Traveling at the speed of China
China's rising fast. How soon will it take the lead in global wealth and innovation?
Last night…Skip to next paragraph
Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (dailyreckoning.com).
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We’re racing to the airport at Pudong. We don’t know why we are racing; there is plenty of time. But the driver seems to want to set a new land speed record for a taxicab.
He’s rocketing along at 100 mph. The cab weaves flawlessly through the traffic.
But what’s this? The cab driver has taken both hands off the wheel. He is putting in a CD. Moments later…what da…?
Country road, take me home, to the place, I belong…
West Virginia, mountain mamma, take me home…
This is no country road. It is about the most modern highway we have ever been on. Flyways…flyovers…bridges…elevated highways…we have just gone over the river on a bridge that looks like it was built yesterday. Now, we are cruising along through the smog in 8 lanes of traffic.
Over on the left, a ghost city is barely visible through the gray haze. It must have dozens…no hundreds…of office and apartment towers. There is a huge parking lot on the left…and then, in the distance…another city. We see only the shapes. But it is a city as big as Bethesda…no, as big as Baltimore….
We continue our Taxicab 500…passing cars on the left…then on the right…and then, right through the middle… slipping through a narrow space with cars and trucks on both sides.
Again on the left is another of these spectral cities… Is it Cleveland? Is it San Diego? In size, it could be either. We left downtown Shanghai a half an hour ago. But we are still passing through towns…industrial parks…and building projects. There must be a dozen cities the size of Baltimore between the center of Shanghai and the airport.
The airport, of course, is new…like everything else…and colossal. It is Dulles in style. But bigger, many times bigger.
Can there be any doubt that China is destined to become the world’s economic superpower? It has the size…the energy…the know-how. And it has the money.
One of our Dear Readers in Shanghai enlightened us:
“I came here 20 years ago. Then, we foreigners had so much more power and money…and technology. We could call the shots.
“Our company still does about half its manufacturing in the US. The local companies here in China can beat us on price every time. And the contracts are huge, so we can make a lot of money here…even with low-cost, relatively low-margin products. But the top quality stuff still comes from the US. The Chinese have not quite caught up – partly because the market here doesn’t want too much quality.
“There’s such a fast turnover. People don’t want to pay for products that will last too long. Things are changing too fast.
“So for now, the quality here on many items still isn’t up to US standards. It’s just a matter of time, though. I’m going to retire in 5 years. I figure that’s about as long as we’re going to be able to do these deals. After that, it’s all over. They won’t need us. They have the money. They have the skills and technology. We won’t have anything to offer.”
Generally, the more you do something the better you get at it. The Chinese are making more cars…more highways…more trains…more office buildings and more of everything than anyone else. It is no wonder that they are doing these things well – maybe better than anyone else too.
A new train service between Shanghai and Beijing begins next month. Trains will travel between the two cities at up to 300 kilometers per hour. Already, a high-speed maglev train takes you from the airport to the city so fast that you arrive before you find a seat.
But so what? You’re probably wondering. So are we. So what if the Chinese take the lead in wealth and innovation?
You remember those 5 big trends we mentioned in yesterday’s “The Land of Rising Prices and Stagnant Incomes”? You don’t? Well, we’ll repeat them:
1) The Great Correction – in many of the advanced economies, but centered in America…