NYTimes Charts China's Growing Economic Influence. Some Thoughts on What It Means for the US

David Barboza of the New York Times has one of those pieces today which just catches your eye, and makes you think.  He writes:

China has begun transforming itself from a global font of low-priced goods fueled by cheap labor into a much more diverse and complex economic power.

But it is the incredible chart the Times has produced tracking China's growth that I strong urge you to review.  You can find it here.

Two stats really stuck out for me:

- In 2000, the US had 180 of the Fortune 500 largest companies by revenue.  China had 8.  This year the US had 140 of the 500 largest global companies.  China had 37, an almost five fold increase. 

- In 2000 the US had 29 of the top 50 companies of the world by market capitalization.  China had 1.  This year the US had 21 of these top 50 market cap companies.  China had 9. 

These charts, and this trip by the President to Asia this week, reminds us how fundamentally the global economy is changing.  We really are entering a completely different economic era, one characterized by the "rise of the rest" as Fareed Zakaria calls it.   A significant part of the rise of the rest is not just the growing geo-political and economic power of these rising powers, but the emergence of globally competitive corporations from these countries which are challenging the hegemony of American and European global brands, making it much harder for our corporations to make money.  The global corporate playing field is getting much more crowded, global competition is getting much more virulent, reducing the pricing leverage of our companies, which Rob Shapiro and I have been arguing is at the core of why it is has been so hard to get wages and incomes up here in the US this last decade.

This new dynamic of this new era of globalization is one we simply have to talk about much more - global competition has grown permanently more competitive.  As these rising power economies mature we will see global competition get ever more intense, as they produce not just low-wage low-quality companies, but the unimagined and yet unbuilt Microsofts, Intels and Nokias of the new century, and new much more global economy.

"Recovery," or returning to the old American economy, is not just impossible, but it is a dangerous illusion, preventing us from recognizing and addressing the underlying structural changes happening in the American economy today.  There is no going back now, there is only the fashioning of a new economic strategy for America, one which takes into account these historic and game-changing developments and begins to strategically transition America and its people successfully into this new era.  

Of the many things President Obama is taking from his trip this week I hope a deeper understanding of this dynamic - and a commitment to address it forthrightly when he returns - is at the core of his takeaways.  For preparing America, our workers and our students for this new much more competitive global economy may just be the most important domestic responsibility of our leaders today.