Parallel Universes

Parallel Universes

The U.S. was then, as China is now, a predominantly rural country undergoing a massive shift toward an urban, industrial economy. By the 1850s, the U.S. was en route to becoming the workshop of the world, rapidly churning out cheap yet high-quality textiles, clocks, guns and other goods. The British dubbed this miracle the "American system of manufactures," and it became the envy of the world. Much as China's capacity for producing seemingly endless quantities of cheap goods is now earning it the ire and admiration of other countries.

U.S. commentators complain that China's success has been predicated on chicanery (like the manipulation of the yuan), dubious business practices and wanton disregard for copyrights. In doing so, they echo things that British commentators once said about America's rise, back when New England factories used reverse engineering to mimic the latest Lancashire technological breakthroughs and Dickens complained of making no money from the pirated copies of his novels sold in the country. To use a line often attributed — probably inaccurately — to Mark Twain, history doesn't repeat itself, but it often rhymes. And this is one of those cases.

What of the bubbles that China skeptics flag? Numerous speculative real estate bubbles grew and burst while the U.S. rose. Each time, the economy recovered and went on to grow again at a blistering pace. So too might China's.

And the fundamental contradiction between China's political structure (nominally communist) and its economic structure (largely capitalist)? The U.S. was an extraordinarily different place politically in 1850, but it didn't lack contradictions. It prided itself on devotion to freedom and equality, yet slavery played a pivotal role in its economy, women lacked basic rights and Native Americans were grossly mistreated. Just as the U.S. struggled throughout the 19th century to resolve its contradictions, so will China in coming years.

Read more: http://www.time.com/time/magazine/article/0,9171,2029400,00.html#ixzz14TBwaKgb