China rules! China's going down! China rules! China's going down!
■"The Two Faces of China: Giant Global Producer Is Expanding Its Role As a Consumer, Creating Threats and Opportunity," by Keith Bradsher, New York Times, 6 December 2005, p. C1.■"Singapore Probe Looks at Fuel Firm's Collapse: Management made upbeat statements, while investors were unaware of the firm's mounting losses," by Laura Santini and Darren McDermott, Wall Street Journal, 6 December 2005, p. C1.
■"Talk of a Bubble as Venture Capitalists Flock to China: investors show a willingness to traverse 16 time zones in search of the next start-up success," by Gary Rivlin, New York Times, 6 December 2005, p. C10.
■"Beijing Loves the Web Until the Web Talks Back: Economic Promise of the Internet in China Brings New Restrictions on Speech," by Tom Zeller, Jr., New York Times, 6 December 2005, p. C15.
It's almost getting impossible to have a balanced conversation about China on any subject: either it's on the verge of ruling the world or it's a time bomb with just a few clicks left before self-immolating/lashing out. Of course, the speed of China's advance is what's making everyone so dizzy. The U.S. took about half a century to move from rural to industrial and several decades for the shift to the service economy, but China is covering the same ground with amazing rapidity, thus giving it that look of existing simultaneously across close to a century of U.S. historical experience.
Just put aside all the whacked-out projections about China surpassing the U.S. during this year or that year, because that discussion is just so meaningless. When you're talking 2030 or 2040, the very definitions of the United States and China may well be far different from today, so that projection comparison is almost meaningless. Point is, China is getting big, and that bigness means it occupies an increasingly heavy center of gravity in the global economy all its own.
Right now China consumes 40% of cement in the world (US=6%), 33% of cotton (7), 27% of steel (12), 23% of lead (21), 20% of copper (16), 19% of aluminum (24% for US), 18% of soybeans (23%), 18% of wheat (6) and 12% of oil (25% for US). In terms of sheer demand, China is beginning to determine shape commodity markets around the world to a degree that doesn't just rival the U.S., it largely surpasses it. That is a profound rule-set change already unfolding.
That kind of influence brings with it great responsibility, because when rogue traders within your financial order start messing around, you can one day end up with the sort of speculative losses (half a billion) that can destabilize global markets if you're not careful. I mean, if one company can do that inside China today, what's to stop one or more similar companies from making a far larger mistake that's also undetectable until it's a fait accompli.
China's growth, therefore, already puts it in the category of too big to ignore not just as an opportunity but as a source of magnificent instability. China is now a global engine of growth second only really to the United States, and the only way it can get bigger is to emulate the U.S. by fostering a huge domestic market. But even that growth will attract some serious speculative interest, raises all the usual fears about a bubble.
So China's either going to rule the world or blow up trying, it would seem, as there is nothing in between—at least in our analysis.
But, of course there is lotsa space in between those two extremes. A good example of this all-or-nothing analysis comes from experts watching China's web development. Either China's web presence is skyrocketing (good) or it's the world's biggest prison for cyberdissidents (bad). Either the Chinese government is committed to wiring the country up as quickly as possible (good) or it's creating the world's most easily monitored online community (bad). In sum, either it's a dreamland of connectivity leading to freedom or Orwell's worst nightmare in the making.
The answer is, of course, China is all those things. It is both yin and yang, a careful balancing act. But one thing is for sure, it's moving forward toward a future that cannot be denied and away from a past that cannot be forgotten. Along the way, China will never quite fulfill all the promise it hints at, nor will it ever generate all the nightmares we imagine.