In the end US is like a headless giant walking or zigzaging. yeap, obama is the head and he is brainless (same sex marriage , LOL).
all you smart ordinarys can keep on cheering and wishing, maybe your next mormon president could save you all.
China is going through an economy cycle that post industrialized countries, primarily the western countries, have gone through. There are paths for them to follow. IMO, the theoretical wall would be when they have to pave their own way. In theory, it may come when innovation is necessary to keep the economic growth. By innovation, I don't believe we are constraints to technological innovation. I believe business model is evolution over time. Who could imagine Google is able to monetize information of the whole world 20 years ago? Similarly, facebook may be able to turn personal information into gold. Will China be able to transform way of doing business as well as create new products using different technologies? Only time can tell.
With regard to US and western world, pulling manufacturing back to the country may be a solution. Innovating manufacturing facilities may be a better way to go. There are products that are better off manufactured elsewhere, for example, toaster, TV sets. There are products that shall be manufactured in the country - the top tier technology, for example, some CPUs and sophisticated equipment, high efficiency solar panel.
Government can either encourage or create incentive to keep certain businesses in the country. At the end of the day, it is the business owners, says corporations, decide where the facility is going to be.
I think anyone doubting the inventiveness of chinese should visit any random technical university in the western world. I would say that maybe 30%+ of administrative staff and phd students are chinese in anything semiconductor-related here in Sweden. The same trend is true in pretty much the whole western world.
Somehow I get the feeling that people complaining about chinese "copying" and lack of inventiveness never have tried actually building something themselves. 99% of the time modifying an existing design is both smarter and a wiser choice than pie-in-the-sky inventiveness.
My guess is that many talented Chinese researchers in fields like semiconductors study in Europe and the U.S. because there simply is no equivalent (yet) in China. Many of these researchers will of course go back to China and will no doubt help build the type of infrastructure China needs to go from what the experts call second-generation to first-generation innovation.
That is exactly it is tough for China to progress because they are working hard to mingle into the West. China political system is the west's best friend. The Chinese foreign students are increasing and the age is getting younger and younger. They all want to settle in a better environment.
Just look at the immigration Visa application in the SF bay areas, there are over two thousand cases from China, and each one has to make initial investment over $1M. The second and third are like India and Korea which dwarf in comparison to China. As the people get richer and richer, they all want to leave the country and try their best to stay in the West, especially in the USA.
I know someone got a PHD from Norway and he moved his family to Canada to look for jobs. He couldn't find the job in the North America and found a teaching job in HK but he left his family in Canada. Too many of them all want to leave the country,especially you are rich and well-educated. It is a huge braid drain from China and benefit a great deal of the West, just like the Europeans before the WWII. Of course , if China political system changes, then everything will be different and it will be like Israeli.
Yes, that's what I think will work to bring a balance to this export of manufacturing and design out of the West. Not necessarily that Chinese talent leaves China, but that Chinese government policies, and the people's own attitudes toward "authority," will slowly change in China.
The real wall for China's development is the political system, it is now so unfit for the reality of China and dramatic change will happen, , peacefully or violently, in the next couple of decades. A innovative China with a modern political system is a benefit to the world.
I agree with what George says here, although at the same time, I'm wondering whether this is the sort of "fear mongering" that Junko was talking about?
Of course Chinese engineers and scientists can innovate. They prove that when they come to the West to get their education. The problem is only that their government runs everything. Everyone by now should know how that works.
I was actually struck by this attitude during the Beijing Olympics. It seems to me that a shift in the people's attitudes is needed before they can rteally shine, and it appears that maybe this is starting to happen.
I thought about that, Bert, and I don't think what we are saying here is "fear mongering." What we are saying is that we need to get off our duffs and compete with China, the world's fastest growing economy. This competition will likely promote innovation in both nations. (Junko Yoshida's reporting from China will undoubtedly illuminate the facts on the ground so that we can better judge what is going on in China and move beyond simplistic debates about who's ahead and who's falling behind.)
