Reports like this are nearly worthless. All Pwc is doing is taking today's trend and extending it out. Doing this ignores countless things. For instance, what about the fact that China's population is aging? What about potential energy shortages. I also disagree with your assertions that factories will not leave China for cheaper places. It is already starting to happen as some have left for Vietnam. I am actually quite bullish on China, but not THIS bullish, and certainly not to the point that I am willing to ignore every potential slowing mechanism.
This ignores the probability that war will in some way happen to involve Japan/China/some other countries. Looking at demographics/gender distributions in Asian countries, there may be a shortage of females relative to young males. This will probably impact the future as well.
Since much of China's prosperity is based on exporting goods, China can only prosper when economic times are good. How well was the economic boom of China during the last major recession in the United States?
What happens if the United States enters tough economic times such as when the housing bubble begins to loose some of the boyancy? Who takes up the 40% of excess capacity that China has when it cannot be bought by the Americans?
There's an interesting article about Chinese investment in Vietnam here.
What I read between the lines in the article is that there's an enormous difference in the reasons underlying Chinese business moving to Vietnam and American business moving to China. American CEOs, ably assisted by the neocons, have moved not only the industrial base of America but also its high-tech industries to China. China benefits greatly from such moves, but in America only the wealthy CEOs benefit. The transfer of American industry to China is a sign of economic desperation, not investment. In contrast, China's transfer of small industries to Vietnam is true investment and results from Chinese economic growth, not decline. For instance, they move industry to Vietnam to manipulate quotas and trade balances. China is not being economically harmed by investing in Vietnam; but the loss of jobs, the decline of a skilled workforce, and the trade deficit brought about by American companies moving to China are harming the US. Moreover, in 2004, the salaries of workers in Chinese state-owned enterprises rose 19% and for the first time exceeded those in foreign companies. I don't know of any American workers enjoying such salary hikes unless they're the alpha male at a corporation moving work to China.
Considering China's economic track record of late, I think there's a greater chance of underestimating their future rather than overestimating it. The only factors I can see that might slow China's growth are the same ones that will affect all nations, such as global warming and diminishing energy supplies coupled with increased demand.
Can U.S. houses be built in China? I don't know what the economics would be, but I could see panel-built houses being at least partially built offshore. Build the walls (complete with windows, doors, etc.), roof, and floor panels in China. Then ship them to the US, truck them to the site, and throw the house up on a foundation in a couple of days.
In my small Iowa town houses are staying on the market for as long as a year. A house I used to rent has been on the market for five years! I assume the owner can't get out from under at a price that will sell the turkey.
House auctions are becoming more common as people become desperate to sell. Usually, it's an open house for a few weeks, then a public auction.
http://tinyurl.com/fofrn
March 03, 2006
STRATFOR on China's Growing "Maritime Morass"
by Joe Katzman at March 3, 2006 05:35 AM
Maybe China will continue on it's path, but there appears to be other possible obsticles.
All I can say is that in the past year nearly every house or apartment unit in my home city is now for sale or for rent, with no buyers or renters. I have not seen this in 20 years of living here.
Mansions, real old-time mansions, that before were not even available to the lower classes are now for sale to anyone who has the money to buy them. It is getting really scary with all these for sale signs going up in every third yard or so.
Several things: Japan needs USA markets because of relatively smaller population base. China has big population. We keep forgetting this salient point! It dwarfs America's potential population.
If China sells jets and cars to the world, they will prosper selling everything else to themselves.
And THIS IS THE PLAN. I watched the Chinese leadership develop this long range plan (which they won't tell us about, naturally!).
"factories working at full speed with motivated, fast moving workers"
Isn't that the sort of thing unions are supposed to prevent?
"Factories with a sullen, slow moving, often overweight workforce that feels hard labor stinks"
OK - there's your union shop!
the vast bulk of our population is that way and unions are what? 7%?
Commenting by HaloScan
