World witnessing the birth of mass market in China
By LOUIS UCHITELLE
NY Times News Service
For decades, the United States was the world’s only significant mass market, offering businesses more than enough consumers to buy up ever greater volumes of their merchandise and services. To gain access to all these consumers, companies had to operate inside the country. And they could do so very profitably, because they benefited from economies of scale, meaning that each item coming off an assembly line was less expensive to produce than the one before.
The wealth generated, in profits and wages, has made the United States far and away the world’s most powerful nation for nearly a century. No one else had ever been able to match the American achievement. But now the world is witnessing the birth of a mass market in China, whose 1.2 billion people hold the promise of consumption on a much greater scale than in the United States.
That prospect is still a generation or two away, economists say, and assumes that political or economic disruptions do not derail it. But a consumer class is rising fast. The Chinese are buying cell phones, refrigerators, computers, cars, toys, furniture, television sets, airliners and designer clothing in ever greater numbers. As this mass market asserts itself, China becomes a problem for the United States not just for the exodus of tens of thousands of American jobs but for the potential to use economies of scale to keep those jobs, even if Chinese wages rise to American levels.
“The notion that God intended for Americans to be permanently wealthier than the rest of the world, that gets less and less likely as time goes on,” said Robert Solow, the Nobel laureate in economics.
This sense of entitlement to preeminent wealth and world power has been a national characteristic stretching back to Theodore Roosevelt and Woodrow Wilson.
Now China is undermining that singular influence. More and more it can defy American demands, and worry less about the economic effects. Last week, for example, its prime minister, Wen Jiabao, visiting the White House, once again ignored President Bush’s pleas to increase the value of the Chinese currency. A stronger yuan would make it more expensive for American manufacturers to shift operations and jobs to China.
In Asia, China is supplanting the United States as the principal trading partner for several countries, including South Korea. This influence reduces American power in the region, not only economically but militarily.
China’s power seems certain to increase as it develops its mass market, chipping away at the American role as the world’s buyer of last resort, the only nation capable of bolstering other countries’ economies with its vast purchases of their goods and services. For 60 years, that purchasing power has made America the unchallenged leader in trade negotiations and political influence, a leadership now gradually eroding.
abs-cbnnews.com |
