PRC Economy - New Reflections : Dec 15 2011

[kish]

China may not overtake America this century after all

Doubts are growing about whether China can pass the US to become the world's biggest economy this century amid warnings that the country’s 30-year miracle is nearing exhaustion.

The world's tallest tower should have been built by now. Officials said last year that the great edifice with 220 floors would be erected in three months flat in China's inland city of Changsha by March, snatching the crown from Dubai's Burj Khalifa.

Prime minister Li Keqiang has asked the State Council to clamp down on the excesses of the regions. Not before time. A top regulator says local government finances are "out of control".

Mr Li aims to cut China's economic growth to a safe speed limit of 7pc next year and rein in rampant investment – still a world record 49pc of GDP – before it traps the country in a boom-bust dynamic of frightening scale.

Vested interests are conspiring to stop him, launching a counter-attack from their power-base in the $6 trillion state industries. Even so, uber-growth is surely over.

China's catch-up spurt has a few more years to run in the Western hinterlands perhaps, but when the full story comes out we may find that nationwide growth has already fallen below 7pc.

Mr Li complained in a US diplomatic cable released on WikiLeaks that Chinese GDP statistics are "man-made"(Shangai statistics..!) , confiding to a US diplomat that he tracked electricity use, rail cargo, and bank loans to gauge growth. For a while, analysts use electricity data as a proxy for GDP but the commissars kept a step ahead by ordering power utilities to fiddle the figures.(wow. That's 'innovative'!):P

Above point were raised by Indian BR members, then it was shouted down as a myth by chinese members.

[Austin]

Why would Chinese or anybody race to over take US GDP Figures when US GDP figures are more than 100 % in Debt ?

[Gus]

well..could it be that debt and GDP are two different things...

[Sri]

And ends at Hongqiao station in Shanghai, which is pretty close to the core of the city.

Some of the smaller cities in between intentionally built their stations further out, because they're trying to build a new urban district. But by and large, it's incredibly convenient.

Heech Ji, First off I really appreciate your contributions to BRF. Hope you keep visiting.

Interesting that China is investing so much money in HSR and we are investing in freight corridors and making many trains 'double-deckers'. Priorities differ I guess.

[subhamoy.das]

This is in line with the "fake" culture of China. I really wonder, why they love so much faking. They seem to be hard working, intelligent, homogeneous nation but then why fake every thing. I think they are in great hurry and want to make the great leap forward. They want to reach US level in 30years. But as with all things acquired in the fast, easy and short cut way, it will also last for a short duration. This great leap forward will be their doom, the second time. This leap was never sustainable in its first place and it is now started to show.

[wong]

^^^^

Yawn. Every 3 months there is a new prediction that China is doomed. This has been going on now since the mid-1990's. Who's had the better track record of predicting the Chinese economy, Indians BR-ites or the Chinese posters here in the last 15 years.

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[sudarshan]

{Deleted response}

[Suraj]

wong: Stick to the thread topic. You're just back from serving out a forum ban. If you're so inclined to earn another, why not just save us the trouble and delete your profile ?

[heech]

I'm pretty sure I've said this before... but I remember being on this forum when people were citing not just Gordon Chang, but Rawski's work about GDP growth in 1999 (14 years ago now).
http://www.pitt.edu/~tgrawski/papers2001/gdp912f.pdf

Let's make it simple. Statistics about Chinese growth, especially those published by provincial or local governments, can often be wrong. Statistics at the national level are most certainly "smoothed" (under-measuring growth in some quarters, over-estimating in other quarters). Statistics on GDP are not some kind of official score, just an approximate indicator to indicate what's going on in the real economy. The fact that people have been arguing this point for 2 decades is pointless and silly.

The reality of growth is pretty obvious to anyone who's been to China. The challenges that China faces are real: how do you maintain growth momentum when the world economy has slowed to a crawl; how do you manage prices and money supply when every other government on earth is printing like crazy; how do you deflate a property bubble while still encouraging urbanization. But IMO, these challenges are less significant than those China has faced over the previous 2 decades... so I think I have reason to be optimistic about China's growth.

[Rishirishi]

The HSR does 1000km in 4h and cost USD 100. Now In India a distance of 1500 km would be travelled in 2h at a cost of USD 80 if we take the flight and book in advance.So why did the CHINESE go the HSR route and not air? Seems like a flawed strategy or some other objective is there?

HSR is not competitive beyond 500 km. This is a real physical limit. You have to ask the Chinese why they went this route.

