Is China poised to close the technology gap?
Monday's news that a Chinese firm aims to build large jetliners renews concern about US competitiveness.
from the March 14, 2007 edition
Page 2 of 3
To many economists, the current world economy still fits that pattern.
Still, both the boosters of globalization and those with deep concerns about it say that today's circumstances are unusual. In the past two decades, reforms in populous nations like China and India, coupled with the end of the cold war, have unleashed more than 2 billion workers – millions of them skilled – into the global labor market. Meanwhile, the rise of the Internet and other technology has made it easier for corporations to run global supply chains.
The result has been a great boom in trade, integrating the world economy as never before. China has become a huge market for US goods – everything from heavy equipment and chemicals to farm produce and paper products.
In many ways, China follows the trail already blazed by nations such as South Korea and Japan: First, low-end manufacturing like toys, then electronic goods like DVD players. Then automobiles.
But China has developed on a bigger scale, with more investment from multinational companies, and now is plowing its profits heavily into investments in research and education in the hopes of becoming an innovation-based economy.
Its moves will affect not just economics but geopolitics as well.
The US, long the world's lone superpower, now faces an emerging China that is both a major partner and a potential rival on the world stage.
"The richer the Chinese get, ... the stronger their defense capabilities get," says Adam Segal, a senior fellow in China studies at the Council on Foreign Relations in New York.
Whether US-China relations will grow more or less stable over time is the key question. "The more interdependent our economies become, the more we all have to lose from any conflict, either economic or military," Mr. Segal says.
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