GeminiAtlas

The Great Shift: China Rising, U.S. Falling

Not so sure about the thesis you put forth due due to some of the challenges faced by China in many of the comments above.
I would add that some other trends are emerging in manufacturing which might render the manufacturing investments China has made obsolete.
There is the myth of US "de-industrialization." The manufacturing jobs have declined but overall industrial output is as high as ever due to ever increasing automation. This will probably continue until it's much like the agricultural industry, 1%-2% of the population to run the robots that make everything and more of it each year.
The percentage of GDP relative to overall GDP attributed to Manufacturing will also shrink, but there will still be more "stuff" that is made. This trend is also starting to take hold in sectors of the service industries. Have you called up a travel agent lately to book airline flights? I thought not. Increasing levels of automation and innovation will continue these trends. Soon we might have robots making other robots that perform services, such as cleaning or fighting wars, etc. for us (roomba anyone?).
Even in engineering, I see these trends, increasing use of ever-more powerful software that automates certain low-level engineering design work are increasing the output of each engineer. The effect is better designed products that are developed with increasingly faster product-development cycle times.
Also, the diversity of products being designed are proliferating. The cost-effectiveness of these products will come from "flexible" manufacturing cabilities that can run low-number production numbers easiliy and with less and less set-up costs. Pretty soon, the cost/part of a one-off part will be almost the same as a million part-run. Companies will be able to make parts "on-demand" and thus try out ideas quickly, letting the market itself tell them to make more or not. Read about "the long tail" coined by Chris Anderson to get the idea. What effect will this have on jobs? Well, I'll tell you, those that are the most creative, the most agile, most networked, most innovative will be the winners, and those that cling to the way things are will be the losers. And the need for strong technical skills is a plus but increasingly, even those are becoming "commoditized" so that even those without technical skill but have creativity, can compete by having good ideas and "innovation networks" to get the idea out there. Incidently, the cost of failure is getting lower and lower (due to the agile manufacturing mentioned above) and the fact that one can "rent" the talent/resources on-demand, and thus there is no need to invest (take the added risk) in capital equipment/skills that you can just contract out to someone who specialized in that area. Of course, that also means you have competition from everyone else too, but that will make everyone better I hope.

China's Arithmetic When It Comes to the Dollar

Have to agree, it seems that China and US are dancing some kind of MAD dance. Except that China seems to keep the longer view (50 years), as well as systematically teaching the 36 Stratagems, Sun Tzu, etc. type-thinking to it's mandarins (pun intended). The US it seems does not keep the longer view (many times the strategic view, at least economically, seems to emphasize no more than 5 years down the road). Seeing that the growing deficits and therefore nat. debt sees no sign of ever being paid back, it looks like this will be a lose-lose situation for both sides. Now it's just about who will lose the least. That isn't so clear, since if China dumps the dollar, they wreck their best client's economy and therefore, their own. If the US monetizes the debt, the US wrecks it's own economy and China gets screwed with worthless paper Treasuries.
Maybe the solution will be to proclaim the new "Sino-American Pacific Empire" and China and the US will live happily ever after.
:)


On Jun 01 06:32 PM Cleveland1 wrote:

> The Chinese-American relationship is effectively akin to our nuclear
> policy of mutually assured destruction. They have to keep buying
> dollars in order for Americans to afford the products spewing out
> of their factories while we continue float ungodly amounts of debt
> to prop up our broken economy and assuring our slow growth for the
> next two decades punctuated by inflation once we do start growing.