China may be on brink

Why can’t the United States be more like China? The question seems to hang in the air anytime the American economy’s current problems enter a conversation.

Millions of us are out of work. Businesses are failing left and right. Homeowners are getting evicted in droves. But China is just humming along.

We learned this week that China has surpassed Germany as the planet’s largest exporter. Chinese shoppers now buy more cars in a year than Americans do. (Really.) Next, China will sprint past Japan and become the world’s No. 2 economy. You should not be surprised to learn that the United States remains No. 1. But I could forgive some doubts because of all the ills we’re experiencing.

Stimulus money

China’s economy, you also should know, has pretty much ignored the financial crisis. China’s leaders pumped billions of stimulus money into the economy, just as ours did. And they told the bankers to lend more, as did ours. A key difference lies in the way the bankers reacted. Here, they shuffled their feet, said they’d get to it and then didn’t. In China, bankers do pretty much what Beijing says. Despite all the economic and market reforms, China’s remains mostly a command economy. Political power still directs resources there.

These events, and China’s patting itself on the back, were front-page material in The New York Times last week.

Its point was that many worry China can’t keep this going, that it’s going to end badly somehow and that we’ll all feel the pain. The Times’ editorial page went further, as have many others, to blame our current economic problems partly on China’s currency policies.

So, why can’t the United States be more like China?

Most Americans wouldn’t stand for it, thank goodness. There’s great risk in the top-down economic system that is working so well for China right now. And you need only look at one of China’s neighbors to see how badly it can turn out.

Consider North Korea’s own currency move about a month ago. It decided to issue new money (missing two zeros that used to be on each bill) amid rampant inflation. Decisive action. And devastating.

Leaders allowed each North Korean to exchange only about $150 of old cash and savings accounts into new money, according to The Wall Street Journal. Everything beyond that became just paper. It was the heart of the plan.

North Korean leaders wanted to wipe out the unofficial economy operating in the shadows of its state-run show. Pyongyang continues to move in the wrong direction even as China’s miracle unfolds next door amid greater openness and consumer choice. This isn’t to say China’s leaders will reverse course and head down North Korea’s path. But what’s to stop them?

My question isn’t why can’t the United States be more like China. I wonder how much more China will become like the United States.

X Mark Davis is a columnist for the Kansas City Star. Distributed by McClatchy-Tribune Information Services.