Surprisingly quickly we have gone from looking at China as some evil purveyor of shoddy goods to the rest of the World, to anxiously regarding it as the economic saviour of the planets economies. Just a handful of years after Tiannamen Square and the global outcry as to its violent outcome, everyone is now counting on the country to save us all. How are they going to do it? By becoming history’s greatest export based economy? Because even though my economics education ended a few decades ago, I cannot help but wonder who is going to buy their stuff, when we don’t have the money to do so? In fact, all those years ago, my fellow students and I were bad mouthing another country for doing much the same thing – Japan. One of the favourite jokes going around at the time was that ‘The English may make the best lovers in the World (Well, it was our race!), but the Japanese made them better, faster, and cheaper.’
The more I think of these two nations and their economies, the more they become similar, too. Although the Japanese have a recent history of innovation and invention that appears to be missing in the Red Empire, I cannot help but think that this current Far Eastern global saviour is nothing more that the Japanese Miracle turned out to be – A bubble economy. Both inside and outside the country, the Chinese way of life is changing at almost head-spinning speed, and these changes will have an effect for all of us if we continue to spend our last few bucks on their exports.
As their economy grows, more workers are being turned from farmers to assembly line workers. As the communications revolution spreads, and cannot help but find it’s ways into the nooks and crannies of everyday Beijing life, more and more educated offspring will find out what is happening everywhere else, and demand more. There have already been protests concerning work being shipped offshore to Bangladesh, where labour is cheaper. In a world where being connected to anyone, anytime is becoming a more vital way of life, how long will it be before today’s children demand to be part of a global community, and want what everyone else has. In other words, exactly what happened to Japan: Twenty years isn’t a log time when you are looking at macro-economic trends, but that boom of the early nineties has turned into a stagnant economy for more than half of that time.
Every country prides itself on being able to honour their elderly by keeping them alive and fitter, longer. The Japanese have done this so well, that those over retirement age and collecting benefits forever are over a quarter of the country and growing. In the Western world, the aged are growing in number, and when you look at the US, combined with the loss of 8.5 million jobs over the last two years, and one in twenty residential properties being ether in foreclosure or underwater, we are close to saturation point already and the baby boom has only just started to cease sending taxes to their Government.
Is this the start to the Chinese Century? A race to the bottom of the lowest common denominator of price and value in manufacturing, and a rise in those taking from the economy instead of giving to it? Will they start to hide their money under the mattress instead of trusting banks, like we have? The danger of looking to them as an economic exporter is that we won’t be able to buy from them very soon, and they will have to make changes to their own exchange rates in order to look after their own – even as their own tax payers demand more freedoms.
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