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Why China matters, even as alarms are sounding about a looming debt crisis in the People’s Republic.
More signs that this century is destined to be recalled as China’s century as much as America’s have appeared in recent weeks, even as alarms have recently been sounded about a looming debt crisis in the People’s Republic, and an alarmist but influential report this week forecasts plunging growth rates in China’s economy through to 2025.
China matters, of course, as a long-time exporter of affordable goods that have increased the standard of living, and reduced the cost of living, for hundreds of millions of North Americans and Europeans. China is also an increasingly important customer for imports. It is now the world’s biggest buyer of industrial robots, for instance. And Beijing long ago assigned to Montreal-based Bombardier Inc. the megaproject of building China’s state-of-the-art intercity commuter rail network.
China has also rapidly created industries that generate vast amounts of electric power and manufacture cars and trucks, jetliners and advanced environmental-protection goods, gaining an early lead on the U.S. in, for instance, solar panels.
“China shouldn’t be underestimated,” economics columnist John Cassidy wrote this week in The New Yorker. “Whatever one thinks of (China’s) authoritarian state-capitalism model, its success in building industries from scratch cannot be denied.”
Most important, China matters because the semicapitalist reforms it dared experiment with, beginning roughly 30 years ago, have lifted hundreds of millions of Chinese from poverty. That has been no small contributor to the UN’s ability a few years ago to declare that for the first time in human history, the rate of global poverty has gone into decline.
China’s own per capita income has increased by a spectacular 3,427 per cent since 1980, from $171 to today’s $6,807. (All figures in U.S. dollars)
No spectacle of this magnitude is without its skeptics, though. This week, the New York-based Conference Board, whose membership includes 2,500 of the world’s blue-chip companies, popped up as a doomster and scold.
It predicts a sharp decline in China’s previous torrid GDP growth rate to a “mere” 5.5 per cent between 2015 and 2019, and a still more modest rate of 3.9 per cent in the five years thereafter. (U.S. and Canadian annual GDP growth is forecast at just 2.5 per cent over the next two decades.)
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