Its not that simple.
1
HSR connects regions rather then cities. There are several stops along the way in smaller cities, and is very useful for business. It may be simple to get from Haydrabad to Delhi by flight, but what about all the other towns in between.

In India I think HSR would probably not make sence, as the costs are very high. perhaps it would be better to improve the existing rail system. Very few poeple would be willing to pay RS 10 000 for a return ticket Jaipur-Delhi.

[KLP Dubey]

{deleted}

Meanwhile, arr is werr:

China’s Economy Unexpectedly Stumbles Again on Weak Export Results

What has kept the economy running is the huge volume of cash being pumped into it. Total social financing — a measure of all nongovernment borrowing from banks, bond markets, trusts and other sources — surged 58 percent in the first quarter of this year from the same period last year. Off-balance-sheet financing from the so-called shadow banking sector has been particularly active.

[/quote]

KL

[subhamoy.das]

This is the real problem with CHINA : http://www.nytimes.com/2013/01/25/busin ... d=all&_r=0

Too many grads and less jobs suitable for them. Time to shift to knowledge based service economy...

[wong]

{deleted}

Meanwhile, arr is werr:

China’s Economy Unexpectedly Stumbles Again on Weak Export Results

What has kept the economy running is the huge volume of cash being pumped into it. Total social financing — a measure of all nongovernment borrowing from banks, bond markets, trusts and other sources — surged 58 percent in the first quarter of this year from the same period last year. Off-balance-sheet financing from the so-called shadow banking sector has been particularly active.

KL

And this article is different from anything written about China's doom in the last 15 years, how?? There is a massive shortage of factory labor as China moves into a middle income economy and Chinese service jobs begin to compete for industrial labor. People simply don't want to do this type of work anymore and this type of work will flow to "Love You Long Time" Vietnam or Indonesia.

[heech]

This is the real problem with CHINA : http://www.nytimes.com/2013/01/25/busin ... d=all&_r=0

Too many grads and less jobs suitable for them. Time to shift to knowledge based service economy...

Is the glass half full, or half empty? While talking about the difficulties for new college graduates... let's not forget the other half of the picture.

The description of life in a factory makes it sound pretty attractive, I think. $400-700 USD a month in salary, 2-person shared apartments, Internet cafes, air conditioning, a park-like work environment. Let's repeat: ANYONE in China (interested in a factory job) can take a bus to the coastal regions, and get a job like that today. Sounds almost like communist propaganda, but no one here seems to be disputing it.

And as far as the college graduates... the immediate future is difficult. I don't think there's any easy fix for them. In the long term, perhaps 10-20 years in the future, hopefully these guys will be able to contribute to a service-based economy. There will be many more cities, more offices (that need people to design), more conferences, etc. But I would be the first to admit that getting from here to there is not going to be easy or painless, especially for these people on the lower edge of this evolution.

[member_20292]

^^^^

anyways, following Chola jis and Heech jis and all the rest of the ji's advice as above, I have increased my personal dealings with Chinese (mainland) vendors.

Problem is, that they are as trustworthy as a Palika Bazaar shopkeeper on a bad day

How does one deal with this problem, apart from hiring agents on the mainland?

[Christopher Sidor]

This is the real problem with CHINA : http://www.nytimes.com/2013/01/25/busin ... d=all&_r=0

Too many grads and less jobs suitable for them. Time to shift to knowledge based service economy...

Is the glass half full, or half empty? While talking about the difficulties for new college graduates... let's not forget the other half of the picture.

The description of life in a factory makes it sound pretty attractive, I think. $400-700 USD a month in salary, 2-person shared apartments, Internet cafes, air conditioning, a park-like work environment. Let's repeat: ANYONE in China (interested in a factory job) can take a bus to the coastal regions, and get a job like that today. Sounds almost like communist propaganda, but no one here seems to be disputing it.

And as far as the college graduates... the immediate future is difficult. I don't think there's any easy fix for them. In the long term, perhaps 10-20 years in the future, hopefully these guys will be able to contribute to a service-based economy. There will be many more cities, more offices (that need people to design), more conferences, etc. But I would be the first to admit that getting from here to there is not going to be easy or painless, especially for these people on the lower edge of this evolution.

For the mass majority of Chinese, the movement from an agrarian to manufacturing work has been breathtaking. There is much more to come. If everything goes according to the plan, then some 100 million more people will join the existing urbanites in PRC in the next decade. Once you have that many number of people concentrated in cities, it becomes very easy to provide them services like health care, pension, etc. And basically China is on the path of creating the biggest market on this planet. When PRC has achieved that, then truly the dominance of US will end. US dominance is not technological nor ideological nor cultural. American dominance is economic and financial. Everything else flows from that.

