The Chinese century: Will China surpass the United States as the world's economic reader?

• Author: Fishman, Ted C.
• Position: International

China used to be far away, the country at the bottom of the world. Certainly that is how it must have seemed until recently in Pekin, Ill., a city of 34,000 residents that in 1830 took its name from China's capital, Peking (now called Beijing). As a reminder of this historical connection, Pekin's high school teams are called the Dragons.

Back in 1830, the residents of Pekin thought that their town was directly opposite Beijing on the globe. These days, however, Pekin is connected to China not just by an imaginary hole through the earth, but by the world's shipping lanes, financial markets, telecommunications networks, and the globalization of consumer appetites.

Farmers around Pekin were expecting to sell China half a million metric tons of corn last year. Excel Foundry and Machine, a local factory, has relocated 12 percent of its production to China to keep from losing business to China's huge, cheap foundries.

Even Pekin's new Wal-Mart Supercenter spreads China's influence around town. Because 12 percent of China's exports to the U.S. end up on Wal-Mart's shelves, the company exerts tremendous downward pressure on prices. That means nearly every shopper in Pekin will save money at Wal-Mart and profit from the retailer's China connection. But this same connection may also help Wal-Mart drive other local stores out of business.

Pekin is not so different from anywhere else in America. China is everywhere these days, influencing our lives as consumers, providers, citizens. It has the world's fastest changing large economy. And it is full of contradictions: China is at one moment our greatest threat, the next our friend. It siphons off American jobs, but it lowers prices and helps keep U.S. inflation down. China's industrial might steals opportunities from the developing world, even as its booming economy pulls poorer countries up.

SOARING GDP

Since economic reform began in 1978 under former leader Deng Xiaoping, China's gross domestic product (GDP)--the value of all goods and services produced in one year--has quadrupled. Its economy is now the world's sixth largest, with a GDP of around $1.4 trillion. (The U.S. ranks first, with a GDP of $10.9 trillion.) China is the world's third-most-active trading nation, behind the United States and Germany. If any country is going to supplant the U.S. in the world marketplace, China is it.

Mornings at the Wanfeng automotive factory outside Shanghai begin with a neat line of employees doing calisthenics to martial music broadcast over a public address system. The blue-uniformed workers, most of them young men, regularly attend company boot camps run by drillmasters from the...