(With apologies to my Chinese friends). China vs. Japan economies briefly compared: Recently, China supposedly passed Japan to become the second biggest economy in the world (after the US, of course) and the largest in Asia. I say supposedly because many of the figures reported by the Chinese central government are based on regional government figures, which are notoriously unreliable in a one party state with rampant corruption and pressure to report high growth rates. Japan Population: 126 million Home to dozens of multinational companies such as Toyota, Honda, Kawasaki, Sony, Mitsubishi, Hitachi, Fujitsu, Yamaha, and so many others that are brand names around the world. Leaders in making everything from automobiles to cameras to electronics to the worlds largest toilet company (Toto). Wealth fairly evenly distributed throughout the country. Virtually all Japanese living at first world standards. Patent and trademark laws strictly enforced. After tremendous growth in the decades following WW2, country has experienced little growth in past two decades. No mass exodus or migration of people or capital. China Population: 1.35 billion Manufacturing hub for the rest of the world, with the US being the biggest customer. Everything from your iPhone to your clothes. Few multinational companies of any note. Can you name three big Chinese multinational brands? South Korea, population about 50 million, has at least 3 that everyone in the world knows: Hyundai, Samsung, LG. About 10% of China, the coastal region (Beijing, Shanghai, Shenzhen, etc.) is rich, and the rest is mostly poor. Thats why Chinese citizens are restricted from moving to those cities without special permits. Can you imagine the US government not allowing someone from Iowa to live and work in Los Angeles or New York? Because of the huge income gap between the wealthy few cities and the rest of China, there are many illegal domestic immigrants in cities like Shanghai and Beijing, and they are second class citizens, denied access to many services and benefits, and usually working menial jobs for low wages (by local standards, but enough to send money back home to their town or village). Sound familiar? Millions of people leave to go live abroad, mostly those who are able to, so the more educated and affluent Chinese (brain drain). Just as the government doesnt trust its people, restricting access to the internet and popular websites like Facebook and Twitter, the people dont seem to trust the government. A recent CNBC report claimed that about half of all Chinese millionaires plan to leave the country in the next 5 years. Many others are investing in assets overseas. But the biggest problem is a wealth gap between 10% of the country and the rest of the country, with over 80% of Chinese earning about $1000 a year or less, Third World wages, and a wealthy elite in a handful of cities. That, combined with massive capital flight by the wealthy and a brain drain, with other structural issues, spells trouble on the horizon.
Posted on: Fri, 10 Oct 2014 22:49:18 +0000
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