China - On Top Of The World

Is China making an unprecedented leap to the top of the global economic hierarchy? Yes, Martin Jacques asserts confidently in his buzz-generating When China Rules the World. He sees the country, which recently passed Japan to become the world's No. 2 economy, rising smoothly to the top spot by continuing to follow a thoroughly distinctive, Confucian-tinged development path. No, say China skeptics like economist John Markin and hedge-fund honcho James Chanos, with equal self-assurance. They predict that bursting bubbles will lead to a Chinese equivalent to Japan's "lost decade" of the 1990s. To them, as George Friedman pithily puts it in his best-selling The Next 100 Years, which is sometimes displayed near Jacques' tome in airport bookstores these days, China is just "Japan on steroids."

While we're too aware of how regularly — and speedily — bold forecasts about China are proved wrong to offer one of our own, our research into 19th century America and contemporary China, respectively, leads us to flag a third possibility: China could stumble but keep climbing upward, much like the U.S. did about a century and a half ago. We find today's China less reminiscent of Japan in the 1980s than it is of the U.S. in the 1850s.(See pictures of the making of modern China.)

Don't get us wrong. We don't expect breakneck growth to continue unabated. China faces daunting challenges, from a rapidly graying workforce to endemic corruption to energy needs that are increasingly hard to satisfy. To say that China faces major challenges, though, doesn't undermine the American analogy. The same was true of the U.S. circa 1850.

Read more: http://www.time.com/time/magazine/article/0,9171,2029400,00.html#ixzz159d8bwt6


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