**The metamorphosis of China from farmland to factories was fast. In 2000, 30 percent of the world's toys came from China. Five years later it rose to a stunning 75 percent. The nation increasingly dominates manufacturing in industry after industry. Over the last decade, China exported one out of every three pairs of shoes in the world. In auto parts, in just four years, 2001-4, exports rose from $1.3 billion to $9 billion. In 1996, China exported $20 billion worth of computers, cell phones, CD players and other electronic devices. Eight years later China exported $180 billion.
**China's most visible infrastructure project to date has been the building of new roads and highways -- from just 168 miles of express highways in 1989 to an expected 40,000 miles in 2010 and 55,000 in 2020 -- equal to the total length of the entire American highway system.
**Shanghai's skyline is dominated by skyscrapers and cranes. In 1978, Shanghai had just 78 skyscrapers. By 2006, there were 3780 and counting, more than Chicago and Los Angeles combined.
**Over the past quarter century, China's GDP has grown an average of 9.6 percent a year. By contrast, over the same 25 years, India's GDP has grown 5.7 percent and the far larger and more mature US economy by 3 percent.
**Despite the nation's economic gains, the human cost of China's rise has been steep, particularly for the peasants. Building factories often meant lifelong farmers were thrown off land and deprived of their livelihood. Breakneck development has caused terrible pollution. Water is filthy. Horrific, preventable accidents abound. Despite low wages, many factory workers are forced to work overtime long into the night without pay, left unpaid for months at a time, or even locked in factory compounds like prisoners.
**In a 2005 survey by McKinsey & Company of US companies active in China, the companies reported that they bought just 30 percent of the goods they could buy in China, but planned to increase that to half by 2008. Chinese workers have seen incomes go up, but the lion's share of the winnings has gone straight to the foreign companies and foreign consumers who are paying lower prices than they otherwise would. If China exports a shoe that sells for $100 in the US, just $15 of the price stays in China in the form of workers' wages, transportation costs, or other value. American companies keep the remaining . Again, the average laptop exported from China is worth $700, but the Chinese company that makes the computers earns only $15.
** Yet, China's economic growth is sizzling, exports are skyrocketing, skyscrapers are rising. Overnight, China has become an economic powerhouse. The US runs huge trade deficits with China which are still rising.. The European Union too. China is poised to overtake Germany as the world's third largest economy in 2008, having passed the UK to become the fourth largest economy in 2005.
** However, despite trade deficits that alarm the West, a high percentage of China's much ballyhooed economic muscle belongs to foreigners. A large portion of the frighteningly lopsided trade deficit can be traced to goods Western companies make in China, then shipped home for sale. Only 4 of China's top 25 exporters are Chinese companies. Foreign companies and their Chinese joint venture partners produced 88 percent of China's high-tech exports in 2005. In practice, 'Made in China' often really means 'Made by America in China' or 'Made by Europe in China'.
**More than half of China's incredible 10 percent GDP growth comes from government (mainly in infrastructure) and foreign direct investment. If you strip that away, China's growth rate is closer to the American growth rate. Foreign investment which hit $69 billion in 2006, pays mostly for new factories being built in China by multinational corporations or by Hong Kong, Taiwanese or other Asian companies that sell to them. The numbers give China an illusion of strength, but the nation's economy is not as strong as it appears.
**Many of the glorious high rises, shopping malls, apartment buildings, highways, and other infrastructure projects are financial white elephants , paid for by bank loans that aren't being paid back. China's banks are broke. Ernst & Young 'conservatively' estimated that the Chinese banking system had $911 billion in bad loans in 2006, six times the magnitude of the American S&L crisis.
**China's most pressing social problem is the fast widening gap between rich and poor. China's rural population, plus nearly every one over 30, are fast being left behind by more prosperous city dwellers, particularly those living in the booming cities along China's coasts. China's citizens have few rights and little protection from government abuses.. Fair trials remain rare. Prisoners are still tortured. There have been many cases of arbitrary arrests and prisoners being held incommunicado. For 8 years in a row, China has been the world's leading jailer of journalists, according to the Committee to Protect Journalists. There is no such thing as free speech. China employs between 30,000 and 40,000 cyber police to monitor the internet and help with censorship. Sometimes Western internet companies like Yahoo have cooperated with theChinese government resulting in arrests. Google admits it censors itself in China.
**China's political sytem is far more likely than India's to face great tubulence. China's authoritarian political system has many fault lines and could collapse. Diplomats and scholars find India's future easier to predict. They say its central question is whethwer it can stay on its current reform path. Whatever China's future, the world's view of China is likely to be dramatically shaped by Beijing's role as host of the 2008 Olympics.
Courtsey: 'The Elephant and the Dragon: The Rise of India and China and What It Means for All of US' (W W Norton & Company) -Robyn Meredith