Advancing a Free Society

Beijing faces its own economic shift

Wednesday, January 19, 2011

China is the world’s second or third largest economy — it depends on whether you count Europe as a single economy. Beijing’s systemic impact is large and rising, and its relationship with the United States is crucial to global stability and growth.

Washington politicians are now making demands about what they regard as Beijing’s uncooperative actions. But Beijing has a far different viewpoint. China is facing a complex set of economic structural changes. Success in navigating this could determine its future growth.

On the industrial – or supply — side, this is a middle income transition. In this process, rising incomes make labor-intensive manufacturing industries uncompetitive globally. Those sectors are likely to decline and, eventually, disappear. But in China’s case, they are more likely to move inland, away from the high income coastal areas, then to countries at an earlier development stage.

Continue reading Michael Spence at POLITICO…

(photo credit: Stuck in Customs)