Understanding A Changing China

Understanding A Changing China, Key Issues for Business, by Howard Davies and Mateuz Raskovic, Routledge 2018

The pace of change in China has been so startling that it is hard to keep up. The old stereotypes about low-wage sweatshops are as out-of-date as Mao suits. .. If cheap China is fading, what will replace it? Economist 2012

What we don't know about China can hurt us, from the changes in culture, to economics, finance, even marketing, the stats are shocking. The GDP per capita in 1976 was 162.9 - as of 2105 that figure had multiplied to 6,991.9, measured in US dollars - shocking! How about urban population as a percentage of China's total population -- from 17.5% in 1976 to 55.6% now! Life expectancy at birth? 64.3 stretched to 75.4!

For US manufactures, the sections on China's growing competitive presence in innovation is downright scary. Check out the stats from the World Economic Forum about China vs. the US competitive position (p. 103):

Table 7.1 Comparison of China's sources of competitiveness with selected countries (2016-2017)

Standings (out of 138 countries)

China US Japan Korea

Overall competitiveness #28 #3 #8 #26

Pay and productivity ratio #27 #8 #24 #16

Production process sophistication #44 #9 #2 #22

Capacity for innovation #45 #2 #21 #30

Company spending on R & D #25 #2 # 4 #23

Quality of the educational system #43 #17 #37 #75

There are additional shocking revelations scattered throughout this book, including the puzzling numbers and workings behind China's financial systems. We may not see or hear directly about these mechanisms, but like our Federal Reserve activities, they are worth uncovering and watching.

For manufacturing people, Understanding A Changing China answers some of our unasked questions, especially on innovation - do we have an advantage here, and how long will it last?. Robotics and AI are just kicking in, but already China has targeted AI for competition. Chapters 13, "The Challenge from China, How serious?" and Chapter 14 "Will It End in Tears?" do in fact leave us with many questions surrounded by a wealth of statistics.

And then there is that most basic of questions, "Can an authoritarian system survive?" Our growing fears of a potential trade war with China contributing to either side's economic crisis is questionable. Imposition of heavy tariffs in the 45% range would, if enacted, undoubtedly hurt both sides. Instead, author Davies, at least for now, sees China in a position to sustain its economy and its growth and he warns that it would be unwise for Westerners to be complacent because the numbers are so filled with possibilities that even a significant change in one set of indicators could signal disruptions.