William Pfaff: Why Beijing's power is less than it seems

Exactly what all right thinking people have been saying all along.
China is right now little more than world's biggest subcontractor,
mostly doing very little value addition of its own. It does'nt owns the
technology for 90% of goods it exports, it just assembles them. This
is no way to become a superpower in a hurry. Looking back at the
success of Taiwan, Korea's economic model of 60s, 70s and 80s, the
right path appears to be the OEM vendor based where countries begin at
the base of the value addition by making simple parts that go into
finished products and gradually progressively move on to making more
and more sophisticated components, eventually making the entire
finished product themnselves, like today Taiwan makes 99% of the
world's laptops and Korea makes the cheapest high quality cars. It is a
20-25 year long path which evetually takes nations from a rice paddy
economy to the laptop, car manufacturing economy all the while
benefitting their citizens with higher and higher pay. China has still
got another 20 years to go before it reaches the stage where it *might*
start making finished products itself, but the big big difference is
that its a communist country with a poor institutional system which
might make it harder for it to establish the pre-requisites such as
free flow of capital, transparent laws and fair competition.
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William Pfaff: Why Beijing's power is less than it seems
By William Pfaff TMSI
THURSDAY, AUGUST 25, 2005

http://www.iht.com/articles/2005/08/24/news/edpfaff.php

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