China's economy grows, but also its challenges

At issue | Various articles, columns on China's growth as a superpower

Our developing worry over an ascendant China is short-sighted. The Chinese have their own issues that will cause them many more problems than the United States faces today.

First, our expectations of China's economic prosperity leave out intangibles, like natural disasters, looming political crises, etc. Also, the fact that economic data from China is heavily filtered makes any projection of that nation's growth rife with pitfalls.

Second, China is heavily Sino-centric. The Chinese are anti-immigration and insular. Many ethnic minorities, in particular the Uighurs, face persecution on a regular basis. Essentially, they are second-class citizens. The recent riots across the northwest provinces indicate there is tension lying just below the surface.

One of America's many strengths is our overwhelmingly open legal immigration policy. It affords us new perspectives and ideas to influence our economy. Innovation is central to a strong and sustainable economy. Granted, China has seen great innovation over the last two decades, but without immigration the Chinese will reach a plateau in innovation.

Third, as we cope with and attempt to wrap our head around our own economic stimulus, the Chinese government has engaged — and will continue to engage — in similar behavior. It has consistently bailed out, stimulated or paid off any businesses, industries or even political opponents that become problematic for one reason or another. This makes much of the analysis of the ascendancy of China look difficult to support.

Fourth, most rhetoric fails to even discuss the prospects of a rising Chinese middle class. As the Chinese economy grows, it is inevitable that there will be a rising and presumably more boisterous middle class.

A growing middle class means several things; but most important, it means that China will be facing calls for more democratic reforms. Rising middle classes across history have pressed their governments for more reforms and freedoms. It's only natural for that to happen.

Fifth, the Chinese are used to growth near 10 percent. No doubt this is a fantastic record, but can it be sustained? What happens when the Chinese economy stops growing at that rate? Say there are several years of 6 percent growth — a marvelous growth rate to say the least. The Chinese would see their economy grow at a rate that would be 40 percent slower than normal.

Something tells me the Chinese citizens would not react well to slower growth of their money. The hyper-consumerism taking hold in China could be slowed, which would in turn slow growth. We know this all too well.

Last, reliance on GDP alone to dictate our analysis of the Chinese economy is shortsighted. Instead we should focus on GDP per capita — essentially average income per person. In China, it is about 14 percent of the United States'. In other words, the U.S. average income per person is nearly 700 percent more than China's. They have a long way to go to reach our standard of living. There are large swaths of the country that live in abject poverty — poverty that would remind people of Sub-Saharan Africa or Haiti. Leading economic powers don't have those types of issues.

All of this is not to say we don't have our own set of issues. We most undoubtedly do. However, China has its own set of issues it needs to work out before it can ever reach our status. I'm not entirely convinced it has the ability to do so. Instead of focusing our ire on the Chinese, we need to focus on getting our economic house in order.