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After 600-year slumber, China's wide awake: the Western world has had a 600-year breathing space, but that is over. The other engine of the world economy is here to stay.

Article Excerpt
During the time of the Ming Dynasty, 1405 to 1433, China was in the midst of an enormous thrust into the world. They mounted some 60 maritime expeditions all around the world with ships 400 feet long--ships much larger than the Pinta, Nina and Santa Maria--that were navigated by magnetic compasses with upwards of 25,000 men on each expedition. They got as far as Mecca. China at the time was the most dominant power in the world. They felt an inward threat from the Mongols, who began to invade, so they stopped the expeditions and looked inward.

The Western world has had a 600-year breathing space, but that is over. The other engine of the world economy is here to stay.

Let's look at the Chinese dragon. China has the largest population in the world, but India will overtake China by 2035. China had an economy valued at $1.4 trillion in 2003, compared to the U.S. economy of $10.4 trillion. They are growing, not at 3 or 4 percent like the U.S., but on the order of 9 percent. They have GDP per capita of nearly $1,100, up to five times more in cities like Shanghai.

From 1980 to 2003, China grew at almost 9 percent per year. In terms of the composition of the economy, 51 percent of China's economy derives from industry and construction activities, compared to about one-seventh of the U.S. economy.

It took China only 10 years to double its national income--faster than any other country in modern history, even faster than Korea. China has grown over eightfold since it re-emerged on the world scene in 1978, two years after the death of Mao Tse-Tung. With the emergence of Deng Xiaoping, they started opening their markets to the world.

So what's been driving the Chinese dragon? First, China moved away from Marxism and Leninism and the proletariat means of production and moved toward privatization and the profit motive. China had 300,000 state-owned enterprises, most of which were losing money and were nonproductive. They worked more as a social welfare network than an economic engine.

Deng Xiaoping and his successors recognized that in order to get rich and be glorious, they'd have to bring in market forces. So a decline in state-owned enterprises began, from 300,000 down to about 101,000 mostly larger and more strategic companies in areas such as steel, autos and electronics.

China's was a peasant culture in 1949. There has been a large influx of low-cost labor from the countryside into the cities. About 38 percent of...

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