When you hear about China in the news it is invariably about the economy and how they have recently grown to become the second biggest in the world, trailing only the U.S. It is an election year in the U.S so once again the Presidential campaigns start raising the fear levels. You will hear a lot about Iran and the imminent threat of nuclear oblivion or China and how they are gearing up to rule the world from an economic perspective. The candidates go back and forth trying to prove who is best suited to protect the people from these evils and if you make the wrong choice, the end is near.
The first issue in terms of China always relates to the amount of U.S debt they own. There are headlines screaming how China is going to own the U.S and something has to be done about it. I have never read a headline complaining about Japan though and they own almost the exact same amount of U.S debt as China.
China is now the world's second largest economy and it is that reason, the potential threat to American economic dominance that seems to be behind the misleading headlines. I'm not sure how you can stop another country from becoming an economic power but the alarm bells have certainly been rung. China however is not as rich as most people seem to think. They are a big economy simply because they have 1.3 billion people. One measure of a countries wealth is the amount of goods and services they produce (GDP). If you look at the countries GDP and consider the population you get a GDP per capital, which is a good measure of the economic wealth of the citizens. Canada for example has a GDP per capital of $50,436 (2011 figures) which ranks it 9th in the world, slightly ahead of the U.S ranked 14th with a GDP of $48,387. According to the International Monetary Fund figures Luxembourg is ranked number one with many of the northern European countries making up the rest of the top 10.
Given the news about the Chinese economic power that is ready to take over the world you would expect them to be ranked pretty high. In reality, they are ranked 88th in the world, just below Libya, Peru and the Dominican Republic with a GDP per capital of $5,414. At least they beat the economic powerhouses of Algeria and Turkmenistan.
The issue that is of interest however is to understand the role of the Communist Party in a country that seems to be moving to a Western style capitalist model. What happened to the collective farms, the cooperation and non-competitiveness that typically define a Communist Party? If you look at the top 12 corporations by revenue in the world, China has 3 of them with the biggest being Sinopec, an oil company. Sinopec used to be owned by the government but in 2000 was listed simultaneously on the Hong Kong, London and New York stock exchange. The public listing was hailed as a victory for capitalism and a movement away from government control to one where they are part of a free market.
In China, the Communist Party (CCP) has over 80 million members and they keep a tight control of the country. The government here tolerates a fair amount of individual rights but they have little patience for anyone undermining their authority. The government is controlled by the CCP. An example of this is the fact that Facebook and You-tube are banned in China and any sign of protest or rally against the government is quickly smothered. The CCP is also in control of the large corporations in a way that is not widely known. The CCP is responsible for the hiring of all personnel. In cases like Sinopec, they appear to be a free market company but the CEO, senior management, supervisors and all personnel with decision making are appointed and approved by the Party. The majority of the Board of Directors are a member of the Party and all decisions in regard to expansion or hiring have to be approved by the Party. Since there is only one party it would be like the Republican Party in the U.S having the sole authority over Exxon Mobil, Wal Mart and McDonalds.
China has come a long way since 1978 when they moved away from the Communist ideas of Mao Zedong but they are a long way from dominating the world economy. There are recent signs of economic problems, as the growth rates of the past decade appear unsustainable. The government made a move recently to focus on domestic growth and that has slowed along with the rest of the world.
I will be visiting the old city of Lijiang next and then doing some hiking in the Tiger Leaping Gorge. My bike is being boxed up and I am now changing from being a biker to a hiker. I was planning to bike down through Vietnam but one of my dreams was to see Mount Everest and the best hiking months in Nepal are October and November so now is the best time to go. I leave China on October 5th and will fly to Bangkok to pick up some cold weather gear for hiking. In Nepal I will first do a 3-week hike on the famous Annapurna Trail and then do a 2-week trek to the base camp of Mount Everest. I am only hiking though, no perilous mountain climbing past the base camp for me.
I will be a week in Bangkok and while there plan to go skydiving. One way to face your fear of flying is to go in a small plane and then jump out. As the saying goes, fear has never stopped anyone from dying but it has stopped a lot of people from living.