This is PRC's half glass full.

[TSJones]

I'm not sure that I can agree with that. Essentially, what you are saying it that we are rich and we can buy anything and there is nothing special about the US proclivity to technology. I've got to definitely think that one over. I really don't know what other country would deliberately exile its light manufacturing sector to a foreign country that for all intents and purposes may be deliberately hostile to it. Or have an overall philosophy that employment of its citizens is not paramount but their ability to buy goods as cheaply as possible.. Or any other sectors such as communications, aerospace, credit banking, etc. The Chinese had better start innovating if they want to dominate technologically. Money will only get you so far in my opinion. And right now, Samsung is giving us a run for our money. We thrive on competition.

[KrishnaK]

TSJ +1. The US has evolved to where it is now, having evolved faster than others could, given it's extraordinarily pro-business environment. Mainland EU has settled for a more predictable lifestyle that values the quality of life of a collective humans over business/individuals. China isn't free to fall where she would normally.

[Christopher Sidor]

PRC is a cog, a massive cog to be precise, in the global supply chain. This chains origin is in US and in Western Europe where the demand is. The parts are manufactured in Taiwan, Korea and Japan. These are then shipped to PRC for assembly. In certain products the entire parts are manufactured in PRC. The raw materials, like oil/gas/steel/copper to construct and run this enterprise comes from resource rich nations of south east asia, including australia, parts of latin america and possibly in future from Russia.

So America did not outsource its light manufacturing sector to PRC. It shifted from a place where the prices would have risen, i.e. US, for the finished products if they were manufactured there, to a global supply chain which for obvious reasons had PRC as a major cog. Such was the efficiency which was extracted that the US and European customers had very low inflation ever since 1992. This allowed US and some European nations to have growth rates of 4%.

In all the sectors such as communications, aerospace, credit banking, etc, it is US which is the single largest market. It is the US where the maximum amount of margin is present. PRC and India might have the biggest telecom user base, but it is the US which has the highest ARPU. PRC and India might have bought the maximum number of planes on order, but it is the American air travel market which has the highest people per capita travelling on flights. In case of Credit banking well US strength is not something to write home about. We are in the mess where we are because of the financial market of US and off course due to European actions.

If tomorrow PRC would overtake US to become the market in the world that automatically the gravity of all these industries would shift. This is what happened in the first 50 years of 20th century. By beginning of the 20th century the american market and economy was the biggest. And observe what happened the industrial exploitation of oil, found in Texas and other parts of America was initiated. Till then it was the economy of the British empire which was driving the world.

It is happening even now. Unilever one of the biggest anglo-dutch consumer firms in the world, now has all of its products being driven out of India, which is its biggest market. In fact products are manufactured for Indian specifications and then the same are reused in UK and other parts of the globe. The same would happen for other industries. By the end of this decade Airbus will be manufacturing planes for Chinese market which would then be sold to other countries.

If trends hold, i.e. PRC is able to make the jump from an investment-cum-export led economy to services-oriented-domestic market led economy, then this is the path that would play out. That is why I said PRC's glass is half full. And PRC is capable of such change. Who would have thought that worshipers of Mao and Marxism would become the most ardent capitalist and that too within 2 years of Mao's death. Deng opened up PRC in 1978, two years after the death of Mao in 1976. And who would have thought after 1989 that PRC would grow at double digit to become the 2nd largest economy on the planet.

If one thinks that innovation cannot happen in closed society then please observe the innovation that happened in soviet union. Recall the fight between Tiger and Pather tanks with the T-34 tanks. Innovation can happen in a non-democratic society. If not then all the innovation prior to WWII ought to have happened in US and not in imperial Germany or Nazi controlled Germany. Going back even further all the progress of north Atlantic region has its origin in renaissance Italy or murderous monarchies of Europe which were hardly beacons in terms of an open society. In fact it is among the biggest myths held by certain North Atlantic people that PRC cannot innovate. It ignores the massive innovation which happened in PRC prior to the coming of Europeans into Asia. Innovation or ability to compete is not the sole birth right of the Americans.

