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 user 2005-02-23 at 9:57:00 am Views: 65
  • #10472
    China Poised to Overtake U.S. in

    China’s unprecedented rise, fueled by foreign investment and technology, has put
    the Asian giant on a path to surpass the United States economically by 2025, the
    author of a new book on China said on Tuesday.

    U.S. pressure on Chinese authorities to revalue the yuan
    currency will bring only a brief respite from the fusion of cheap-but-skilled
    labor, imported technology and economies of scale that make China so
    competitive, said Oded Shenkar.

    book “The Chinese Century,” represents neither a “China-bashing book” nor the
    1980s “Japan as Number One genre,” the Ohio State University business management
    professor said.

    “The rise of China
    is a watershed,” Shenkar told Reuters in an interview. “I compare it to the rise
    of the United States in the late 19th century.”

    Britain, the leading power of
    that era, did not take its former American colony seriously despite the
    geopolitical implications of the U.S. emergence. China aims to regain the world
    preeminence it had before the modern era, he said.

    More than becoming a new Japan,
    “China will be overtaking the United States between 2020 and 2025,” Shenkar

    The Israeli-born researcher said
    he put China’s emergence as the world economic power about two decades earlier
    than most analysts by measuring purchasing power rather than nominal figures to
    measure output and growth.

    “I believe first of all that the
    Chinese economy is actually larger than the numbers would suggest,” he said.


    Although he expects an eventual
    modest revaluation of China’s currency, Shenkar said lobbying China to alter the
    yuan’s decade-old peg to the dollar would not help much.

    “Pressure on not only currency
    rates, but also tariffs and quotas will have only a temporary effect,” he said,
    citing the case of Japan’s dramatic revaluation in the late 1980s.

    “What you are going to do if you
    revalue the currency, is lower their costs of importation,” he said.

    To cope with competition from
    China, the U.S. government must improve education in science, while American
    negotiators must drive harder bargains on counterfeiting, said Shenkar.

    “In intellectual property rights
    (IPR), the Chinese continue to play games,” he said, describing celebrated
    crackdowns that never seem to put Chinese counterfeiters out of business.

    “Most people still think of IPR
    violations in terms of bootlegging of DVDs,” he said. “The reality is this is
    happening across the board,” he said, citing fake machinery, shampoo and
    medicine that cause billions of dollars of losses.

    A major theme of Shenkar’s book
    is how technology transfers have helped China catch up to U.S. competitors at
    low cost.

    “Maybe we are selling our
    technology too cheap, or as in the case of China, we’re giving it away or
    somebody is taking it without compensating us,” he said.