Economics: Is China Really At The Peak?

(Drivebycuriosity) - There is a cult around the term "peak" and pundits make the headlines by claiming that something had "peaked". We heard about peak oil, peak stuff, peak innovations, peak car, peak life expectancy and even peak craft beer ( driveby  thedailybeast ).

Now Noah Smith, a popular blog writer, entertains his subscribers with the claim that China is "at the peak" (noahpinion ). He boasts "we thus have the privilege of seeing a great civilization at its peak". How arrogant you are, Noah!

China skeptic Smith is not alone. China´s economy grew about 6.3% in Q2 2023 - three times as fast as the American - but the media lament that the country missed expectations (which were at 7.3% growth cnbc ).

I am aware that "emperor" Xi is sabotaging his own economy by curtailing China´s big tech (I wrote about that here ). But competitors Europe & the US are not really free market places. America`s & Europe´s antitrust zealots are following Beijing`s  crusade against Big Tech and are throwing sand in their gears when ever they can ( zealots). But, neither Xi nor Biden can stop technological progress.

                      Perpetual catching up

China is still at the begin of a perpetual catching up process, which is fueled by extreme income & wealth differences to the US and other Western nation. In 2022 China had about $12,720 income per capita, the US number was $76.400 (worldbank). Lots of room for growth. China is following other countries which had - at least partially - caught up to the leading economies. China`s per capita income needs to triple to reach today´s at least half of the American income.

The country has a huge natural resource which is fueling the growth. There is a gigantic amount of human capital: About 1.4 billion people, four times as many as the United States.  

More people means that there are more creative minds with new ideas. Thanks to the sheer size China has potentially about 4-times as many artists, entrepreneurs, inventors, scientists, coders and geniuses like Elon Musk or Steve Jobs as the US. 

China`s ascent is fueled by people who are smart, hard working & well educated. The Chinese education system is more rigorous, competitive and success focused than the American and the British (americanaffairs ). 

 International Mathematical Olympiad 2023 results:

(twitter )

 

 

Wikipedia counted in 2021 already 3,012 colleges and universities, with over 40 million students enrolled in mainland China (wikipedia). Chinese corporations, think tanks & administrations can employ a large number of highly dedicated & educated people. The country already leads the world with mathematical skills, the basis for science & software development.

China´s vast human capital is not only the engine for fast expanding knowledge. It is the driving force for science & innovation and so fostering economic growth (washingtonpost scottsumner). Elon Musk criticized the “entitled” and “complacent” character of people in the United States, and lauded the “smart” and “hard working people” of China ( cnbc)

               Dense & Productive

China`s ascent gets supported by the fact that a large part of the population lives in very big cities. China has over 160 cities that have a population of over 1 million people, which include at least 14 mega cities, with each has more than 10 million citizen ( worldpopulation). These big cities contain altogether more people than the whole US, where a large part of the population spreads over vast areas.

The density gives China another advantage. "Packed city centers are correlated with economic growth, talent levels, and diversity" notices city lab, a think tank (citylab).  They add that "clusters of talented and ambitious people increase one another’s productivity" and "the increased productivity of the broader community spures economic growth". Project Syndicate, another think tank, says "80% of economic output originates in cities: urbanization is the engine of economic growth" (project-syndicate).

China`s cities are connected by a cutting-edge network  (trains, subways, harbors, airports) beating the rotten American infrastructure by far. And Beijing is pumping trillions to expand and modernize the net, the country has already some of the fastest trains of the world. 

Skeptics take notice. China`s ascent will boost the global progress of medicine, robotics, artificial intelligence, nanotechnology and more - and so the standard of living everywhere. It is a gain for the whole world.