PRESIDENT OBAMA’s first official visit to China brings him this weekend to a country that, despite the global downturn, is increasingly wealthy, confident, ambitious — and perplexing.
Over the past decade, even as China’s exports have soared, the nation has begun transforming itself from a global font of low-priced goods fueled by cheap labor into a much more diverse and complex economic power. Along with that, it has developed huge disparities of wealth.
“There are a lot of billionaires, but there’s also a lot of poverty in China,” says C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. “It’s a very bipolar society. People have to recognize that both elements are there.”
Per capita income, for example, is still small — about $3,200, which is less than 10 percent that of the United States and slightly more than that of Iraq — and many farmers earn less than a dollar a day. Yet China is also home to the fastest-growing number of billionaires.
China doesn’t just dominate trade; it scours the globe for resources; doles out multibillion-dollar loans to other developing nations; and holds stakes in Wall Street giants like Morgan Stanley and the Blackstone Group.
A nation that sold about 600,000 cars in 2000 is now poised to eclipse the United States and is on course to sell nearly 15 million vehicles in 2009. No country has ever accumulated larger foreign exchange reserves ($2.2 trillion). No country has more Web surfers (338 million).
And China leads the world in initial public stock offerings.
Ask the world’s luxury brands where sales are holding up, and where they are expanding, and they will tell you here, in China. Every big city is building five-star hotels and the country’s newest airports make America’s look shabby.
In Washington, China is now viewed as both an economic rival and an increasingly important partner in trying to address some of the world’s most pressing problems. China is not just America’s biggest trading partner; it’s also America’s biggest foreign lender, buying up Treasury bonds and helping to finance the national debt. So American leaders talk about “strategic dialogues,” “strategic and economic dialogues,” and now “strategic reassurance.”
But even leading economists confess to difficulty at fully understanding the role of a nation dominated by state-owned companies.
For instance, while some argue that China’s low-cost manufacturing hurts America by draining away American jobs, other economists say that exporting those jobs to China allows companies to become more profitable in America, and expand their better-paying advertising, service and development departments at home. They also point out that Chinese factories hold down the price of everyday goods for Americans. One study, cited in “China: The Balance Sheet” (Public Affairs, 2006), said that, on average, America is about $70 billion a year richer because of trade with China.
Through all the arguments and counterarguments, one thing seems clear: China’s momentous shift is creating the need for armies of analysts, economists and experts to explain and forecast how China’s rise will remake the world, and the lives of ordinary Americans. At right are a few indicators of this country’s seemingly unparalleled rise, just over 30 years after the death of Mao.