Economics: Did China`s Economic Miracle Really Come To An End?

 (Drivebycuriosity) - Recently the magazine Foreign Affairs announced "The End of China’s Economic Miracle" ( foreignaffairs). This reminds me to Mark Twain´s quip "the reports of my death are greatly exaggerated". I disagree and strongly believe that China´s miracle is still in the beginning.

                      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, engineers, 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:

 

 

 ( source)

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 the engine for fast expanding knowledge and the driving force for science & innovation (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). China`s ascent is boosting the global progress of medicine, robotics, artificial intelligence, nanotechnology and more - and so the standard of living everywhere.

The Chinese are also particularly thrifty. They save on average almost three times what the Americans do. China`s Gross Domestic Savings Rate is 46%, the American just 17% ( worldbank). Higher savings support investments which are the base for long term economic growth.

               Productive Density

 

China has another advantage. The country is much denser populated than the US. China is as big as the US but has around 4-times more people. China`s  1,43 billion people live on 9,596,961 km2/3,705,407 sq mi while the 330 million Americans occupy 9,833,520 km2/3,796,742 sq mi (worldometers  wikipedia). 

Thanks to the higher density China`s economy is much more efficient than the American. On average the Chinese need to spent less money & time for transporting goods & commuting.

A large part of the population lives in huge 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.

 "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 communication & transport nets. The country has already some of the fastest trains of the world. The US is disadvantaged because it lacks a nation spanning train network, travelers need to fly and to rely on overcrowded airports & unreliable airlines.

Catching up process, vast human capital, high savings & the productive clusters of huge cities are the engines for China´s perpetual progress.  China`s ascent is a gain for the whole world.