If there was any doubt that China is a force to be reckoned with that doubt was erased with this week’s latest economic figures. China has now surpassed the UK to become the world’s 4th largest economy, falling behind the US, Japan and Germany. Within a few years, China with a population of over 1.2 billion will possess the world’s largest economy.

Since 2003, China’s growth rate has averaged 10% per year, which is down from its peak levels in the 1990s. In practically every field Chinese industry has prospered and businesses continue to flock to China in the hopes of exploiting that burgeoning market. With China’s rapid expansion, coupled with news of a growing trade surplus with the United States, American lawmakers have spoken about a loss of American jobs due to increased Chinese competition. While China’s growth should raise concern in America, the concern should not be over China as a threat, but over America’s increasing inability to compete on a global scale. This failure is mirrored in the fact that American students lag behind most of the industrialized world with regarding academic skill, given the lackluster state of American education, it should come as no surprise that American industry is fining it difficult to compete as well.

In a country where over half of high school seniors in LA County can’t pass a 9th grade algebra skills test, what hope is there to lead and innovate in various high tech fields? Is China to blame for our trade deficit with that nation? Is the devaluation of the Yuan, affecting our trade imbalance with that nation? Hardly and empirical evidence will support that claim. Devaluation may have some minor affect, but it is hardly the cure-all American politicians would have us believe, just as devaluation has nothing to do with our trade imbalance with Japan or Germany. America’s trade imbalance and any subsequent loss of American jobs is directly attributable to complacent industries and workers. These industries have failed to anticipate changes and adapt, they have failed to meet consumer demand and failed to produce at maximum efficiency with minimum costs.

Not all American industries are reeling from Chinese competition. Companies like Microsoft, IBM, Kodak and Motorola are dominant in their fields not only at home but abroad as well. Indeed, even the faltering GM is the number one carmaker in mainland China with 18% marketshare, recently surpassing VW, highlighting the fact that US firms can compete anywhere anytime. Why is it that a company like GM can consistently loose marketshare in the US while gaining in a fiercely competitive market like China? For the same reason that any other company succeeds or fails. In China, GM has gone to great lengths to understand the Chinese market giving consumers a product they want and not at exceptionally reduced rates, in fact, the average Buick sold in China, sells for 50% than its American counterpart. Also in China, GM is not burdening with high production related costs. This GM experienced has been repeated in India where sales are up by nearly 20%.

Rather than blaming China for our woes, we should look to the Chinese market as a model for reform in America. Rather than looking for foreign scapegoats, we as Americans should highlight the real problem plaguing our industry, that being complacency. We must also address a growing cultural phenomenon that will prove devastating for future American business endeavors: the ongoing decline in the value of, appreciation for and progress of education in this country. Then and only then will American industry be able to compete as they clearly can.
http://business.timesonline.co.uk/article/0,,13132-2137778,00.html