If history is any guide, it is not ordained that PRC will stumble. Off course the reverse is also true, i.e. it is not ordained the PRC will NOT stumble. Just as hubris and arrogance was the cause of British decline, watch how it saw Germany as its biggest threat when the real threat to its domination came not from the east but from west, it might be the case of American decline. The US was the biggest economy by the first decade of 20th century and the British empire did nothing to reverse that. By the time WWII came around it was the case of two cats fighting over economic structures which had no relevance. Britain fought to preserve its empire, where its gross misrule and barbarity had rendered it unwelcome. The Nazis fought with equal barbarity to create their empire in Europe primarily at the expense of Slavs.

[member_20292]

^^^ cool post

[subhamoy.das]

I donot think u can compare PRC with US. The difference is in innovation. I have been asking for post after post to show us samples of Chinese innovation recognized in the world, but none. Where are the CHINESE tech products which are sold all over the world, where are the CHINES MNC ( outside of utility and resource companies ). It is a joke that you are comparing US to China. One is the craddle of innovation and the other ones is the cradle of copy and fake. At most what u can give credit to PRC is that they created the infrastructure to setup the factories and lots of factories rellocated and they did well in outsourced manufacturing and i would put this miracle in the same bracket as Thailand, Malaysia, Indonesia, Taiwan etc, the east asian countries. And that miracle has started to ebb in 30years flat as outsourced manufacturing is moving to places close to customer.

[SriKumar]

heech,
good to see you post (after a long hiatus). Your perspective on ground realities are interesting to read.
Internet research only takes one that far (and sometimes it makes one see only what one wants to see).

Read part of the NYTimes article. A glut of manufacturing jobs is a good problem to have, as far as I am concerned. So, now the factory management in China is trying to compete for workers; this provides impetus for them to better working conditions (may or may not happen), or offer higher pay (is happening per article) or improve efficiency to reduce need for workers etc. (dunno how this will play out). These are capitalist forces at work and it will be interesting to see how things evolve there ( pay for white vs. blue collar jobs used to be 3:1 and now is 2:1 per article).

It will be interesting to see how this worker supply vs. demand forces will shape the manufacturing environment i.e. will we see more efficiency? Or whether white collar content in blue collar jobs could be increased over time (as one moves higher-up 'in the chain' (white collar workers are plentiful per article, so someone has to innovate and figure how to put 2 and 2 together), Or, more value gets added to the product etc. If none of these pan out, the jobs could move out, atleast in some (low tech) sectors.

Good post Sidor.
Looking at a historical context (or ANY larger context, in space or time) gives one a sense of perspective and an idea how things could evolve in a particular situation.

[heech]

I often hear "innovation" or "creativity" being cited as a fundamental difference between the US and China.... but almost always by people who aren't really involved in the innovation industry.

I'm not sure I see substance in the idea that US has some sort of permanently lead in "innovation". Where is this innovation showing up?

- Apple? I'm addicted to my iPhone / iPad, but their success is really just a reflection of the fact that the US consumer is still top dog. Imagine if Chinese GDP per capita was equal to US GDP per capita... are you so sure a Chinese equivalent to Apple wouldn't be the worlds' largest company right now?

- Facebook? Not at all clear a business model that will be sustainable. And China's Tencent, for example, has a larger market cap. Tencent's key product (QQ) was launched 2 decades ago.

- Twitter? eBay? Amazon? I'ts not clear how any of this is more innovative than the Chinese alibaba, weibo, etc, etc.

- Cisco? Anyone in telecommunications is already aware China's Huawei is becoming the dominant force here.

- And with all the debate about whether HSR is a "copy" of Japanese / German engineering... the bottom line is, China has an amazing international product that it can market, sell, build, and support (legally and profitably). China has set out to own the high speed railways in the 21st century, much as Boeing and Airbus owned large jet airliners in the 20th century. Note that no one cares whether jet aircraft technology originated in Germany or was advanced in the UK... Boeing is Boeing, regardless of the technology's roots. Surely this is also a sign of China's economic rise? Regardless of whether HSR makes sense for India in the year 2013... I think most of you would agree that, in perhaps 50 years, HSR will make a lot of sense for India. It's the only reasonable solution for a major problem that affects all densely populated cities. This is an industry China is trying to own *before* it develops.

Speaking as a technology guy, I see little distinction in this industry between China and the US. Impossible to see a sustainable edge in one or the other. I think on a per capita basis, Americans entrepreneurs are more willing to take personal risk. But I believe this is also balanced out by the sheer *heat* of being in China's hot-house: there is just constant competitive pressure to succeed in China, a desperation to achieve for those unemployed college students. In other words, maybe there is a difference in motivation... American entrepreneurs motivated by greed + opportunity, Chinese entrepreneurs motivated by fear + lack of opportunity... but the end result remains a great deal of brilliant, well educated people working very, very hard to build amazing products and change the world.

