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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (48274)	3/17/2006 10:56:09 AM
From: mishedlo	Respond to of 116555

Does the Future Belong to China? A new power is emerging in the East. How America should handle unprecedented new challenges, threats—and opportunities. By Fareed Zakaria ... Americans like size, preferably supersize. That's why China hits the American imagination so hard. It is a country whose scale dwarfs the United States—1.3 billion people, four times America's population. For more than a hundred years it was dreams of this magnitude that fascinated small groups of American missionaries and businessmen—1 billion souls to save; 2 billion armpits to deodorize—but it never amounted to anything. China was very big, but very poor. All that is changing. But now the very size and scale that seemed so alluring is beginning to look ominous. And Americans are wondering whether the "China threat" is nightmarishly real. Every businessman these days has a dazzling statistic about China, meant to stun the listener into silence. And they are an impressive set of numbers. China is now the world's largest producer of coal, steel and cement, the second largest consumer of energy and the third largest importer of oil, which is why gas prices are soaring. China's exports to the United States have grown by 1,600 percent over the past 15 years, and U.S. exports to China have grown by 415 percent. The most astonishing example of growth is surely Shanghai. Fifteen years ago, Pudong, in east Shanghai, was undeveloped countryside. Today it is Shanghai's financial district, eight times the size of London's new financial district, Canary Wharf, in fact only slightly smaller than the city of Chicago. And speaking of Venti Lattes, last week Starbucks CEO Howard Shultz noted on CNBC that in three years the company would probably have more cafes in China than in the United States. At the height of the Industrial Revolution, Britain was called "the workshop of the world." That title surely belongs to China today. It manufactures two thirds of the world's copiers, microwave ovens, DVD players and shoes. (And toys, my 5-year-old son would surely want me to add. All the world's toys.) To get a sense of how completely China dominates low-cost manufacturing, consider Wal-Mart. Wal-Mart is America's—and the world's—largest corporation. Its revenues are eight times those of Microsoft, and make up 2 percent of America's GDP. It employs 1.4 million people, more than GM, Ford, GE and IBM put together. It is legendary for its efficient—some would say ruthless—efforts to get the lowest price possible for its customers. In doing this, it has used technology, managerial innovation, but, perhaps most significantly, China. Last year Wal-Mart imported $18 billion worth of goods from China. Of Wal-Mart's 6,000 suppliers, 5,000—80 percent—are in one country, and it isn't the United States. There was a correction with the Wal-Mart statements: msnbc.msn.com ... Inevitably, the China challenge looms largest for the United States. Historically, when the world's leading power is challenged by a rising one, the two have had a difficult relationship. And while neither side will ever admit it publicly, both China and the United States worry and plan for trouble. To say this is not to assume war or even conflict, but merely to note that there is likely to be tension between the two countries. How both sides handle it will determine their future relations—and the peace of the world. Page 1: msnbc.msn.com Page 2: msnbc.msn.com Page 3: msnbc.msn.com Page 4: msnbc.msn.com Page 5: msnbc.msn.com Page 6: msnbc.msn.com Page 7: msnbc.msn.com