In China, Children of the Rich Learn Class, Minus the Struggle

[jk]

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September 22, 2006
In China, Children of the Rich Learn Class, Minus the Struggle

By HOWARD W. FRENCH

SHANGHAI, Sept. 21 — Every weekday this summer, Rose Lei drove her daughter, Angelina, 5, to a golf complex at the edge of central Shanghai for a two-hour, $200 individual lesson with a teaching pro from Scotland.

But now that the school year has started, little Angelina will have to cut back on the golf, limiting herself to weekend sessions at a local driving range. In addition to her demanding school schedule, she will be attending private classes at FasTracKids, an after-school academy for children as young as 4 that bills itself as a junior M.B.A. program.

Ms. Lei, 35, a former information technology expert and the wife of a prosperous newspaper advertising executive, is part of a new generation of affluent parents here who are planning ways to cement their children’s place in a fast-emerging elite.

A generation ago, when people still dressed in monochromes and acquiring great wealth, never mind flaunting it, was generally illegal, the route to success was to join the right Communist Party youth organization or to attend one of the best universities.

Now the race starts early, with an emphasis not on ideology but on the skills and experiences the children will need in the elite life they are expected to lead. In addition to early golf training, which has become wildly popular, affluent parents are enrolling their children in everything from ballet and private music lessons, to classes in horse riding, ice-skating, skiing and even polo.

The intense interest in lifestyle training speaks not just to parents’ concern for their children’s futures but also to a general sense of social insecurity among China’s newly rich.

“These people are rich economically but lacking in basic manners, and they are not very fond of their own reputation,” said Wang Lianyi, an expert in comparative cultural studies at the Chinese Academy of Social Sciences, in Beijing. Of the 35 million Chinese who traveled overseas last year, he said, many were shocked to discover that they were often viewed as having bad manners.

To address that, some of the newly affluent, like Ms. Lei, take their young children for extended stays overseas. London and New York are popular choices, because the children can get a head start on speaking Western-accented English.

Others are signing up for finishing schools popping up in China, which promise to train youngsters how to become proper ladies and gentlemen in the highest Western tradition.

The best known of these programs is run by a bluntly spoken Japanese woman, June Yamada, who charges about $900 for a two-week course that includes a brief stay at a five-star hotel here. Teenagers must bathe before dinner, take afternoon tea, wear formal dress and relearn how to walk, how to eat, how to dance and how to engage politely with members of the opposite sex.

“I don’t just teach them what to do and what not to do, I teach the girls how to be women, and the boys how to be men,” said Ms. Yamada, a former fashion writer who wrote a popular book on manners here. “We’re probably the most expensive school in Shanghai, but nobody is complaining and they keep coming back, so we must be doing something right.”


jk comment: the schiff scenario depends on [mostly] asians picking up on consumption while americans are squeezed. looks like there are plenty of early-adopters in china. they will set the tone for increased consumption by a [presumably] growing middle class.

[Ann]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

jk comment: the schiff scenario depends on [mostly] asians picking up on consumption while americans are squeezed. looks like there are plenty of early-adopters in china. they will set the tone for increased consumption by a [presumably] growing middle class.

Hey, jk. What's this "Schiff Scenario" stuff? Haven't the guys at itulip been saying this for years? Shciff, et al... plagiarists, the lot of them, I tell ya! I was digging around and couldn't find everything I remember reading about this on itulip over the years. (This site needs to do a better job of making old content easier to find.) I did find this from March '06...

http://www.itulip.com/pasttopstories.htm#March_2006

"iTulip AntiSpin: Let's see if we got this straight. Treasuries are going to rally, and low U.S. long term interest rates that once fueled the housing bubble will fall again from recent highs, because Japan will start to buy more U.S. Treasury debt again in April at the beginning of their new fiscal year. They will buy even as the U.S. economy is slowing, thus driving yields lower, even though the Bank of Japan doesn't need the import U.S. inflation as Japan's 15 year deflation is over. As the U.S. economy slows, dollar demand falls, putting further pressure on the dollar and interest rates. Rather than a set-up for a U.S. treasury rally, this looks more like a formula for less foreign lending to the U.S., higher versus lower U.S. interest rates and more not less pressure on the housing market and the U.S. economy. The essential paradox of the U.S. economy's dependency on foreign borrowing: the less foreign lenders need U.S. financial assets, such as Japan's recently diminished need for U.S. treasury debt, the more the U.S. needs to borrow to fund fiscal and trade deficits. The macroeconomic virtuous circle may become a vicious cycle."