At the end of the day, let's keep in mind that culturally mainland China looks just like the rest of east Asia: Korea, Japan, and Taiwan. These other countries are thriving fine in the innovation game (Japanese society normally doesn't exactly reward individualism or creativity... so what?), and I have no reason to think China won't follow. Therefore, I personally think it's inevitable (in perhaps another 100 years) for China's GDP per capita to match that of the rest of east Asia.

[TSJones]

"It is happening even now. Unilever one of the biggest anglo-dutch consumer firms in the world, now has all of its products being driven out of India, which is its biggest market. In fact products are manufactured for Indian specifications and then the same are reused in UK and other parts of the globe. The same would happen for other industries. By the end of this decade Airbus will be manufacturing planes for Chinese market which would then be sold to other countries."

I must disagree with this statement. In fact, I think the future of manufacturing is leading to *more customization* as the future trends towards increasing automated manufacturing levels. Of ourse the engineering of those products are key. Whether they are engineered in the US, India or China, the manufacturer darn well beter know his customers and proceed accordingly. There are cost/benefit ratios that must be adhered to, but automated manufacturing will have a deep effect on that as well.

However, the thought of having to buy "love you long time" soap does present interesting perspectives.

[Gus]

heech, are you not mistaking products of innovation for innovation?

sure, there is no 'innovation gene' and chinese are quite capable of innovation, as any other society. but it is the system which allows such people to think up something and make it into a something that can be sold.

The contention here, at least in my mind, is that people in such system also tend to not be the state's obedient subjects and that you can have one or the other, but not both for a meaningful time.

[KLP Dubey]

The Chinese had better start innovating if they want to dominate technologically. Money will only get you so far in my opinion. And right now, Samsung is giving us a run for our money. We thrive on competition.

I tend to agree. "Innovation" is often confused with "optimization". It is relatively easy/feasible to catch up and compete via disciplined and well-funded effort in certain areas. Japan is a case in point. But "dominance" is another matter altogether, because it implies a large human/intellectual/cultural and physical infrastructure that ensures an overall lead and staying a few steps ahead. The US has a 200-year headstart in terms of intellectual infrastructure quality. This is not tiring or faltering anytime soon. And it is not easy to replicate elsewhere just by spending money or "making large efforts".

One of the Chinese posters said that "China is culturally the same as Japan, Taiwan, and Korea". I agree, and that in my opinion is the #1 reason they will never dominate. East Asians are fundamentally hard and discplined workers, and adaptors/copiers/reproducers/optimizers par excellence, but not innovators. I am not referring to specific individuals but the collective.

In any case, this whole discussion is somewhat meaningless, considering that China is likely to 1) grow old, and 2) poison their environment irreversibly, long before they get rich or approach "world domination".

Now this is not a reason for Indians to get complacent.

Namaskar,

KL

[SriKumar]

- Apple?
- Facebook? Not at all clear a business model that will be sustainable. And China's Tencent, for example, has a larger market cap. Tencent's key product (QQ) was launched 2 decades ago.
- Twitter? eBay? Amazon? I'ts not clear how any of this is more innovative than the Chinese alibaba, weibo, etc, etc.
- Cisco? Anyone in telecommunications is already aware China's Huawei is becoming the dominant force here.

Well, Apple first happened in the US, and specifically Sili Valley. Same for Cisco, Boeing, Intel, AMD etc. There is a difference in being the first with a viable technology vs. developing a variation of it post-facto, after release in the market (am sure you understand this). If you argue that putting up quick alternatives (albeit somewhat inferior) in competition to a prior product from another country has value, I'll agree 100%. Having Hauwei/Tencent/FiftyCent etc. is much better than not having it at all. In addition, having these me-too companies provides a platform for any new variation/innovation to be made of this product. To me, this is a major benefit of having imitation companies. They have a solid framework to understand market forces and requirements in context of their product offering, price-points, manufacturing issues, and a host of other things that make an innovative product successful in a market- by some measures a factor almost as important as innovation itself. But, trend-setting technologies that show the world what can be done, in the examples quoted above, came first in the US, especially if the list were to be expanded for hardware-related technologies in electronics/computers/aerospace etc. And even within the US, I would argue that it is specific pockets in the country that served as incubators.

