Reading this old post by Fred, and it nudged something that I’ve been meaning to talk about for a bit: China. There’s lots of talk in the mainstream media about how wonderful China is, and how quickly they’re growing. Indeed this is all very true, but in the long-run China is a dead end unless they change the foundations upon which their economy is run.

China’s primary strong points are its natural resources and abundant cheap labor.

Natural resources

Natural resources are pretty self-explanatory. However the more deeply you think about them, the more questions you uncover. Today, China lags behind even the United States in being environmentally-friendly. We talk a lot about sustainability and carbon footprints — ideas China is largely ignoring. They’re financing their growth today at the long-term expense of their environment, and ours — a great deal of the smog that collects in the LA basin comes from China. To their credit, China experimented with a “Green GDP” — an idea I hope to more fully explore in the next month or so with a full-length article for Ars — but later abandoned the idea because the cost of the damage they were doing to their environment was politically unacceptable. (And frankly, those numbers were absurdly optimistic anyway.)

Cheap labor

Labor is China’s best resource right now. As the second most populous country, but with an abysmal per capita GDP, China has the perfect recipe for abundant cheap labor. And this is what American manufacturers have been exploiting for quite a while. Unfortunately, while labor is a good way to get your foot in the door as a world power, it’s a piss poor way to maintain that economic power.

Unless you start reinvesting some of this handsome revenue with an eye on long-term viability, you go somewhere quickly, and then just as quickly sputter to a halt. Right now, India has far more economic potential than China because they are reinvesting in their population in the form of education and infrastructure on a scale that China is not. Twenty years ago, India had virtually nothing in the way of infrastructure, education, and therefore no clear plan for long-term economic success. Obviously, they’ve turned that around, but they’ve had a political advantage in that they’re a democracy.

Part of China’s long-term problem is politics. The politics of suppression and lack of freedom severely hurt your ability to produce in the long-run because you cannot invest in education in a meaningful way. On Thanksgiving, I wrote that I was grateful for the Internet because it enables me to have access to huge amounts of information that I would otherwise be ignorant of. China’s firewall is effectively keeping out subversive information which is seriously damaging their ability to grow. It’s not just the firewall itself, of course. You need schools that are strong in math and science and social sciences and literacy. The problem becomes, then, that the more educated your population, the less likely they are to lie down passively while you trample basic freedoms. Education brings understanding brings curiosity brings resentment brings change. You can’t maintain the status quo and continue growing at the same time.

There’s more to China than its cities. While much ado is made over conditions for Chinese factory workers, these conditions are still much better than their agrarian compatriots. (Though obviously not great.) Would a Chinese farmer acquiesce to a such an incredibly low standard of living artificially imposed from the top down if he were educated?

Not in the long run. When China begins the wholesale education of its people, and begins systematically opening up and becoming more free, then it will have a real future, like India. Until then, they remain a one-trick, relatively uninteresting pony.