Ka-Poom Theory going back to 1999: a decline in US consumption makes the USA less interesting as a Chinese/Japanese/Korean company town. Why lend us the money to buy their stuff and hold down mortgage rates to free up $$$ for buying Asian imports when they can buy and sell goods from each other, trade with Russia, EU, LatAm, etc. How did this old itulip idea become the "Schiff Scenario"? Sheesh!

[jk]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

Hey, jk. What's this "Schiff Scenario" stuff? Haven't the guys at itulip been saying this for years? Shciff, et al... plagiarists, the lot of them, I tell ya! I was digging around and couldn't find everything I remember reading about this on itulip over the years. (This site needs to do a better job of making old content easier to find.) I did find this from March '06...

http://www.itulip.com/pasttopstories.htm#March_2006

"iTulip AntiSpin: Let's see if we got this straight. Treasuries are going to rally, and low U.S. long term interest rates that once fueled the housing bubble will fall again from recent highs, because Japan will start to buy more U.S. Treasury debt again in April at the beginning of their new fiscal year. They will buy even as the U.S. economy is slowing, thus driving yields lower, even though the Bank of Japan doesn't need the import U.S. inflation as Japan's 15 year deflation is over. As the U.S. economy slows, dollar demand falls, putting further pressure on the dollar and interest rates. Rather than a set-up for a U.S. treasury rally, this looks more like a formula for less foreign lending to the U.S., higher versus lower U.S. interest rates and more not less pressure on the housing market and the U.S. economy. The essential paradox of the U.S. economy's dependency on foreign borrowing: the less foreign lenders need U.S. financial assets, such as Japan's recently diminished need for U.S. treasury debt, the more the U.S. needs to borrow to fund fiscal and trade deficits. The macroeconomic virtuous circle may become a vicious cycle."

Ka-Poom Theory going back to 1999: a decline in US consumption makes the USA less interesting as a Chinese/Japanese/Korean company town. Why lend us the money to buy their stuff and hold down mortgage rates to free up $$$ for buying Asian imports when they can buy and sell goods from each other, trade with Russia, EU, LatAm, etc. How did this old itulip idea become the "Schiff Scenario"? Sheesh!

now, now. ka-poom forecasts a trajectory for the u.s. economy. the question that has stayed with me is how a u.s. in the midst of ka-poom will affect the rest of a globally integrated economy. or, alternately, how the rest of the globe will function in the face of an ever more screwed up american economy.

schiff painted a [relatively] optomistic picture of demand picking up abroad. a somewhat less optimistic version would have demand picking up in other parts of the globe following a mild global recession. the gloomier alternative is that we have a severe global recession and possibly global deflation.

these issues of global demand and global monetary and fiscal policies have really not been addressed, to my knowledge, in ka-poom discussions. how will the boj act? how about the pboc? not just in terms of whether they continue to support the u.s. dollar, which they will pull back from doing, but in terms of their own domestic economies? u.s. equities will go down the tubes. what will happen to the nikkei, the emerging markets? and over what time course?

schiff makes a start at trying to analyze those questions in a manner consistant with ka-poom theory. that's precisely what makes his story interesting.

[Ann]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

schiff makes a start at trying to analyze those questions in a manner consistant with ka-poom theory. that's precisely what makes his story interesting.

Sorry. I get defensive because I see all these guys saying a lot of the same stuff but without giving credit. I write a lot and it happens to me all the time. One of the things I like about EJ is that he always credits sources if an idea is someone else's. Most folks don't bother. He's also consistent.

Anyway... and EJ chime in here... I think EJ says that in a crisis the US is used to behaving in a unilateral fashion. Remember the golden rule... who has the gold makes the rules! That worked when the US was a creditor. But who has the "gold" now? The creditor nations. They will make the rules. They will set the terms. It won't be a crazy set of demands ala the IMF and Argentina in the late 1990s or the victors of WWI vs Weimar Germany... the creditors don't want to see the US go through a hyperinflation. On the other hand, there will be LOTS of political pressure here at home. I'm thinking, the US might be left with the military superiority card as the play. But I don't want to go there. It's hard to see cards in the US hand that don't take us someplace awful. You're a headshrinker, right? Am I being neurotic about this? We can take it offline for a session. Just kidding.

