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Does China’s Rise Spell America’s Decline?

In one of his presentations on the importance of infrastructure, Tim James -- the director of research at the Seidman Institute (and project director for AIC's infrastructure study) -- pulled up a slide with a picture of a beautiful, new, modern-looking freeway and a road sign that, according to James, read "Build it and they will come."

I always figured that Tim was taking creative license to illustrate a point.  But then I heard that China has built brand new freeways to previously-rural areas where only a very small minority of the population drives a car, and an even smaller minority actually owns one.  Still, I thought that was another case of exaggerated anxiety about the "rise" of China.

But, as they say, the third time's a charm, so when I heard Jim Owens, Caterpillar's chairman and CEO, said this week that China will have a higher-quality infrastructure than the U.S. in 10 years, I thought maybe all of this hype about China's new, modern, beyond-fit-for-purpose infrastructure really is more than just hype.

Maybe it's been willful disbelief on my part, because if China's infrastructure will indeed best our own in just a decade, that's something about which we should be very alarmed.  Why?  Because, as Owens said, infrastructure is the "backbone" of our competitiveness.

I've talked before about the "rise" of China and I want to make it clear that I'm no xenophobe, and I wholeheartedly reject the notion that globalization is a zero-sum game in which China's win is America's loss.  On the contrary, I take the view that the "club" of economically developed nations can have as many members as there are countries in the world and, in fact, that the more members there are, the better off everyone is.

But that absolutely doesn't mean the U.S. can sit on its laurels.  A friend this morning told me that in a speech yesterday Kai Ryssdal, the host of Marketplace by American Public Media, said that global trade is an incentive -- I would say imperative -- to "up our own game," to raise our levels of innovativeness and to improve our primary education system so that we don't lose as China wins.

I wasn't really planning on writing about the passage of Proposition 100 but it only makes sense to say here that the additional ~$1 billion it will generate each year over the next three will allow the state to preserve what's left of funding for Arizona's education system (K-12 and universities) - which is a very good thing for the state, as far as competitiveness is concerned.

I wrote two months or so ago about the benefits of global trade and what the U.S. must do to make sure we get our share of those benefits.  While they've attracted some readers, the level of interest wasn't near what it was for my post about, say, the decimation of the Arizona Department of Water Resources or the economic impact of the Proposition 100 sales tax increase

But maybe it's not just me -- Caterpillar's Jim Owens said that even policymakers in Washington, D.C. show little interest in discussing the nation's global economic competitiveness.

Why, I have no idea.  With China's GDP growing at 9%, the average GDP of emerging markets rising at 6%, and the United States' GDP growth at 3-3.5%, I don't see how we can possibly afford to not talk about economic competitiveness, and how we can possibly afford to not work to improve our infrastructure, our business climate, and our schools so that we don't get left behind as China and other emerging economies continue to rise.

So I'm going to keep talking about it, and I hope you'll join me.  What do you think the U.S. and Arizona should be doing to retain and attract businesses that will maintain and improve our competitive edge in the global economy?  Write a comment below -- no registration required.

Written on Thursday, 20 May 2010 13:43 by Gary Yaquinto

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