There something else going on at the macroeconomic level: It's what the China expert Dan Breznitz calls the "fragmentation of production." Breznitz argues that this fragmentation means China does not have to master breakthrough innovations to succeed. China has changed the game, and we need understand how so that we can compete.
I think where Americans keeps falling down is that they see this as a competition: USA vs Russia, USA vs China,...
I doubt China sees it this way. China are not interested in becoming a bigger economy than USA. They are just interested in becoming a bigger economy. Their goals surely make for a bigger economy than USA, but beating USA is not a goal in itself.
As an outsider looking in, there are pros and cons to a command economy.
When over-done, a command economy has the down side of stifling some market driven development.
A command economy does however prevent some useless competition.
The free-market view of competition is that competition encourages innovation. That was perhaps true at some time. These days far too much Western competition is playing out in IP battles between belligerents. The innovation isn't happening. Instead it is being stifled.
Comparing what other governments have done in the past decades with what Chinese government has achieved, from the perspective of economic development, I don't see many reasons to criticize. How many times you have seen a population of more than 1B can develop so fast for so long in the history? Doesn't this government deserve some compliments? It is actually interesting to think why media always full of criticism only.
In terms of political system, it is meaningless to say which one is good and which one is bad. Numbers talk.
regarding the brain drain, China's growth has proven that it is not an issue. True Chinese will never abandon China just because of a better life abroad, otherwise, China would have diminished so many times in history. It is in the blood. Whoever abandon the motherland will not hesitate to abandon the new land if things change.
China's growth doesn't prove the brain drain issue at all... It is mainly manufacturing and low cost.. They need the Foxconn management style. By the way, that kind of management style is from Taiwan and learned from Japanese, very effective in the production environment. As far as I know, the poll of the Chinese Millionaires and 70% of them all plan to move abroad.
As I mentioned before the Chinese political system can't keep the best and the rich because the highly controlled situation.
When Iran was under Shah's ruling, so many foreign students from Iran in the universities in the west but did then go home to help Iran? Nope, they all stayed in the west and was a huge brain drain.
China needs a transparent political system, not the princeling ruling.
The economic number means something but the infrastructure building is the main GDP growth.
Taiwan was growing over 10% for over twenty years under the KMT ruling but the people were leaving the countries. Taiwan high tech starts to blossom when the democracy set in. The capital market really allured the oversea Chinese talent to go back.
I don't know what do you mean ture Chines, even the princelings send their kids as young as 12 year old to the west to get educated. It isn't just one person like Bo but you definitely can't count with your fingers.
I think the major cultural disconnect is that a people would think it is the government's job to "develop the country." From a western point of view, or perhaps more appropriately from a US point of view, on the contrary, the country would have developed more, over time, if the government hadn't been there hamstringing the process.
I think this goes back to the conversation about the new processor architecture, which appears also to be controlled by the government.
From my own point of view, I would find it very disturbing if Americans started giving credit for US innovation to the US government. I would consider that to be a really worrisome trend. Government funding for basic research is appropriate, I think, at least to some extent.
Which were the most productive times in the USA in the last 100 years?
Probably WW2 and the "space race" era of the 1960s.
During both those periods the relevant US industries were being driven as a command economy.
The goals were generally national - production of war materials, getting a man on the moon.
During those periods the major companies spent a lot less time beating each other up in court.
It is certainly true that the government does not innovate itself, but it can direct the industry to work towards innovation.
It is a historical fact that the central government managed to feed over 1 billion people. (It also a fact that the central government almost destroyed Chinese agriculture.) Any analysis of Chinese development since 1949 must take into account centuries of imperialism that culminated in the horrors Imperial Japan visited on the Chinese (and other Asian nations) during WW II. Few in the West know that the Chinese national anthem is "Arise," as in rise from your knees. We can argue endlessly about the Chinese form of government, but I'd say the Party has it hands full meeting the rising expectations of China's middle class. Moreover, as we report, talented provincial and municipal officials are challenging the central government. These local officials, along with some of EE Times' friends in China, represent the next generation of leaders -- not the corrupt princelings who are struggling to retain their privileges.
