Never Cede a Century to a Country That Censors Google

grandmafriedman

Such words by Thomas Friedman, columnist for the New York Times and author of The World is Flat, seem prophetic given what has happened over the past couple of weeks in China.

Friedman credits the phrase to Grandma Friedman, which was in response to the belief of many that while Britain owned the 19th century and America the 20th century, that China was going to own the 21st century.

And there some good reasons to think that way. China’s economy has averaged close to double digit growth for over 35 years, and in 2010 surpassed Japan as the world’s second largest economy. Many people predicted, given such growth, that the Chinese economy would surpass the U.S. economy by 2030.

In 2014, the U.S. GDP was $17.4 trillion, while China’s GDP was $10.3 trillion (Japan was a distant third at $4.6 trillion). The Economist Intelligence Unit has projected that by 2050 that China’s GDP will be $105.9 trillion while the U.S. GDP will be $70.9 trillion.

If you look back at 1990, the U.S. GDP was $6 trillion, while China’s GDP was only $404 billion; the U.S. economy was essentially 15 times as large as the Chinese economy. As of 2014, the U.S. economy is less than 1.7 times as big as China’s.

So it’s no surprise that many people expected China to be the world’s largest economy, and to dominate the 21st century.

China’s manufacturing activity slumped to a three-year low and its services sector showed new fragility, reflecting the weakening state of Chinese economic health. Exports in July tumbled 8.3% from a year earlier and big-ticket investment has sputtered. While Chinese policy makers have vowed to ensure that economic growth hits the country’s target of about 7% for this year, that would still be its worst performance in more than two decades.

The Chinese economy is in the midst of a transition away from an era when smokestack industries, huge exports and massive infrastructure spending—underpinned by trillions in state-backed debt—powered China’s seemingly unstoppable rise. Instead of them, China is pushing services, consumer spending and private entrepreneurship as new drivers of growth that rely less on debt and more on the stock market for funding. This is expected to be the “new normal” for China, and mimics what the U.S. economy went through decades ago.

A recent Wall Street Journal story reported that while China is the world’s second largest economy, tut on transparency remains distinctly an emerging market, with murky politics, unreliable data and opaque decision making. This veil dims the understanding of China’s economy and is an important reason its recent slowdown has produced so much turmoil. Economists widely doubt that China grew at a robust 7% pace in the second quarter, as the country’s official statistics say. Citing other data, such as power generation and passenger travel, some think the rate might be as little as half that.

And over the past couple of days, Chinese authorities said they punished nearly 200 people for spreading online rumors in connection with recent major news events, in a government crackdown on politically sensitive discourse. The sweep targeted people who the government said spread false Internet rumors regarding events such as the stock-market turmoil and deadly explosions earlier this month in the port city of Tianjin.

So it seems that it’s come full circle, and that perhaps Friedman was on to something when he wrote The World Is Flat.

The Chinese economy was humming along for years, but when it hits a bump in the road one of its first actions is to look to blame its people, to censor them for having “misled society and the public, generated and spread fearful sentiment, and even used the opportunity to maliciously concoct rumors to attack [Communist] Party and national leaders.”

So apparently China is willing to not only censor American firms such as Google, Twitter, and Facebook but to go after its own people when things aren’t going well.

The censorship, along with the lack of transparency, doesn’t sound like a recipe for being number one.

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Jim Borden

Accounting Prof. at Villanova; happily married for 30+ years; father of 3 outstanding young men; vegan; interests: fitness, creativity, education, blogging, social media.

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