(Drivebycuriosity) - The US are suffering spiraling Covid-19 infections, hospitalizations & deaths. The new wave is hurting the American economy, making the recession even worse. Businesses are not only hampered by lockdowns, quarantines & curfews. Many people are afraid of getting infected and avoid personal contacts. They are staying at home and avoid shops, gyms, restaurants, bars and other public places. The US economy is barely kept alive with huge amounts of government checks, zero interest rates and massive Federal Reserve loans.
When we look to China we see a very different picture. Beijing stopped the pandemic early. Since April the numbers of new infections, hospitalizations & deaths are close to zero (worldometers). Apparently the Chinese have enough self discipline to perform social distancing, mask-wearing & hygiene to end the pandemic. The early success on the Covid-19 front allows the Chinese economy to recover much earlier than the American. China`s recovery happens on own power (in Germany we say "aus eigener Kraft") and it is sustainable - there are no government checks, no massive credit programs and the Central Bank interest rates are around 3%.
China benefits now from the weakness in the US & Europe. The recessions in the West curb prices for materials (oil, iron, coal etc.). Cheap materials raise the profitability of Chinese corporations ( twitter) creating additional tailwinds.
The Covid-19 pandemic accelerates a long term trend: For decades China`s economy has been growing much faster than the US. There are many reasons for that. China`s growth story is driven by the secular catching-up process which is fueled by extreme income & wealth differences from the US and other Western nation standards.
The country has a huge natural resource which is fueling the perpetual growth: A gigantic amount of human capital: There live about 1.4 billion people who are intelligent, work hard and save money to achieve a better life and to reach the living standards in the US and Europe. The Chinese save more than 40% of their income, the American just around 20% (worldbank ). High savings (capital accumulation) and a good education are the base for China`s sustainable economic growth.
The Chinese economy benefits from an education system which is more rigorous, competitive and success focused than the American and the British (americanaffairs ). Wikipedia counted in 2014 already "2,236 colleges and universities, with over 20 million students enrolled in mainland China" (wikipedia). Fast expanding knowledge is driving science & innovation and fostering economic growth (washingtonpost). Chinese corporations, think tanks & administrations can employ a large number of highly dedicated & educated people - a strong driver of economic growth (scottsumner).
China is transforming from being the work bank of the world (focused on manufacturing & exports) into a modern economy based on domestic consume & services like the US. The country is also getting more capitalistic and huge publicly noted technology companies like Alibaba, Tencent & Baidu are becoming the engines of China`s economic growth and technological progress (scmp.com). Rainier Zitelmann, a German historian and author, quotes a leader of a private Chinese think tank who is bemused that socialist ideas are experiencing a renaissance in Europe and the United States: “Here in China, hardly anyone still believes in Karl Marx’s ideas.”( fee.org). Elon Musk recently criticized the “entitled” and “complacent” character of people in the United States, and lauded the “smart” and “hard working people” of China ( cnbc ). China´s transformation is fueled by the technological progress: Rapid advances in software & Internet (including cloud computing), AIs, robotics, 3D printing, nanotechnology, genetic engineering and other technologies are all lifting the productivity of the economy (byronwien).
China’s big advantage is that it has four times as many people as the United States. The country has the potential for about 4-times as many entrepreneurs, scientists and geniuses like Elon Musk. Perpetual growth - and the recent success on the Covid-19 front - show that Beijing - communist or not - is doing a good job in raising the standard of living for more than a billion of people, far better than the governments in the US & Europe. China´s government has a very long-range plan for infrastructure investments, whereas western countries can't see beyond the next election. Move over America!
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