I DON'T CARE IF IT'S A DISASTER IN THE MAKING, THERE ARE A BILLION OF THEM!:

Big Enough To Know Better: China has grown for three decades at a pace no other country has ever sustained. But 2006 may be the year when we begin to see problems. (Fareed Zakaria, 12/26/05, Newsweek)

Most people don't really understand China's economic story. It looks like an oxymoron: central planning that works. As a result, many assume that, like Japan in the 1980s, China will stumble and collapse. But this misreads the two situations. Japan was a relatively small country that had become a huge economy by turning very modern. In that era its per capita GDP was almost the same as America's, about $30,000. But growing a supersophisticated economy required that every aspect of Japan's society be modern. As it turned out, there was much in Japan, from its banking system to its politics, that was not.

China is a different story. Its per capita GDP, even after this revision, is just $1,700. At some point, it will face all the kinds of problems Japan did. But well before that, it will surely be able to double its GDP to $3,400 per capita, which would bring it up to Brazil's level. When that happens, China, because it has 1.3 billion people, will be the second largest economy in the world. Size matters.

Why? Why does the agglomeration of an enormous number of poor people into one unsustainable administrative unit matter, other than in negative terms for that state?

Posted by Orrin Judd at December 20, 2005 5:32 PM