As we’ve pointed out numerous times, China has massive problems that may well undermine its current ascendancy. As Joel Kotkin writes in Forbes, put your bet on America for it’s youth, freedom, stability and restless innovation.
A few years ago, most were predicting Japan’s ascendancy. We saw a spate of movies – think, Rising Sun or Black Rain, for instance – that showed a corrupt and degenerate America competing with a disciplined Japan. David Halberstam wrote the very interesting best-seller The Reckoning that chronicled a Japanese triumph that never occurred. One need only recall the arrogant book written by Japanese nationalist Shintaro Ishipara entitled The Japan That Can Say No, Why Japan Will Be First Among Equals.
Kotkin echoes many of the same observations as John Pomfret:
Will China follow a similar trajectory in the next few decades? Countries infrequently follow precisely the same script as another. Japan was always hemmed in by its position as a small island country with very minimal resources. Its demographic crisis will make things worse. In contrast, China, for the next few decades, certainly won’t suffer a shortage of economically productive workers
But it could face greater problems. The kind of low-wage manufacturing strategy that has generated China’s success already seems certain–as occurred with Japan–is already leading to a backlash across much of the world. China’s very girth projects a more terrifying prospect than little Japan. At some point China will either have to locate much of its industrial base closer to its customers, as Japan has done, or lose its markets.
More important still are massive internal problems. Japan, for all its many imperfections, was and remains a stable, functioning democracy, open to the free flow of information. China is a fundamentally unstable autocracy, led from above, and one that seeks to control information–as evidenced in its conflict with Google ( GOOG – news – people )–in an age where the free flow of information constitutes an essential part of economic progress.
China’s social problems will be further exacerbated by a huge, largely ill-educated restive peasant class still living in poverty. Of course America too has many problems–with stunted upward mobility, the skill levels of its workforce, its fiscal situation. But the U.S., as the Japanese scholar Fuji Kamiya once noted, possesses sokojikara, a self-renewing capacity unmatched by any country.
And China’s export-driven economy – like Japan’s in the 1980s – is provoking a backlash around the world.
Don’t count American out just yet.
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