Big but not strong: China still can’t compete with the US

Big but not strong: China still can’t compete with the US
Tseng Fu-sheng
2014-03-20
Since the launch of economic reforms in 1978, China has become the world’s second-largest economy, the largest merchandise trader and the largest manufacturer, with forex reserves topping US$3.8 trillion, including US$1.2 trillion of US government bonds, for a share of 9%, making it the US’ largest creditor.The nation is still a laggard in many respects, however, in view of its comparatively low per capita income at just US$7,000, one seventh of the US level, and its heavy reliance on imported energy and resources. Restrictions on the conversion of the renminbi, as well as the minuscule share of renminbi, at a mere 1%, in the forex reserves of central banks worldwide, compared with 60% in the US dollar and 25% in the euro are also issues.
China lacks independently developed technology for national defense, relying on imported engines for advanced jet fighters and it only has one aircraft carrier, the Liaoning, compared with the 10 operated by the US. It relies on Microsoft and Google for computer operating systems in the information era. Amid the ongoing search for the missing Malaysia Airlines flight MH370, the US monitoring satellite system has demonstrated its strong capabilities, dwarfing China’s efforts. These signs indicate that China is still unworthy of being called a major power.
In view of its backwardness in several key respects in terms of economic growth, it’s hard to see how China can compete with the US in the following aspects:
China’s per capita clean water resources amount to only one fifth of those of the US, a gap which will widen further as water pollution is getting worse in China and there have been increasingly serious water shortages.
China also trails the US by far in the supply and reserves of energy, especially in view of the latter’s advancement in the exploration of shale oil, nuclear power and wind power, on top of its abundant reserves of petroleum, coal and natural gas.
The US also far outstrips China in grain output and its grain stockpile, as China has to import massive amounts of grain from the US and Canada, while the US is self-sufficient.
China will be a grey society by 2020, leading to a contracted labor force which will dampen economic growth.
In the wake of rapid economic development, the middle class is emerging in China and will pose a strong challenge to the autocratic rule of the Communist Party, entailing transitional labor and social costs for the regime, in sharp contrast to the stability of the US system.
China’s medical care and health system still occupy a low position in the evaluation of the World Health Organization.
China’s political and social system have been strained by the eruption of various new issues as the country’s economy has grown, notably a widening wealth gap which has resulted in numerous social problems. People at the bottom of the social ladder have become increasingly discontent and restless as they are denied the fruits of economic development, the bulk of which are in the firm grip of those in the higher echelons of society.
(The author is adviser to the national security section of Taiwan’s National Policy Foundation. Translated by WCT.)

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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