[jk]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

Remember the golden rule... who has the gold makes the rules! That worked when the US was a creditor. But who has the "gold" now? The creditor nations. They will make the rules. They will set the terms. It won't be a crazy set of demands ala the IMF and Argentina in the late 1990s or the victors of WWI vs Weimar Germany... the creditors don't want to see the US go through a hyperinflation. On the other hand, there will be LOTS of political pressure here at home. I'm thinking, the US might be left with the military superiority card as the play. But I don't want to go there. It's hard to see cards in the US hand that don't take us someplace awful.

i see things the same way. you'll have the only military superpower in terrible economic pain. that sounds like a recipe for military adventurism.

hey, doesn't iraq already fit that model? but given the iraq experience it's hard to picture a groundswell for more of the same. on the other hand, it might be possible to get support, under the right conditions, for knocking out chavez in venezuela. and don't they have oil too? of course, we can always blame canada! [and they also have oil.]

more seriously, the nazis used the military humiliation of wwi and versailles to pump things up during the interwar period. it's interesting that you bring up the analogy of the victors of wwi v weimar germany, if only to dismiss it.

with a [still more] weakened u.s. i can imagine the already resurgent russia becoming more assertive especially in its "near abroad" to the west - e. europe and the baltics - and to the s. - the caucasus [with its oil and oil transit role]. also, china will have an exacerbated problem with its historic malinvestment and a huge labor force still occupied in the state operated enterprises, plus - with the u.s. consumer tapped out - an overly large consumer production sector. the chinese will certainly be tempted to pump up a nationalist, militarily oriented response to these conditions. they can assert themselves vis a vis a variety of territorial disputes with vietnam, russia and japan. and of course there's always taiwan.

You're a headshrinker, right? Am I being neurotic about this?

i don't think these worries are misplaced. but i'm a chronic pessimist. there is data that pessimists have a more realistic, accurate view of the world, but optimists are happier. what a choice!

schiff makes a start at trying to analyze those questions in a manner consistant with ka-poom theory. that's precisely what makes his story interesting.

i've tried moving a couple of threads in the direction of "those questions" but without success. i even started a new thread on ka-poom + schiff, but it didn't generate much interest. i think "those questions," about the rest of the globe, are really, really important, and in practical terms have relevance for an appropriate investment stance.

[BK]

Re: Observations of China - from friends

We have friends who visited China this past summer. Our friend came to the United States 25 years ago for University.

Her last trip (home) to China was Ten years ago. Today Automobiles have replace the throngs of bikes that once filled the street. General Motors automobile are the Number one status symbol for Chinese people in this Region of China (the Buick is the IT car) .

The Fields aound towns that once allowed communities to be self sufficient in growing food have been built upon. During the last ten years China has become a net importer of food (they import a lot of US grown grain products).

So, there is good news for the US economy with China embracing consumerism.

[jk]

Re: Observations of China - from friends

We have friends who visited China this past summer. Our friend came to the United States 25 years ago for University.

Her last trip (home) to China was Ten years ago. Today Automobiles have replace the throngs of bikes that once filled the street. General Motors automobile are the Number one status symbol for Chinese people in this Region of China (the Buick is the IT car) .

The Fields aound towns that once allowed communities to be self sufficient in growing food have been built upon. During the last ten years China has become a net importer of food (they import a lot of US grown grain products).

So, there is good news for the US economy with China embracing consumerism.

we, the developed superpower, send them, the emerging market, grains and raw materials and they sell us manufactured goods! didn't that used to work the other way?

[lobodelmar]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

Increasing consumerism in China is not necessarily a good thing -- they are also competing with us to purchase those goods. JK's comment alluding to how US firms may send raw materials and they send finished goods is only partially right...Luckily for all of us, we are so interdependent that there cannot be a complete breakdown of trade relationships, otherwise we would be pretty much SOL. For now at least, the Chinese need our consumers so that the finished goods are actually worth making.

The thing that bothers me most is that the US economy increasingly seems to be reliant on the financial industry, whic seems to result in wealth generated without value being added. And if all the talk on this board is correct, and the creditor nations start pulling back, what is the US going to be able to do to stop the train rolling backward down the hill? Play with interest rates? Hardly. Invade someone? As you've alluded to, yes, that is possible. Is war with China possible in the future? Possibly.

