17757 Wed, 01/27/2010 - 2:23pm
People are always talking about Chinese imports. Or the Chinese impact on the industry. Maybe it’s the Chinese economy or Chinese products or Chinese quality. Well, it’s time to stop talking like that. China is a noun. If you are a little rusty on your English composition skills, the point here is that it’s no longer right to qualify subject matter having to do with China. China is rapidly—very rapidly—becoming the center of the global economy and when you talk about industries and products and business, you cannot segment out the Chinese portion of that anymore. Consider these points: • China is now the world’s third largest economy and most of the suits predict that by the time the year is over it will have passed Japan to move in the number two spot. That will still put it a considerable distance behind the U.S. economy, but with its rate of growth at astonishing levels (and ours not so much) it appears it’s not an if but a when until China becomes number one. • China is now the world’s largest exporter, having just passed Germany. All of those Mercedes and BMWs and precise machinery have been one-upped by Gap T-shirts, frying pans and consumer electronics coming out of China. • China is now the world’s number one market for automobiles, having passed the most car-crazed country in existence: Us. Just a generation or two ago cars were an uncommon sight on most Chinese streets. • China is now buying more U.S. assets than America is buying China assets. China’s spending is up four-fold from just a year ago, while the comparable U.S. number is off 80 percent. Put it all together and it is a compelling picture of all that his happening out there. Numbers can sometimes lie, but not this time. But here’s the most important part of this story: many people still look at China’s emergence and rapid growth as a self-contained chapter in the history of the global economy. They see it as an event limited in time and scope, one that will naturally fall back into a greater picture of the continued economic dominance of the U.S. and the rest of the Western world. There’s a very strong case to be made that that is dead wrong. Those with short memories and a lack of historical perspective only know China as the backwater nation of the 1960s and 1970s that began its rise after it opened itself up to the West and relaxed its economic control on business. But in fact for much of the past 1,000 years (probably longer if you have a really good memory) China has been the most advanced society on the planet. There’s a reason Marco Polo went to China rather than his Chinese counterpart going to Europe. In fact, it’s only been the past century or two that China had fallen behind, hopelessly out-of-touch with the modernizing Western world. This period has been the exception, not the rule. A recent piece in The Financial Times made exactly this argument. We all need to stop thinking in terms of this being a temporary phenomenon. That’s not to say that what happens with the U.S. economy becomes inconsequential or unimportant. It will likely remain vital for many lifetimes. But if you’re waiting for the China bubble to burst and for things to go back to the way they used to be, you might want to rethink that. Not only is China a noun, it’s the noun.