ImageOn September 19th the World Affairs Council of Charlotte welcomed Timothy Beardson, author of “Stumbling Giant: The Threats to China’s Future,” for a discussion on the unlikelihood that China will replace the United States as the next superpower.

A native of Britain, Beardson is the founder of the first foreign investment bank to be licensed to operate in China, has had over 35 years of experience working and living in China. In his opening remarks, Beardson boldly counters the widespread prediction that China will “rise to global supremacy” by looking at issues stemming from factors like education, culture, technology, politics, economics, social trends and demographics.

One of the biggest hurdles China faces is its overall demographics. Urbanization is ever increasing, with more women entering the workforce causing people marrying and having children later in life. For many years, China had a growing labor force due to its rising birth rates every year, but since the 1970s there has been a 40 percent decrease in annual birth rate numbers which is now impacting availability of workers and causing an increase in wages.

With employee wages increasing, China is no longer as competitive in low cost manufacturing. “No society in human history has been able to have a sharply falling population, and sustain high economic growth rates,” said Beardson. By 2020 India’s population is set to overtake China thus becoming the most populous country in the world. India will be a bigger competitor in low cost manufacturing with more investors looking to capitalize on the shift and taking business out of China.

Chinese culture tends not to foster innovation and critical thinking, perhaps due to institutional reasons. China’s schools put more emphasis on data retention rather than analysis and “thinking outside of the box.” China does not have a single university in the top 100. Beardson also notes that typically more money is being spent on buildings rather than what is going on inside and improving efficiency. To continue to compete in the global economy, Chinese manufacturing must learn to innovate or risk being left behind.

Beardson challenges the prediction of most for China to become the next superpower with insight, extensive research and experience to say it will not continue its rise to supremacy. With China looking at a possible financial crisis in the near future, it faces many challenges of reform and action to avoid its downfall.

Summary by Michael Mendoza, UNC Charlotte (WAC Charlotte Intern – Fall 2013)

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