[medved]

Re: Observations of China - from friends

we, the developed superpower, send them, the emerging market, grains and raw materials and they sell us manufactured goods! didn't that used to work the other way?

No. China is not only emerging market, it is also a communist state. They will never give their farmers enough freedom to develop productive agriculture. It is the same problem the former USSR always had. No matter modernization, liberalization, sputink and military power, their agriculture never worked. The small farmers were wiped out (literally) as a political class. The big farmers are unthinkable under communist rule (even liberalized one). So, they are guaranteed to be a net importer in this sector of the economy.

m.

[EJ]

Re: Observations of China - from friends

No. China is not only emerging market, it is also a communist state. They will never give their farmers enough freedom to develop productive agriculture. It is the same problem the former USSR always had. No matter modernization, liberalization, sputink and military power, their agriculture never worked. The small farmers were wiped out (literally) as a political class. The big farmers are unthinkable under communist rule (even liberalized one). So, they are guaranteed to be a net importer in this sector of the economy.

m.

China is a totalitarian capitalist state, another reason why Chomsky's admiration for it confuses me. Think Benito Mussolini's Italy, but in place of a charismatic dictator, a massive state bureaucracy. You are free to make money, free to buy just about anything you can afford, free to engage in just about any kind of entertainment you can think of, and there your freedom ends.

To your point, why can't the CCP develop domestic agriculture into a modernized, large scale, efficient capitalist enterprise, financed and controlled by the state, the same as it has other industries in China? Why does that risk creating a powerful political class that threatens the CCP? Can't it operate by the same work-or-starve rules non-application of labor laws and threat of imprisonment that keeps the present order elsewhere?

[jk]

Re: In China, Children of the Rich Learn Class, Minus the Struggle

don't the chinese also have a big-time water shortage problem?

[medved]

Re: Observations of China - agriculture and the central power

China is a totalitarian capitalist state

Respectfully disagree. It is ruled by the same old communist oligarchy. The real power has never been taken from them. It's just they decided to give their people some limited freedom. Russia is in a similar situation, except it follows a slightly different trajectory. In both cases the communist plutocracy is untouchable. It still decides, how much freedom their people are allowed to have. The freedoms they are given still follow the principle "everything not explicitly allowed is forbidden". Very similar to the NEP experiment initiated by Lenin in 1920s. At certain point the plutocracy can flip the switch back. As we know, in the case of NEP it was done very quickly.

another reason why Chomsky's admiration for it confuses me.

Nothing confusing here. Mr. Chomsky sees China for what it is - a communist state. Precisely the kind of political system he likes.

Think Benito Mussolini's Italy, but in place of a charismatic dictator, a massive state bureaucracy.

Unfortunately, I don't know much about Mussolini's Italy, but I don't think it is a good comparison. It seems to me, Mussolini never tried to destroy the productive farmers in his country. Precisely what Russians and Chinese tried and accomplished (collective farms in Russia, cultural revolution in China). The problem is, productive peasants are much like the soil they work. It takes generations to create, easy to destroy and impossible to replace.

To your point, why can't the CCP develop domestic agriculture into a modernized, large scale, efficient capitalist enterprise, financed and controlled by the state, the same as it has other industries in China?

Nobody ever succeeded in developing efficient agriculture this way. In the West it happened naturaly, the same way it happens in any other industry - more effective farms survive, less effective go out of business or get swallowed by bigger farms. Of course there is a lot of government meddling and corruption, but it happens in any industry. OTOH, there is no record of successful agricultural development *driven* by a government.

Why does that risk creating a powerful political class that threatens the CCP?

Because successful small farmers are one of the biggest enemies of the central communist power. They are the most difficult sector of the economy to industrialize and control.

Can't it operate by the same work-or-starve rules non-application of labor laws and threat of imprisonment that keeps the present order elsewhere?

No. These laws can be effectively applied by a wealthy landowner, but not by the state (again, both China and Russia are good examples of it). Murdering and starving to death millions of people never improved their agriculture, only made it worse.

Think about it, China imports grains from the US, but their farmers are still poor as mice. Why don't they get higher prices for their stuff? Because their government suppresses the prices by using imports. So much for "free economy".


P.S. One more reason to invest in the US agriculture, when dollar tanks.

