China as 1850's America

China’s just so hard.

Intellectually, you want to agree with a Vitaliy Katsenelson or a Jim Chanos that the whole thing is completely nuts, but the demographics are just so overwhelming and undeniable.

Is it a bubble on the verge of bursting, or multi-decade mega-theme heading for a series of corrections buying opportunities on its unstoppable march higher?

Two American historians, Stephen Mihm and Jeffrey Wasserstrom, may have the answer.  Writing in TIME Magazine, they ask the question of whether or not China doesn’t look an awful lot like America circa mid-19th Century.  There are some interesting parallels worth considering

Here’s a snatch, then you should head over, read the rest and draw your own conclusions…

China could stumble but keep climbing upward, much like the U.S. did about a century and a half ago. We find today’s China less reminiscent of Japan in the 1980s than it is of the U.S. in the 1850s.

Don’t get us wrong. We don’t expect breakneck growth to continue unabated. China faces daunting challenges, from a rapidly graying workforce to endemic corruption to energy needs that are increasingly hard to satisfy. To say that China faces major challenges, though, doesn’t undermine the American analogy. The same was true of the U.S. circa 1850.

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.

There’s a lot more, this is a compelling comparison.


How Today’s China Resembles 19th Century America (TIME)

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