Japan turned into a low-growth, but stable, country. But Japan did not have a billion impoverished people to deal with, nor did it have a history of social unrest and revolution. China’s problem is no longer economic – its economic reality has been set. It now has a political problem: how to manage massive disappointment in an economy that is now simply ordinary. It also must determine how to manage international forces, particularly the United States, that are challenging China and its core interests.
Do read it all.
I never panicked over China's rise. I expected their growth spurt would expire rather than go on forever the way some portrayed China. I could remember similar claims about the Soviet Union, Germany, Japan, and even the European Union surpassing America.
I'd like to add two things to the article.
One, the impressive Chinese rise was in part due to urbanization. As I wrote many times on this blog, take the most efficient peasant and put him in the most inefficient factory, and GDP goes up a lot. China has run out of that option to get a cheap input for easy gains. What follows is harder.
And two, the very size of China made the export-dependent route to economic growth a problem. China is so huge that the world ran out of customers before China ran out of rural peasants to plug into factories.
Taiwan, Singapore, and even Japan were small enough to urbanize and modernize without exhausting the world's ability to absorb their exports.
But China is huge, obviously. How could the world ever absorb the scale of exports that would allow China to replicate Japan's path?
So China has achieved a lot. But it was no miracle. And now the task of coping with the reality of China's limits rather than seeing a fantasy vision of never-ending growth is China's job.
Which has lessons for India, too, which also desperately needs economic growth to reduce massive poverty in large segments of their population that aren't plugged into the global information economy.