoat on which to pin their nation's challenges, just as they did with the Japanese in the 1980s.
For all the superficial similarities, China is not a replay of Japan. For one thing, China is looking to bypass the process of domestic company building that preoccupied Japan for decades. That's why you've seen Chinese bidding on companies with established global brands, such as Unocal Corp. and Maytag Corp.
Even if US politicians are wary of China, many executives aren't. The hand wringing of Corporate America in the 1980s isn't in evidence with China. Companies are relying on its cheap labor and land to pump up profits. Consumers, rather than slapping "Buy American" bumper stickers on their cars, are happy to load up on low-cost Chinese goods.
Will Pesek is a columnist for Bloomberg based in Kuala Lumpur.
Posted: Fri - October 14, 2005 at 05:57 PM