[abhishek_sharma]

China: Year Zero: 1979 and the birth of an economic miracle.

[member_20292]

However, the thought of having to buy "love you long time" soap does present interesting perspectives.

beautifully racist line someone remove it please ......

[subhamoy.das]

Innovation requires a eco-system. China may be efficient but not innovative. It does not have the eco-system of free and fair democratic values where minds are without fear to drive innovation. The CHINESE mind set is sold on big and does not like small which is alway how innovation starts. They will always wait for the next big thing and copy it. They love the "great leap" model. Sadly innovation requires lot of patience and is never a great leap in one shot. The Chinese model is driven my state and not my common people on the ground, another no no for innovation. China has already done half of their shelf life and yet has nothing to show in form of innovation or innovative tech products. If we consider Japan, and take 1945 as the ground zero, then by 1975, Japanese already earned a name for its tech products. The companies that heech has indiated as couterparts of US ones, execept for Huwaei, none has a presence in the worlds third largest economy, so i could call them local and not MNC. I am still waiting for the Chinese MNC and their tech products. So far only 1 name - Huwaei. No LENOVO is not to be included, it is as much a CHINESE company as JRL and Indian company.

[chola]

sure, there is no 'innovation gene' and chinese are quite capable of innovation, as any other society. but it is the system which allows such people to think up something and make it into a something that can be sold.

We tend to take it for a fact that that there is no "innovation gene." That we assume without question that this is so is mainly because of widespread acceptance of western political correctness.

There might really be a lack of the "innovation gene" in East Asians. For as wealthy as Japan, Korea and Taiwan are, they are no great innovators. The US and other mainly Caucasian nations still dominate the invention front. The East Asians do well with expanding upon basic discoveries by goris such as improving the solidstate electronics, the micro-chip and the combustion engine but in the end those are all Western inventions.

China will be no different. But even so, it will make them fabulously wealthy (as Japan, Korea and Taiwan) and a prime market.

Of course, you need the correct system to make the most of what you have. The chinis will be wealthier if they were freer.

By the same token, India can be far more innovative if we employed a better system than the semi-socialism we had in place since the Nehru clan. Politically correct or not, we might be more innovative by genetics and no, it has nothing to do with the "invasion from the north" theory.

[heech]

Well, Apple first happened in the US, and specifically Sili Valley. Same for Cisco, Boeing, Intel, AMD etc. There is a difference in being the first with a viable technology vs. developing a variation of it post-facto, after release in the market (am sure you understand this).

I really don't understand this, so why don't you explain it to me? What really is the distinction between being first with a viable technology, and adopting it + refining it for a better commercial product? Other than being a point of pride used on internet debates, what is the relevance of being "first" to long term economic value + domination?

Who invented the first graphical operating system, and who ultimately dominated / defined it commercially? Who invented the original web browser, and who ultimately dominated? Who invented the original personal computer, but ultimately bowed out of the space entirely? Apple's revolutionary iPhone was an amazing product, but... so what? Does it keep Korea's Samsung from pressing on Apple's margins and/or controlling future growth?

So again, where does this so-called "innovation" come in in defining China or the United States' future trajectory?

[heech]

There might really be a lack of the "innovation gene" in East Asians. For as wealthy as Japan, Korea and Taiwan are, they are no great innovators. The US and other mainly Caucasian nations still dominate the invention front. The East Asians do well with expanding upon basic discoveries by goris such as improving the solidstate electronics, the micro-chip and the combustion engine but in the end those are all Western inventions.

And yet again, a contribution made by yet another someone not personally involved in innovation. Speaking as a former graduate student in MIT's engineering program... do you have any idea how many "caucasians" are actually doing the inventing at the highest levels of Western society? Doubtful you have any clue.

But really, I have no interest in debating this point. I'll just state the obvious. If wealth is accumulating in east Asia, then other then for point of internet pride, what's the *purpose* of this "innovation gene"?

I think it's important to point out an issue of scale. China is roughly 6x the size of South Korea, Japan, and Taiwan combined. And maybe it will take 50 years, maybe it will take 100 years... but one day China will inevitably have 6x the impact on world culture + technology + society that Korea + Japan + Taiwan currently has.

[heech]

The contention here, at least in my mind, is that people in such system also tend to not be the state's obedient subjects and that you can have one or the other, but not both for a meaningful time.

First, let me say that the fact that these peoples will not be "obedient subjects" doesn't trouble me. You're probably making some kind of subtle comment about political stability.

