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The statement in the title is rather disingenuous. There have been quite a few countries in the past few decades that have achieved much higher rates of growth

The statement in the title is rather disingenuous. There have been quite a few countries in the past few decades that have achieved much higher rates of growth than the US did. For example, South Korea started out after the Korean War so poor that Ethiopia(!) sent it aid. Now, they are a highly developed nation and their GDP per capita is on par with southern European countries, such as Italy, and will probably surpass them very soon. Now, the obvious argument against China imitating the growth of a country like SK is that SK is small enough that it was able to grow at a phenomenal rate by focusing on exports, whereas China's size inherently precludes it from that particular luxury. However, many other things, particularly in terms of technology, have changed since the last "big" country (the US) became industrialized. It just may be possible for China to achieve organic growth at much higher levels than the US enjoyed during the 20th century.

Estragon 15y ago
I attended a talk recently by Justin Yifu Lin, the current chief economist of the World Bank. On the basis of a comparison of China's current Purchasing Power Parity to that of earlier Asian tigers, he argued that China's economy is likely to grow at a rate of 8% p.a. for the next two decades. He also argued that Africa will move into the cheap manufacturing jobs that are now becoming more expensive in the China. Not sure how that squares with his projected growth for the Chinese economy; presumably they will grow in the "knowledge economies." They are certainly trying to... If that's the case, knowledge workers in the West (which includes most readers of HN) may be in for some serious economic disruption.
- mahyarm 15y ago
  From what I know, rent in Beijing is very expensive, on par with the bay area or worse and wages are not dramatically lower for anybody who's in china and is somewhat competent. It's not the vast price difference gulf between a US factory worker and the peanuts that a chinese factory worker gets. What will happen after the chinese property bubble bursts and to everyones rent could change things although.
- bane 15y ago
  "He also argued that Africa will move into the cheap manufacturing jobs that are now becoming more expensive in the China." To play a counterpoint, that will require various African nations to put into effect a strong strategy for an export driven economy. While "Africa" has a billion or so people, it's not a monolithic nation-state. Some countries with better governance may go that route, others may not, and others may end up with a continuous string of dictatorial regimes and corrupt governments and accomplish nothing. In 20 years, there may still be more poor Chinese peasants looking for cheap factory work than available Africans looking for comparable factory work in countries that have switched to an appropriate economic model. It's also not entirely clear that the Asian export-driven model will work elsewhere. http://en.wikipedia.org/wiki/Export-oriented_industrialization http://en.wikipedia.org/wiki/Export-oriented_industrializati...
Symmetry 15y ago
Very true. There are a long list of countries that have grown much faster than the US did during this period because catchup growth tends to be much faster than being in the lead. Look at how quickly Japan went from being roughly where China is to being a peer of the US, for instance. This isn't a prophesy, and there are many things that could prevent it - Great Leap Forward 2.0, devastating war, etc. But fast growth is very much an achievable proposition for China.
tokenadult 15y ago
The title of the article compares the current condition in China to the condition in the United States a century ago and provides some perspective on just how much stark poverty there still is in China. Anybody who could reliably predict long-term economic trends could make huge piles of money as an investor. As the old saying goes, "The market can remain irrational longer than you can remain solvent," which is why predicting those long-term trends is so difficult. A while ago, something reminded me about my life experience in the 1980s, when I was already an adult living in east Asia and a lot of Americans thought that Japan would soon have the world's dominant economy. Compared to many countries, Japan is very prosperous indeed today, but trends predicted for Japan in the late 1980s were not realized in the 1990s or the first decade of the twenty-first century. Maybe China will have a VERY long-term trend of steady economic growth, but to do so it will have to resolve political issues that are easier to resolve in a political system like that of Japan or that of the United States than a nonrepresentative system without an independent judiciary like that of China. If we wanted to talk about REALLY long-term trends, we might consider the risk that China will return to its frequently encountered condition of being split into separate warring countries that don't enjoy the advantages of a common national economy. That was China's condition in the 1930s and 1940s, and it has often been China's condition in other eras. Conditions in Tibet and in Eastern Turkistan may matter as much for China's future as the import market in the European Union.
maratd 15y ago
> Now, the obvious argument against China imitating the growth of a country like SK is that SK is small enough that it was able to grow at a phenomenal rate ... Really? I would think the obvious argument against China growing at the same rate would be a consistent application of laws, respect of property rights, and some form of political maturity. Granted, China is improving on all of those factors, but they still have such a long way to go and that is what will hamper their growth.
- jbooth 15y ago
  As opposed to early south korea? Didn't they only start the whole elections thing in the last 20-30 years?
- w1ntermute 15y ago
  No, read up on South Korean history-their export oriented economy was originally constructed during the 1970s by US-backed dictator Park Chung-hee. SK has only been democratic for about 20 years.

