When I was a wee little lad, it was the Japanese that were going to own me and force me into indentured servitude. Didn't quite work out that way. Something about inadequate banking systems and a 2 decade recession.
Then I remember the "Asian Tigers", and how if I wanted to have any chance of putting my degree to use when I graduated from University, I ought to start looking to move to ROK, or Taiwan, or Hong Kong.
Then, when I graduated from school, and I had gotten my first job, there was another Far Eastern menace that was taking over the economic world. This time it was Malaysia and Indonesia.
And through it all, amazingly, the USA is still here.
I'm not making light of the situation. Our students ARE lazy. Not enough of them enter science and engineering cirriculum, and of those that do, the majority under apply themselves. As a result, the average graduating class of engineering students, at least the ones I come across, decline year over year.
This is not a universal phenomenon. There are bright, hardworking kids that you come across. You hire these guys, by the way.
But the whole "the scale is tipping too far" paranoia model... it ignores two things.
1) China can try all they want to artifically restrain inflation. Sooner or later, the pressure will become too great and they'll have to let the Yuan go, and the longer they wait, the worse it will be for them in the end. Can you really expect a factory worker to earn $8.00/day, when his residential costs rise to $300/month?
2) As wages rise, demands for a better standard of living rise. Do people really think that the average Londoner in 1888 wasn't saying the same things about the USA that we currently say about China? Did the UK go belly up when the USA grew past it?
Trust me, speaking as somebody who has been to China, worked there, talked to the people... the average Chinese doesn't care one whit about reclaiming lands lost to Russia, and they don't fantasize about invading the USA. (In fact, the commonly accepted Chinese term for the USA is Mei Guang, which means 'the beautiful land'. For a people we fought a war with 50 years ago, they're incredibly friendly and open).
What I predict? A much, much larger segment of the world will join the 'global middle class'. As they do, their wages will rise and some other new place will be the "IT" labor market, possibly Vietnam or Laos. Meanwhile, Chinese society will take its place in the global market as a mature market force, both in terms of demand (its middle class will want I-pods too) and supply (Huawei is gaining on Motorola every day).
And this is a good thing. It's how the world grows up. Yes, there will be competitive pressure on us from China. This is good for them, as they win some accounts, and its good for us too, as our own labor pool and entrepreneurs responds to the competion and steps it up a notch or two. And as a consumer, it's always better for you to have more and more choices.
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