I have just returned from an eye-opening trip to China.
China, today, is a modern, vibrant country that is bound and determined to be the number one economy on the planet. To that end they are purposefully building a middle class that will propel them to their goal by 2015, leaving the US vying with Japan and/or India for the number two or number three spot.
For our part, we are fighting back by tackling such heady issues as Gay bashing, becoming a Theocracy, defending our right to carry concealed weapons in Starbucks, and not offending any Mama-Grizzlies.
Current estimates of the size of the middle class in China range from 100 million to 247 million, depending on how much income it takes to make one “middle class.” Assuming an income of about $9000 is necessary, China could have over 600 million middle class citizens by 2015; in other words they will have twice as many people in their middle class as we have in our entire country.
Also, roughly half of China's projected urban population will be middle class by 2025. And, unlike the US where income levels typically peak between the ages of 45 and 54, it is projected that the wealthiest consumers in China will be between 25 and 44 years old; a result of their younger generation being more highly educated than ours.
The Chinese government is promoting and subsidizing education as a major component of its economic war. We, however, are experiencing the highest High School drop out rates since the signing of the Declaration of Independence.
So, who cares, you ask?
Well, consider this: if China’s middle class becomes large enough to consume all the output from its manufacturing facilities we could be forced to bid up the prices of their goods just to incentivize them to ship some our way. And, if the US is successful in getting China to allow the value of its Yuan to float, the cost of cheap Chinese goods could skyrocket.
But, I’m betting that the next election in the US will be about other, far more pressing issues.
The meteoric rise in China’s middle class is tied to dramatic increases in its per capita income:
China, today, is a modern, vibrant country that is bound and determined to be the number one economy on the planet. To that end they are purposefully building a middle class that will propel them to their goal by 2015, leaving the US vying with Japan and/or India for the number two or number three spot.
For our part, we are fighting back by tackling such heady issues as Gay bashing, becoming a Theocracy, defending our right to carry concealed weapons in Starbucks, and not offending any Mama-Grizzlies.
Current estimates of the size of the middle class in China range from 100 million to 247 million, depending on how much income it takes to make one “middle class.” Assuming an income of about $9000 is necessary, China could have over 600 million middle class citizens by 2015; in other words they will have twice as many people in their middle class as we have in our entire country.
Also, roughly half of China's projected urban population will be middle class by 2025. And, unlike the US where income levels typically peak between the ages of 45 and 54, it is projected that the wealthiest consumers in China will be between 25 and 44 years old; a result of their younger generation being more highly educated than ours.
The Chinese government is promoting and subsidizing education as a major component of its economic war. We, however, are experiencing the highest High School drop out rates since the signing of the Declaration of Independence.
So, who cares, you ask?
Well, consider this: if China’s middle class becomes large enough to consume all the output from its manufacturing facilities we could be forced to bid up the prices of their goods just to incentivize them to ship some our way. And, if the US is successful in getting China to allow the value of its Yuan to float, the cost of cheap Chinese goods could skyrocket.
But, I’m betting that the next election in the US will be about other, far more pressing issues.
The meteoric rise in China’s middle class is tied to dramatic increases in its per capita income:
- The first industrial revolution created a 250% increase in per capita income over a 100-year period.
- The second industrial revolution triggered a 350% per capita income growth over a 60-year period.
The Chinese are also quite aware of how challenging meshing Communism and Capitalism can be: Russia failed miserably and even Japan, a democracy, overheated its economy in its bid to be top dog.
The primary difference in China’s tactic is what I call “Pay to Play”. If you are Chinese and want to become rich you agree to pay high taxes, period. If you are Chinese and poor you benefit by paying no taxes, period. In other words the rich are required to lift the entire country up by its bootstraps, not just whine and whinge about having to pay taxes while figuring out how to move their money off-shore. Pay to Play makes it desirable for the rich to move as many people as possible into the middle class as fast as possible. What we deride as spreading the wealth is viewed in China as growing the country. A very sound business strategy anywhere. Well, almost anywhere.
Consider too that the Chinese are perfectly happy to let us send our youth to fight other's wars, but if we become too trigger happy, economically or militarily, they could easily apply sanctions forcing us to take our finger off the button and de-nuke ourselves, or else. But, for the US, Gay bashing is much more important, especially if you can brandish a weapon while doing it. All in the name of God of course.
So, in closing, think before you vote, demand politicians who understand the bigger picture. Our country literally depends on it.
No comments:
Post a Comment