I have stated many a times before that I doubt the People's Republic of China (and certainly the Communist Party) will exist in its current form for long. It will either evolve internally or have changed forced on it. I personally am not that concerned about that. Although I'm a citizen of the People's Republic of China, I'm Chinese first and foremost... and if/when the PRC falls or evolves, it will just be part of a long series of Chinese governments that have come and gone. China as a nation will still remain.

But before we go too far down that topic of discussion, let me just point out that Japanese and Korean society are still models of individualism sacrificing themselves for the community. I don't expect that overall framework to change in China.

[chola]

In any case, this whole discussion is somewhat meaningless, considering that China is likely to 1) grow old, and 2) poison their environment irreversibly, long before they get rich or approach "world domination".

Now this is not a reason for Indians to get complacent.

Namaskar,

KL

Both you and I know that what you just said is intended to be a perfect reason for Indians to be happy where we are. Since our so-called rival will implode we don't have to worry.

The truth is, China was never a good nation to measure ourselves against. We should have stopped being complacent when first Taiwan, then Korea and then Thai, Malaysia, etc. blew past us in the 1960s and 70s.

in fact, we should have taken it as a challenge to match the per capita income of Japan beginning in the 1950s instead of challenging China today who is an tenth of Japan.

Sad as it sounds, I think we will become complacent once China inevitably implodes as a commie state. For some reason we have accepted a permanently inferior position as long as we are not behind the chinis. So perhaps we do we need China to do well just so we are inspired to progress.

[chola]

And yet again, a contribution made by yet another someone not personally involved in innovation. Speaking as a former graduate student in MIT's engineering program... do you have any idea how many "caucasians" are actually doing the inventing at the highest levels of Western society? Doubtful you have any clue.

It was made by a person whose industry funds innovation, my boy. And yes, I do know that the vast majority of the research institutes in the US are lead by Euro caucasians with a substantial amount of East Asians and South Asians (who are also caucasians.) Substantial meaning less than 10 percent.

But really, I have no interest in debating this point. I'll just state the obvious. If wealth is accumulating in east Asia, then other then for point of internet pride, what's the *purpose* of this "innovation gene"?

I think it's important to point out an issue of scale. China is roughly 6x the size of South Korea, Japan, and Taiwan combined. And maybe it will take 50 years, maybe it will take 100 years... but one day China will inevitably have 6x the impact on world culture + technology + society that Korea + Japan + Taiwan currently has.

I actually do not disagree with you on those points. We should care less whether China is innovative, we should care more on the size of its market and what we can sell to it.

A China six-times that f Korea, Japan and Taiwan would impact quite a bit as a economy. But I would say nearly nil on the cultural and technology fronts. Except as a source of exotic food and perhaps cartoons (Japan), East Asia is unfortunately a not much more than a mimic of Western culture and technology.

[TSJones]

delete

[member_20292]

By the same token, India can be far more innovative if we employed a better system than the semi-socialism we had in place since the Nehru clan. Politically correct or not, we might be more innovative by genetics and no, it has nothing to do with the "invasion from the north" theory.

Anna,

funda is pretty simple Da. India is far more equal society than the top down monarchies of east asia.
This is conducive to more bottom up innovation. Thus we are better innovators, and will be better innovators than east asians.

Also, we have a tendency to follow our rituals to the T, put bhog, tilak, feed laddoo to the ganapati, etc. come rain shine, invader 1, invader 2, and the like.

In East Asia, since things change by fiat, once the CPC outlawed religion, its practise was much reduced. How will you have any Taoism or the like influencing far off India (unlike Buddhism influencing far off Japan) if your rulers themselves screw the religious leaders?

The first Emperor of united China was a guy called Qin Shi Huangdi, who got the terracotta warriors in Xian made for his after life.

Guy butchers all the 6 kingdoms, something like (Chand)ashoka, but unlike Ashoka, he rapes kills and pillages the scholars and poets who criticise his actions. Screws Taoism through and through and disables it for centuries.

Please search wiki :
http://en.wikipedia.org/wiki/List_of_wars_and_anthropogenic_disasters_by_death_toll

Out of top 10 genocides in history, 6 are Chinese. And most of them are rebellions/wars.

East Asians fight total wars. Society is through and through militarized. The entire nations of people join the army and take up arms when war calls for it.

They believe in thorough conquest of the vanquished, so much so that the entire Han gene pool is majorly uniform; you do not see anything close to that in Europe or India. This can only happen when there are wars on a massive scale, as there have been, and enough people conquer women.

