China Emerging_ 1978-2008 - Xiao-bo , Wu [71]
Another constantly increasing pressure on Chinese enterprises is the growing inflation in China. The price advantage of “Made in China” has been declining, but it should be noted that this is not merely a domestic problem. Since China is indeed the supplier to the world, the rest of the world is impacted. The US Commerce Department indicated that in the first half of 2007, prices of imports from China had already risen by 4.1%. This was the fastest change since the United States started to track China-import prices in 2003 and it was much higher than the overall 2% inflation rate in the United States. A China analyst at the Royal Bank of Scotland explained succinctly, “In the past ten years, China was a force for deflation, but in the coming ten years, it will be a force for inflation.”
“Water Cube”—the Beijing National Aquatics Center (May 2008).
In The Age of Turbulence: Adventures in a New World, Alan Greenspan voiced similar concerns. He described the international scene as follows. Among old-style powers in Europe, Britain was best situated for growth. With its strong natural-resource base, Russia would also move forward. India had the most potential in its heavy industries and its IT service industries, while Japan, albeit still in a slump, would retain its “great strength.” While expressing concern about the American economy, Greenspan predicted that, in 2030, China would become America’s main competitor. He said, “The way in which China moves forward to embrace global markets will determine the fate of the economies of the entire globe.”
China seemed to be operating under two scenarios as it approached the Olympics and thereafter. On the one hand, the Chinese had a feeling that a massive force was on the ascendancy and that the influence of China was increasing daily. On the other hand, the stock markets were erratic, the real estate market began to falter, the renminbi continued to appreciate, and the consumer price index (CPI) remained high. How these two scenarios intersect and play into the future is a major cause for both concern and the ongoing debate.
The May 2007 issue of The Economist carried on its cover a picture of a panda climbing the Empire State Building, in the styleofKingKong.Thiswasreminiscentofanothercoverbackin1989:Sony had just purchased Columbia Pictures, and Newsweek ran a cover with the StatueofLibertywearingakimono.Justoneyearlater,however,theJapanese stockmarketplunged;therealestatebubbleburst;andtheJapaneseeconomy had fallen into a pit from which it has taken seventeen years to emerge. Will China follow the same course? Everything seems to depend on people’s attitude and their intelligence. An exciting era is quickly retreating into the distance for China. As a major nation that is in the process of pursuing a peaceful ascendance, China is beginning a reason-based trek.
The cover of the May 2007 issue of The Economist
In 1989, Newsweekfeatured a kimonoclad Statue of Liberty on its cover.
Crossroads
H
istoryislikethetwo-facedJanusofancientRomanmythology:One face gazes backward while the other stares intently into the future. Looking back at 1978, we see a country that was standing on the sidelines, traveling alone along its own course. Prolonged political struggle
had made its people anxious and apathetic about the future. Any individual vitality was suffocated. At the beginning of the country’s opening up, both leaders and the common man seemed helpless in the face of the enormous problems. There was no assistance from outside. At the same time, internal resources were exhausted, and a rigid system bound the hands and feet of everyone.
Now, thirty years later, the rigid planned economic system has gradually been disassembled. A group of ordinary people, not reconciled with their apparent destinies, took matters into their own hands. The ordinary people turned a huge country of 1.3 billion people into one vast experiment. Under the astonished gaze of all, knowing that they would be unable to