Iffy Prediction

Is China about to become the new world economic power, or is it going to wind up like Japan and Western Europe did. You remember Japan in the 19802;? Everyone was convinced that Japan's economy was so strong and the Japanese worker so productive that by the year 200 Japan would be equal to the United States economically. But looking at Japan today one could only say it is a mess and that prediction was far from correct.

And remember all the hype about the social welfare states of Western Europe. The European Union and the Europe were going to make Europe significant again. But looking at debt ridden, creaking, confused, irrelevant Europe today that prediction of Western Europe's rise to prominence seems more like a bad joke. Now Western Europe is renouncing the welfare state faster than a speeding bullet. Alas! It may take generations to undo the damage done there.

And now China flexes its muscles economically, socially and even militarily as it believes what the western world and Japan tell it. "You will soon be the number one economy and dominant power in the world". But hold on! There are just as many dents in that armor as in the Japanese and Western European predictions of the 80's and 90's.To question that idea first look at some facts about the remarkable rise from abject poverty in China to, well, abject poverty for many and wealth for a few.

1) China is rising only because it partially adopted the western free market economic system and plugged into the international markets the west built and sustain. But has Chine now reached a point where its totalitarian system is beginning to hamper use of those markets?

2) Surprise, surprise! the idea that China owns most of the U.S debt is a false one. In fact, ailing Japan owns 12% of the U.S. debt and China owns 11%. That hardly puts China in the position of dictating policy to the United States.

3) The per capita income level in China is about equal to Albania, not Australia or Argentina or most other nations. The huge wealth in China is in the hands of a very small group while hundreds of millions of Chinese live as badly as any place on earth.

4) China has not taken over western manufacturing. In fact, the closing of antiquated western factories and shipment of low skill production overseas would have happened even if there were no China. It's not a system that makes countries economically viable anymore.

5) The Chinese dictatorship is starting to get in the way of innovation and free marketing now. Given the stubborn refusal to open China to more freedom, their economy will slow gradually as a result. Without social and political freedom, there can neither be complete economic freedom nor any possibility of "being number one". I am bettering on the dictators there keeping their power, not surrendering it for more economic growth.

So, are you betting on China as the number one economic power in the world. I have grave doubts.