CHINA POISED TO OVERTAKE U.S. BY 2020

[Anonymous]

China Poised to Overtake U.S. in
2020s-Author

WASHINGTON –
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.

His
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
said.

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.

CURRENCY PRESSURE MISPLACED

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.

[Author]

February 23, 2005 at 10:00 AM