Myths about China: The Dragon is really just a Big, Fat, Ugly Leech?

[psychoanaleesis]

I guess it's time the smoke clears on some issues regarding this putative boogeyman of the Free World.

From Forbes.com

Read up on this one too: Cracked.com

Derek Scissors talks about the myths behind America's "no. 2" (hint, hint)

Please read the whole article. I'm not too about some terms so if someone here could paraphrase some economics lingo into plain English, I'd be grateful.

This is nice [From the article page 3]: " Every discussion of the Chinese economy, including this one, should be taken with a truck's worth of salt." (emphasis mine)

Maybe it's time to take a lil breather fellas?

Here's the rundown:

Myth No. 1: China is now the leading engine for global growth.

Truth: China detracts from the rest of the world's growth in gross domestic product (GDP).

Myth No. 2: China could surpass the U.S. as the largest economy in 10 years.

Truth: There is a reasonable chance that China will never surpass the U.S.

Myth No. 3: China will surpass Japan as the world's second-largest economy in 2010.

Truth: China probably surpassed Japan several years ago.

Myth No. 4: China is America's banker.

Truth: If there was ever any Chinese financial influence, it is not there now.

Myth No. 5: The U.S. and China are intensely interdependent--"Chimerica" has emerged.

Truth: China depends far more heavily on the U.S. than the U.S. depends on China.

Myth No. 6: China's controlled exchange rate is a central factor in the global economy.

Truth: The controlled exchange rate is merely one symptom of a larger problem.

Myth No. 7: China continues to reform its economy, with perhaps an understandable pause due to the financial crisis.

Truth: China's market reform slowed sharply in 2002 and effectively stopped in 2005.

Myth No. 8: China is rebalancing toward more domestic consumption.

Truth: The dominance of investment over consumption in driving China's economy is intensifying.

Myth No. 9: China's greenhouse gas emissions are about the same as America's.

Truth: China's emissions are as much as 25% larger, and the gap is widening every day.

Myth No. 10: China has an official program to substantially cut its carbon emissions.

Truth: The goal is to cut carbon emissions intensity. Actual emissions will soar in the next decade.

[Reidy]

Here's some more from Forbes.

This has been going on for decades. The US is losing out to this or that competitor, and the reason is some combination of the selfish American ethos that refuses to pull together for the common good and the long run, and its refusal, politically, to adopt central social and economic planning.

The late 50s / early 60s were the post-Sputnik era, in which the economic and technological might of the Soviet Union had the US in a race to the finish, because its people cared about winning the Cold War unlike selfish, materialistic Americans.. President Kennedy said that the Cold War would be won by the country that could guarantee its people a higher standard of living. This was true, but what's quaint is his belief that it was an open question as to which country this would be. During his presidency, the CIA announced that Soviet GNP would outstrip American by 2000. He was publicly dismissive of the finding but according to posthumous anecdotes he was quite rattled. Nixon was another believer. In his famous kitchen debate with Khruschev, he blurted out "you may be ahead of us in space, but we're ahead of you in color TV" - i.e. they were as powerful technologically as the US, but we were nicer people.

America's last days theses were popular later in the 60s, but they didn't take this particular form. Then came the energy shortages of the 70s. America was at the mercy of OPEC and prices could only get higher, the story went, because of its refusal to adopt an energy policy and accept gasoline rationing. It all evaporated when the US got rid of energy price controls.

After that came mighty Japan, which was overtaking the US because it had MITI to plan its economy and make the big decisions. Sing along if you remember the period: Japanese companies manage for the long run, while American companies manage only for a quick profit. You could take the Scissors article, substitute "Japan" / "Japanese" for "China" / "Chinese" and turn out a typical Sunday-paper op-ed piece circa 1980. When Japan didn't work out, mighty Germany was next; it proved that you could have an economy at once prosperous and heavily dirigiste. Robert Reich was a big promoter of this short-lived notion. I even came across one Business Week article and one NPR feature in the 90s about mighty Finland, which had a communications policy by contrast the the US, and Nokia proved it.

I was hoping that the expansion of the Clinton / Bush years and the rise of the internet would squelch this once and for all, but it didn't happen.