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The Rise of East Asia: Threat or Opportunity
So the economy keeps thundering away and one result is rapid urbanization of China, as people migrate, like the mother and her daughter in that remarkable novel by Ha Jin, "Waiting." The year that Communist came, there were 5 Chinese cities with a population of 1 million. Today, there are 40. There are only 6 in Japan. And with that urbanization, the demand for infrastructure is also huge. At present growth rate, China will surpass the United States, in terms of its overall GDP by 2030.

It won't be as rich as America or Europe in terms of GDP per head and, indeed, because the aging population, at the same time as the slight slowing down in the rate of growth. It certainly does not look as though it will catch up to America or Europe during the first half of the coming century. Nevertheless, if China's real income continues to grow by 8% a year and if income distribution remains much the same, by 2020, the top 100 million households in China will have an average income equivalent to current average in Europe and that represent among other things, a vast market for consumer goods.

Can all this last? Let me answer that question before considering whether it will last? First, we should make what we are seeing as the recovery of China as an economic power. China has been the largest economy in the world, according to Angus Madison's calculations, for the last 18 out of the 20 centuries. China and India together in 1820 and the beginning of the Industrial Revolution, which last transformed Europe and North America. India and China represented in 1920, over 50% of the world's GDP, that has fallen to 8% by the 1950. It recovered to just twice that amount by the end of the 20th Century. And by say, 2020 ¡V 2030, China and India will represent, most people predict, more than 30% of global GDP once again.

In 1975, the Chinese earned about 7 ½ % of the average income of West European, by the end of the century, that had increased to 20%, back to the level it was at in the mid-19th Century. There are other reasons why I think the Chinese success story could simply roll on and on.

First access to the almost unlimited supply of cheap labor. Secondly, as the state owned enterprises are run down, there will be more investments in the private sector, which will lead to increased productivity and third, China's economy is unusually open to both trade and investments, with those things perhaps representing 75% of its GDP, about double the figure for larger developed countries. People often say that china is likely to be held back by lack of innovation and capacity to develop technology. And I suspect there is some truth in this.

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