Is China making an unprecedented leap to the top of the global economic hierarchy? Yes, Martin Jacques asserts confidently in his buzz-generating When China Rules the World. He sees the country, which recently passed Japan to become the world’s No. 2 economy, rising smoothly to the top spot by continuing to follow a thoroughly distinctive, Confucian-tinged development path. No, say China skeptics like economist John Markin and hedge-fund honcho James Chanos, with equal self-assurance. They predict that bursting bubbles will lead to a Chinese equivalent to Japan’s “lost decade” of the 1990s. To them, as George Friedman pithily puts it in his best-selling The Next 100 Years, which is sometimes displayed near Jacques’ tome in airport bookstores these days, China is just “Japan on steroids.”
While we’re too aware of how regularly — and speedily — bold forecasts about China are proved wrong to offer one of our own, our research into 19th century America and contemporary China, respectively, leads us to flag a third possibility: China could stumble but keep climbing upward, much like the U.S. did about a century and a half ago. We find today’s China less reminiscent of Japan in the 1980s than it is of the U.S. in the 1850s.
Don’t get us wrong. We don’t expect breakneck growth to continue unabated. China faces daunting challenges, from a rapidly graying workforce to endemic corruption to energy needs that are increasingly hard to satisfy. To say that China faces major challenges, though, doesn’t undermine the American analogy. The same was true of the U.S. circa 1850.
The U.S. was then, as China is now, a predominantly rural country undergoing a massive shift toward an urban, industrial economy. By the 1850s, the U.S. was en route to becoming the workshop of the world, rapidly churning out cheap yet high-quality textiles, clocks, guns and other goods. The British dubbed this miracle the “American system of manufactures,” and it became the envy of the world. Much as China’s capacity for producing seemingly endless quantities of cheap goods is now earning it the ire and admiration of other countries.
U.S. commentators complain that China’s success has been predicated on chicanery , dubious business practices and wanton disregard for copyrights. In doing so, they echo things that British commentators once said about America’s rise, back when New England factories used reverse engineering to mimic the latest Lancashire technological breakthroughs and Dickens complained of making no money from the pirated copies of his novels sold in the country. To use a line often attributed — probably inaccurately — to Mark Twain, history doesn’t repeat itself, but it often rhymes. And this is one of those cases.
What of the bubbles that China skeptics flag? Numerous speculative real estate bubbles grew and burst while the U.S. rose. Each time, the economy recovered and went on to grow again at a blistering pace. So too might China’s.
across the Pacific: a country leapfrogging its way toward the top of the economic order and in the process stirring anxieties in the U.S. that rhyme remarkably well with those an adolescent America once triggered in the aging empire across the Atlantic.
American historians Mihm and Wasserstrom are the authors, respectively, of A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States and China in the 21st Century: What Everyone Needs to Know
This article originally appeared in the November 15, 2010 issue of TIME Asia.
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