[EJ]

Re: Observations of China - agriculture and the central power

Respectfully disagree. It is ruled by the same old communist oligarchy. The real power has never been taken from them. It's just they decided to give their people some limited freedom. Russia is in a similar situation, except it follows a slightly different trajectory. In both cases the communist plutocracy is untouchable. It still decides, how much freedom their people are allowed to have. The freedoms they are given still follow the principle "everything not explicitly allowed is forbidden". Very similar to the NEP experiment initiated by Lenin in 1920s. At certain point the plutocracy can flip the switch back. As we know, in the case of NEP it was done very quickly.



Nothing confusing here. Mr. Chomsky sees China for what it is - a communist state. Precisely the kind of political system he likes.



Unfortunately, I don't know much about Mussolini's Italy, but I don't think it is a good comparison. It seems to me, Mussolini never tried to destroy the productive farmers in his country. Precisely what Russians and Chinese tried and accomplished (collective farms in Russia, cultural revolution in China). The problem is, productive peasants are much like the soil they work. It takes generations to create, easy to destroy and impossible to replace.



Nobody ever succeeded in developing efficient agriculture this way. In the West it happened naturaly, the same way it happens in any other industry - more effective farms survive, less effective go out of business or get swallowed by bigger farms. Of course there is a lot of government meddling and corruption, but it happens in any industry. OTOH, there is no record of successful agricultural development *driven* by a government.



Because successful small farmers are one of the biggest enemies of the central communist power. They are the most difficult sector of the economy to industrialize and control.



No. These laws can be effectively applied by a wealthy landowner, but not by the state (again, both China and Russia are good examples of it). Murdering and starving to death millions of people never improved their agriculture, only made it worse.

Think about it, China imports grains from the US, but their farmers are still poor as mice. Why don't they get higher prices for their stuff? Because their government suppresses the prices by using imports. So much for "free economy".


P.S. One more reason to invest in the US agriculture, when dollar tanks.

An interesting perspective...

What to Do with All the Farmers?
By Spengler

Agriculture employs half the world's population outside the advanced countries, where only one person in 40 still farms. In the United States, the ratio is one in 50. By prevailing standards of technology, 1.25 billion workers are redundant, and nearly 3 billion people (including their dependants) stand to be displaced. [1] The good news is that Chinese and Indian farmers comprise three-fifths of the world's total, and have good prospects of eventual integration into the world economy. But that leaves more than a billion people at risk, mainly in Africa, Latin America and the Middle East.

Every great advance in productivity of agricultural in history left in the lurch a superfluous population that was ground up in war. The Carolingian Renaissance of the High Middle Ages brought the horse collar, the steel plow, windmills for swap drainage, and three-field rotation. The Teutonic Knights shifted some of the excess population to the Baltic and Eastern Europe, eradicating the local population in the process. The Crusades absorbed more of the surplus, until the Black Death of the 14th century made people scarce again. The Napoleonic Wars dealt with the peasants made redundant by the agricultural revolution of the 18th century, and World War I repeated the exercise a century later.

In his recent book Before the Dawn, Nicholas Wade proposes that humankind has evolved to become more peaceful. On the contrary, the 21st century may produce war casualties on a scale never before seen.

I do not mean to propose a simple theory of war. Nothing foreordains violence as the outcome of economic problems. The United States, Canada and Australia created many more homes for displaced European peasants than the wars of the 19th and 20th century provided graves. Not only Christian America, but communist China and Hindu India have found peaceful means to manage the great transition to city from countryside. But where the bonds of traditional society can be broken only by force, the threat of war on a terrifying scale remains high.

Mexico's present political crisis is a case in point. The left-wing candidate Andres Manuel Lopez Obrador has refused to accept defeat in the recent elections, encamped hundreds of thousands of followers in the capital, and formed an alternative cabinet. Because Lopez Obrador controls the police force of Mexico City, where he was governor, he cannot be chased away, leaving Mexico in a predicament of dual power. The impoverished half of the Mexican people have little to lose, leaving Mexico's long-term prospects doubtful. The United States already has taken in perhaps 20 million economic refugees from its southern neighbor, so many that immigration dominates the political agenda in many states, repeating, as it were, the role the US played with respect to Europe during the 19th century. If the US were to restrict immigration, Mexico's safety valve would close and the political situation might worsen.

During the 1930s, Mexico's post-revolutionary leaders imported Josef Stalin's collective-farm model to keep peasants on the land and out of trouble. [2] This policy left half or more of Mexicans in unrelieved rural misery. Now the lid has blown off the pot.

