Nov. 2, 2015 | St. Louis
So first some basic facts about China’s rise. Well, 35 years ago, China was very, very poor. OK. That’s the time when President Nixon visited China, OK, and the per capita income was about one-third of sub-Sahara Africa. Africa we think is the poorest region of the world but China was even poorer than that. But only 35 years later, one generation’s time, China has already become the largest manufacturing superpower, OK, or powerhouse. OK, and China supplies almost nearly half of global industrial goods including crude steel, which is about 800 percent of U.S. level and 50 percent of global capacity; and cement, which is about 60 percent of world production capacity; and vehicles, which is about a quarter of global supply; and also China has industrial patent applications which is about 150 percent of U.S. level. And China’s also the world’s largest producer of ships, high-speed trains, robots, tunnels, bridges, highways, chemical fibers, machine tools, computers, cell phones and many other stuff. So China currently is very much like 19th century U.S. OK, I want you to keep that perspective and that’s the perspective I want to get to later.
If you look at, this is a figure about the value-added manufacturing output produced by the top five industrial powers. The blue line’s the U.S. The yellow line’s Japan. The green line’s Germany. The brown line’s Italy. And China’s red. So as you can see, in the ’70s China was essentially producing very tiny amount of industrial manufacturing goods and U.S. was several hundredfold of China. But starting around 1980, OK, China start to take off. And gradually accelerate and surpass all the industrial powers one by one and ultimately overtake U.S. in around 2010. OK. And if you look at a trend maybe China is going to collapse, but you could look at a trend maybe somewhere China is potentially able to produce manufacturing goods twice as large as U.S. or even more. OK, so if that is the bubble, every nation want to have that bubble and every nation should have that bubble. So therefore by looking at this picture, it’s unlikely that China’s rise is purely a bubble.