People leave China to escape from the Chinese people, which turns into mobs every once a while. China needs the rule of law, backed by a strong government which also abide by the law. It doesn't need democracy in the next 100 years.
Westerners who never saw a Chinese mob would always prescribe democracy. It is like women prescribe tits for everyone. It doesn't work.
One chicken that will certainly come home to roost in China is the fallout from the one-child-per-family program. Coastal manufacturing in cities such as Shanghai is starting to run up against low-cost labor shortages, while the population ages.
Japan has this issue in spades, aggravated by what amounts to a no-immigration policy.
Given that China's strong suit is manufacturing, this could represent a "wall".
Yes, labor costs are rising in China. Cheap labor was of course one of the key reasons to shift manufacturing to China on the first place. The savings also made it worth all the hassles. Now we are hearing from manufacturing services providers that more western companies in China want out, but Chinese joint venture partners control product specs and other documentation. Hence, it's going to hard for these companies to extricate themselves from joint ventures, especially if they have received government incentives.
Meanwhile, the central government is pouring funds in areas away from the coast like Chengdu. One reason is that the bosses in Beijing realize they have to shift investment away from the coast to get closer to new sources of labor.
It took awhile for the motive all of this positive spin and coverage on China to sink in on me. EET understands where their advertiser and reader market is shifting, at least in their minds. Good luck with that, I'm sure they'll let most of your coverage to be read. China is my competition, in business, in freedom and in human rights. I don't hate or fear them, bring it on.... Yes, a rising middle class in China may force positive change, just as our falling middle class will force change. Can we get back to signal integrity now.....
The raising labor cost got a big effect on China's growth. This is where China had the fullest advantage. All their investments are in large scale production and labor intensive. Soon we may see a big change in the current scenario of the Chinese growth.
Demographics might be China's biggest nightmare in years to come as the population is clearly ageing and there are not enough young people to keep the levels of growth we have seen in the past 20 years or so. How China manages the inevitable transition from a labour-intensive economy to a high-tech high-value economy will dictate its future.
For anyone interested in the China-Alarmist perspective please read Forbe's article on China's financial system: "Ponzi in Peking - China Meltdown, be very scared." It appears in their 28 December, 2009 issue. As the title implies it comes from the perspective of impending doom, which runs counter to George's point, but regardless of which prognostication you favor this article also provides to Westerners some good insight on just how things work over there. Yikes!
This article along with my everyday work with our blooming Asian vendor list(mostly Taiwanese, Korean and Japanese companies who've set up shop in China, and some native Chinese companies) are the cornerstones of my thinking on business in China. It can be summed up this way: while I am very sceptical of the long term health of their financial system and overbearing command and control government the shear number of hungry and able people will keep them competitive for the rest of my career.
Not much in George's article here causes me to waver from that view except this important new datapoint:
"...China watchers note that the stasis created by Chinaís command economy is slowly being challenged by more nimble provincial and municipal governments. Regional and local officials ďare doing everything in their power to make the system work, sometimes against the wishes of the central government.Ē
This is important because, if successful, it could take out one of the impediments mentioned above and will make them even more competitive. Freedom Works!
And that bring me to my final point which comes in the form of a question: why is decentralization good for China but bad for the US? We certainly aren't heading in that direction now.
The only sustainable trade is real trade - I make a real product or service that you value; you make a real product or service that I value - let's make a deal. If I don't have a real product or service to trade, NO TRADE TAKES PLACE.
US fiat money has infected the global system and broken it down, temporarily making it possible to trade virtual credit for real, manufactured products, causing enormous trade imbalances as a result.
A return to honest, commodity-based money is the only way to resolve the imbalances of trade.