China’s per capita income remains only
about $4,000, about 10 percent of America’s. It has a handful of
companies that compete as global brands, the rest satisfying domestic or
regional markets or serving as subcontractors for foreign brands. Its research systems excel at copying or adapting foreign technologies, rather than
innovation. It has one of the highest disparities of wealth between rich and poor
of any country in the developing world. China’s environmental degradation and
its shrinking water supply threaten the health of its population. And its
economic model, which has relied on export-led growth, foreign direct
investment, and domination by state-owned enterprises and companies with party
connections, is running out of steam and badly needs fundamental reform.
Many U.S. executives also assumed that as China got richer, its citizens would spend more of their income. But the opposite has happened: the country’s savings rate is now climbing faster than its spending. China’s households save more than a quarter of their money, while Americans save less than 4 percent.