China: We're Number Two!

As has long been forecast to happen, China appears set to overtake Japan as the world's second largest economy by overall GDP. This was no surprise. As the article halfway acknowledges, however, overall GDP is a rather crude measure of overall economic health - by other measures, such as per capita income, China still lags well behind the U.S., Japan, South Korea, and most of Europe, not to mention its erstwhile province of Taiwan, and certain factors make it unlikely to catch up in those metrics anytime soon. The population is huge, and a massive portion of it is still impoverished, as anyone who's visited the rural Chinese interior can tell you. Furthermore, with most of its growth built on export-oriented manufacturing and "catching up" infrastructure improvements within the country, there are natural limits to the amount of growth the Chinese economy can produce, and that's without even considering the drag created by the widespread corruption and governmental incompetence it suffers as a one-party state. With the U.S. in the throes of its worst recession, and Japan and several of its other target export markets being aging societies likely to decline in overall consumption in the future, foreign markets for Chinese goods are unlikely to remain as robust as they are now in decades to come, and while there is a growing domestic consumer class in China, it's still far too small in terms of numbers and purchasing power to make up the difference if exports decline precipitously. Furthermore, there are only so many train lines, highways, power grids, and skyscrapers China itself needs, and it's unclear to me that the Chinese people will willingly continue to pay the massive human and environmental costs they have endured to this point in exchange for continued growth. After all, the evidence of history indicates that safe, easy working conditions, clean air and water, and good health tend to come in fairly short order after owning cars and televisions on the priority list for a burgeoning middle class in any country. Solving those problems has economic costs, which may be exacerbated in China's case by its lack of an apparatus for doing so smoothly via democratic action. China is well along on the road towards becoming a developed economy, no doubt, but I would be surprised if doesn't hit a few more potholes along the way.