As Colombian Vice President Francisco Santos told the London Financial Times on September 19, violent crime is the greatest threat to most of Latin America. Caracas is now the world's most dangerous city, despite (or because of) the populism of Hugo Chavez, just ahead of Sao Paolo. The street price of cocaine has fallen from US$250 a gram in the late 1980s to as little as $50 today despite US-sponsored efforts to suppress coca production, because there are too many farmers. Latin American cities already are in collapse and cannot absorb more people from the countryside. Short of starving out several million farmers in Peru and Colombia, there is no way to suppress cocaine traffic. That is the sort of thing Stalin was happy to do, but not George Bush.

Seventeen million Africans, for that matter, have become economic refugees, Der Spiegel reported recently, and many thousands die in open boats or the desert in their attempt to reach Europe.

No peace agreement ever will emerge between Israel and the Palestinians, I believe, because economics should have dispersed the Palestinian population more than half a century ago. Mechanization of agriculture, rather than Zionist political aims, began displacing the rural Arab population in the 1930s, I observed in another location. The Zionist agency bought farms from absentee landlords, displaced the fellaheen engaged in near-subsistence agriculture, and made the land profitable and productive. From an economic standpoint, that is, the Palestinians were Okies, but with no California to go to. This led to the 1936-39 Arab uprising against the British Mandate and Jewish settlement.

Rather than disperse gradually like other agrarian populations, the Palestinian Arabs became wards of the United Nations after the 1947-48 War of Independence. Their numbers surged because of better medical care and nutrition than they previously enjoyed as well as child subsidies. That is why the 700,000 Arabs who fled or were driven from Israel grew into the 4 million "refugees" registered with the UN in 2002. I place the term "refugees" in quotation marks because in no other case has the third generation following a population transfer retained official refugee status.

Despite the best intentions of Shimon Peres and the Israeli socialists, it seems delusional to imagine that any combination of light industry and tourism will provide a livelihood for a Palestine with 5 million inhabitants (including the non-refugee West Bank population). The Palestinian entity cannot exist without subsidies, and it cannot extract subsidies from the West or from the Muslim world without constituting a military threat. The existential choices for Palestinians come down to dispersal or perpetual war.

This bears on the eccentric behavior of Iranian President Mahmud Ahmadinejad, who took the opportunity of his appearance before the United Nations last week to predict the early appearance of the Mahdi. A third of Iran's population remains in agriculture, according to the US Central Intelligence Agency's World Factbook, but this third produces only a tenth of the country's gross domestic product. Iran's farmers and the urban jobless (unemployment officially is estimated at more than 11%) form a hard core of support for Ahmadinejad, that is, a constituency with no prospects and nothing to lose.

Again, I do not propose an economic explanation of Iran's intransigence on the matter of nuclear-weapons development. It is not Iran's economic misery as much as the mortal wound this misery deals to traditional society that motivates Iran's leaders. Islam constitutes the revenge of traditional society against encroaching empires, I have argued (see Sistani and the end of Islam, September 8), and the dissolution of agricultural communities as well as the formation of an immiserated urban proletariat threatens the existence of Islam. Modern Islamism responds not so much to the economic problems as to their expression in the form of a crisis of faith.

The dreadful circumstances of Latin America, Africa and the Middle East set China's enormous accomplishment in relief. Each year China shifts between 12 million and 15 million people to cities from the countryside - that is to say, it manages migration on the scale of the aggregate African exodus to Europe every year and a half. Nothing like this ever has happened in history, surely not in an orderly fashion. As I wrote last year (China must wait for democracy, September 27, 2005):

In the mere span of five years between 1996 and 2000, China's urban-rural population ratio rose to 36:64 from 29:71, and the UN Population Division projects that by 2050, the ratio will shift to 67:33 urban. Chinese cities, the UN forecasts, will contain 800 million people by mid-century. By 2015, the population of cities will reach 220 million, compared to the 1995 level of 134 million.

Well over half a billion souls will migrate from farm to city over the space of half a century.

That is both good and bad news for the rest of the world. China's success demonstrates that peaceful population transfers are neither impossible nor an expression of Western values. But China's capacity to employ half a billion migrants depends on a ferocious competitiveness in global manufacturing that sets an extremely high threshold for new market entrants. Chinese industry is so efficient that prospective competitors will enter the world market only with extreme difficulty.