Estragon 15y ago

I attended a talk recently by Justin Yifu Lin, the current chief economist of the World Bank. On the basis of a comparison of China's current Purchasing Power Parity to that of earlier Asian tigers, he argued that China's economy is likely to grow at a rate of 8% p.a. for the next two decades. He also argued that Africa will move into the cheap manufacturing jobs that are now becoming more expensive in the China. Not sure how that squares with his projected growth for the Chinese economy; presumably they will grow in the "knowledge economies." They are certainly trying to... If that's the case, knowledge workers in the West (which includes most readers of HN) may be in for some serious economic disruption.

mahyarm 15y ago
From what I know, rent in Beijing is very expensive, on par with the bay area or worse and wages are not dramatically lower for anybody who's in china and is somewhat competent. It's not the vast price difference gulf between a US factory worker and the peanuts that a chinese factory worker gets. What will happen after the chinese property bubble bursts and to everyones rent could change things although.
bane 15y ago
"He also argued that Africa will move into the cheap manufacturing jobs that are now becoming more expensive in the China." To play a counterpoint, that will require various African nations to put into effect a strong strategy for an export driven economy. While "Africa" has a billion or so people, it's not a monolithic nation-state. Some countries with better governance may go that route, others may not, and others may end up with a continuous string of dictatorial regimes and corrupt governments and accomplish nothing. In 20 years, there may still be more poor Chinese peasants looking for cheap factory work than available Africans looking for comparable factory work in countries that have switched to an appropriate economic model. It's also not entirely clear that the Asian export-driven model will work elsewhere. http://en.wikipedia.org/wiki/Export-oriented_industrialization http://en.wikipedia.org/wiki/Export-oriented_industrializati...

Symmetry 15y ago

Very true. There are a long list of countries that have grown much faster than the US did during this period because catchup growth tends to be much faster than being in the lead. Look at how quickly Japan went from being roughly where China is to being a peer of the US, for instance. This isn't a prophesy, and there are many things that could prevent it - Great Leap Forward 2.0, devastating war, etc. But fast growth is very much an achievable proposition for China.

tokenadult 15y ago

The title of the article compares the current condition in China to the condition in the United States a century ago and provides some perspective on just how much stark poverty there still is in China. Anybody who could reliably predict long-term economic trends could make huge piles of money as an investor. As the old saying goes, "The market can remain irrational longer than you can remain solvent," which is why predicting those long-term trends is so difficult. A while ago, something reminded me about my life experience in the 1980s, when I was already an adult living in east Asia and a lot of Americans thought that Japan would soon have the world's dominant economy. Compared to many countries, Japan is very prosperous indeed today, but trends predicted for Japan in the late 1980s were not realized in the 1990s or the first decade of the twenty-first century. Maybe China will have a VERY long-term trend of steady economic growth, but to do so it will have to resolve political issues that are easier to resolve in a political system like that of Japan or that of the United States than a nonrepresentative system without an independent judiciary like that of China. If we wanted to talk about REALLY long-term trends, we might consider the risk that China will return to its frequently encountered condition of being split into separate warring countries that don't enjoy the advantages of a common national economy. That was China's condition in the 1930s and 1940s, and it has often been China's condition in other eras. Conditions in Tibet and in Eastern Turkistan may matter as much for China's future as the import market in the European Union.

maratd 15y ago

> Now, the obvious argument against China imitating the growth of a country like SK is that SK is small enough that it was able to grow at a phenomenal rate ... Really? I would think the obvious argument against China growing at the same rate would be a consistent application of laws, respect of property rights, and some form of political maturity. Granted, China is improving on all of those factors, but they still have such a long way to go and that is what will hamper their growth.

jbooth 15y ago
As opposed to early south korea? Didn't they only start the whole elections thing in the last 20-30 years?
w1ntermute 15y ago
No, read up on South Korean history-their export oriented economy was originally constructed during the 1970s by US-backed dictator Park Chung-hee. SK has only been democratic for about 20 years.