Since 1978, [China's] annual economic growth rate has been a formidable 8% to 9%; and since 1990, per capita annual income has risen from $350 to $3,000. There are the predictable claims of imminent Chinese world economic supremacy, but we have heard all that before from the Nazis, Soviets, and Japanese, and they should be received with caution.
There are still at least 800 million Chinese peasants who live much as they did thousands of years ago. There is a population control plan that will raise the average age by one year every two years for at least two decades, and reduce the worker-to-retiree ratio from 3-to-1 to 2-to-1 in the next 20 years. There are acute shortages of land and water, and most social services.
Government spending on health and education has declined from 25% to 35% in 20 years. The private sector has taken up a lot of this, but about half the population receives no medical care at all. The percentage of middle school students going on to high school has actually declined by a third in the last 20 years.
The state still owns the country's banks, natural resources, heavy industry and telecommunications, and controls about 35% of all production. Ecological damage is very serious and costly, affecting three quarters of the country's water courses and most of its air. Distinguished China specialist James Fallows reckons that China suffers 250 deaths in mining accidents every day.
Corruption and arbitrariness in government are pandemic. The state has liberalized, but within limits that were dramatically underlined by the needless massacre in Tianenmen Square 20 years ago (the crowd could have been dispersed bloodlessly with fire hoses and rubber bullets, as they would have been in Western capitals).
The sense of the inexorable rise of China has been heightened by the inexplicable blunders of the United States in the last 15 years, of borrowing trillions of dollars from China and Japan to buy trillions of dollars of non-essential goods from China and Japan, and admitting millions of low-paid undocumented immigrants, while outsourcing millions of low-paid jobs (largely to China), and forcing the private sector to waste trillions more on unsound residential mortgages.
It is not clear that China can persuade its domestic economy to absorb much of the exports that have been lost to the recession and a belated reawakening of thrift in the U. S. But it has played its financial cards cleverly. China is shortening the maturities on its U. S. treasuries; 25% are now short-term. China will not sit with mountains of 3%-yield U. S. bonds, and appears to be preparing to buy large quantities of tangible U. S. assets, probably in the technology sector.
The Chinese cannot be counted upon to overpay wildly as the Arabs and the Japanese did when they squandered the bonanzas that burned holes in their pockets 20 and 30 years ago.
This will soon become a political issue in the United States.
China has more problems than the United States, and is not as rich or well-organized a country. Beijing is not about to overtake Washington, but its growth has been astounding and will continue. The first 30 years of the Chinese Revolution were a sanguinary version of The Gong Show. The last 30 have changed the world, for the better.