This is the historical nature of war in East Asia. To expect China to suddenly have a peaceful rise is to be foolish. See the US response to the Chinese rise. An overt and out-and-out policy of being aggressive and pivoting in the Asia Pacific region. This is contrast to our waffling about. The Chinese do not waffle. They are expansionist +mercantile group of people. There is no mercy there --see history--and also how they treat their animals---no mercy at all. Thus, there should also, economically, not be too much soft corners in our hearts for chini bhai bhai and we should relentlessly pursue our self interest in a polite but firm manner.
it is important to realize the weak point of the CPC, that is, democracy, and rebellion (and they fear it since it has caused them so much grief in the past). Again, that wiki list will tell you more than I can, about WHY the CPC fears both scholars, writers, religious leaders and over all, rebellious protest so much.

Some societies are not meant to have democracy and they do far better under authoritarian rule than not. East Asia, the middle east, both show this trend.

[chola]

By the same token, India can be far more innovative if we employed a better system than the semi-socialism we had in place since the Nehru clan. Politically correct or not, we might be more innovative by genetics and no, it has nothing to do with the "invasion from the north" theory.

Anna,

funda is pretty simple Da. India is far more equal society than the top down monarchies of east asia.
This is conducive to more bottom up innovation. Thus we are better innovators, and will be better innovators than east asians.

I would not go so far as to say our Bharat was or is more equal. It was obviously not simply by looking at our scheduled classes. But given freedom, they will do better than East Asians I think.

The reason we are so behind is because our intrinsic advantages were not given the same freedoms.

Freedom doesn't mean freedom for netas and mafias to exploit without mercy. The freedom I want is in the Western model where innovation is rewarded while graft and corruption is exposed and punished to a far greater extent.

Please search wiki :
http://en.wikipedia.org/wiki/List_of_wars_and_anthropogenic_disasters_by_death_toll

Out of top 10 genocides in history, 6 are Chinese. And most of them are rebellions/wars.

East Asians fight total wars. Society is through and through militarized. The entire nations of people join the army and take up arms when war calls for it.

They believe in thorough conquest of the vanquished, so much so that the entire Han gene pool is majorly uniform; you do not see anything close to that in Europe or India. This can only happen when there are wars on a massive scale, as there have been, and enough people conquer women.

This is the historical nature of war in East Asia. To expect China to suddenly have a peaceful rise is to be foolish. Also, it is important to realize the weak point of the CPC, that is, democracy, and rebellion (and they fear it since it has caused them so much grief in the past).

Some societies are not meant to have democracy and they do far better under authoritarian rule than not. East Asia, the middle east, both show this trend.

Agreed on most points. The Far East was a far bloodier place and closer, for most of its history, to what Europe in the Middle Ages was. But again, freedom enhances their wealth exponentially. You can see that by the glaring differences between North and South Korea and between China and Taiwan/Hong Kong. Obviously, East Asians are far wealthier when given freedom. Something we don't necessarily want for China.

That said, a "free" society in East Asia is different than a free democracy in the Western mode. Free Asian societies is closer to Nazi Germany than the Anglo-Saxon model. They are extremely efficient and mercantile. Very vicious in the extracting wealth from friends or foes. All you need to do is look at Japanese and Korean dismantling of the American auto industry by protecting their own markets and undercutting the US ones. They did this to a protector.

[KLP Dubey]

Both you and I know that what you just said is intended to be a perfect reason for Indians to be happy where we are. Since our so-called rival will implode we don't have to worry.

Actually I don't know. I don't believe India should be "happy where it is". This is the PRC Economy thread, so my post was on China.

Industrial development is a no-brainer and is not rocket science. Moving from a "low/medium income" to a "medium/high income" country does not require much innovation. I agree we need to copy, optimize, and implement everything that is available (perhaps try not to steal like the Chinese). The political will, and quality of leadership, is lacking to get those things done at the national level. States like Gujarat are an exception.

The question was about "dominance", which as I said before is an entirely different thing altogether. A fundamental aspect of (East) Asian culture is an implicit and deep-seated inferiority complex with respect to the West. They desire to "do the same thing a little better than the white man", but do not have a capacity to "dominate" (which requires out-of-the-box thinking and a degree of "disrespect" to the status quo).

Indians have had a long tradition of being innovators, articulate communicators, and disruptors of the status quo. The political class in India needs to clear the field in order for these characteristics to thrive again.

KL