The Water Cube

The Water Cube

China is forecast to become the world's largest manufacturer next year, overtaking the US and ending the US's run of over a century in the top spot. The US took first place from Britain in the 1890's, and held it for a little over a hundred and ten years.

Let no one tell you that manufacturing is not more important than other parts of the economy in geopolitics. The ability to produce large amounts of stuff, combined with a large population, is two-thirds of what makes a modern great power. (The third part is an effective military culture.) Other sectors, such as the financial sector, are important to the extent that they support manufacturing and the ability to project force.

China has the world's largest internet. Its number of patents is growing faster than any other nation, and Chinese love being engineers, unlike in the US, where being a lawyer or MBA or maybe a doctor is considered the route to a good life. This, again, is eerily similar to the period when America broke down the doors: engineers were worshiped, scientists were respected and everyone wanted to be an inventor. In the old days Chinese came to America to become scientists and engineers, then stayed. Now they come and go back, and meanwhile Chinese universities pump out huge classes of both as well.

And great things are happening in China, such as their plan to become the world's leader in wind power by 2020 (which they are pumping huge amounts of money into) or their high speed trains, or experimental buildings such as the water cube or the bird's nest. Chengdu is creating a complex of buildings with sliced-geometry which are porous to sunlight. If you're an architect who wants to do big groundbreaking projects the best places in the world right now are Dubai or China. Certainly not the United States, where there is no money and no appetite.


Yes, China has a lot of problems. They're almost endless. But they also have an endless appetite for thinking big about how to solve their problems. That appetite is missing in the US. When I read policy proposals from both campaigns my response is usually as follows:

McCain: this policy, if followed, would be disastrous.

Obama: not a bad policy, but either doesn't go far enough or doesn't tackle the fundamental problem (for example, Obama's health care plans won't reduce costs enough, and without that, it's just a finger in the dike.)

The Chinese also think long term. They were aggressively buying up oil resources ten years ago when oil was under 20 dollars a barrel, and they were doing so at what then seemed like crazy prices (but which now seem like steals).

This new century is not going to belong to America. It is not going to belong to Japan. It's not yet clear that it'll belong to China, but they're a contender. America, though it is a continental power and will remain a Great Power will lose superpower status and once lost, will not regain it in our lifetimes.

At the end of the day, you can juggle as many pieces of paper as you want; you can play land-swap games with property and pretend that's real wealth, but in post industrial revolution societies, real wealth is what you can produce. China's far from as rich as the US on per-capita measures, but in gross terms, it's pulling even. And once it does it will just keep pulling away. And America's elites, who have helped it all along the way, offshoring and outsourcing as much industrial capacity to China as they could in exchange for labor arbitrage profits, will continue to help China preferentially over the US, because they understand that China is the future, that its market will be bigger than the American market, and that if you want to play in the big leagues, that's going to mean playing in China.

All of this may come tumbling down due to global warming and various resource shortages, mind you. China is running the same playbook that America ran, that Japan ran, that every Asian Tiger ran. It's running it fast, but time may be running out. But there are signs they recognize this, as with the wind power plan, and are moving to adjust. Everyone in the world is going to face the same problems. The future belongs to the nation or nations which adjust best, who create the new model economy which works within the new resource constraints in a world where resources don't come from an endless cornucopia. So far Europe, China, Japan and many other nations are ahead of the US in this race.

And those who don't complete the track will pay a fearful price because the old economy, based on cheap hydrocarbons, a huge food surfeit and cheap resources, will no longer be viable.