The Contra China Argument

There is an article in Fortune magazine this month about short seller James Chanos and his big bet against China.  I have written a fair amount about China, one of my first posts is still my favorite:  Do We Want China to Fail?

The competitor in all of us wants to win, and China failing would be one way to accomplish that.  Despite this, I still think a failure in China would be bad for everyone.  Certainly it would be bad for the Chinese, but here are a few reasons why it would be bad for those of us in the technology industry:

1. IP Theft.  The work that the Chinese government is just now starting to do on piracy and IP theft will be the first thing abandoned if things turn for the worst.
2. Aggressive Cyber Behavior:  The Chinese government is already allowing or maybe even sponsoring efforts to compromise computer networks in the US.  A stable and prosperous China will give us the chance to address this diplomatically.
3. Nationalization:  Fear of a Chinese economic collapse could drive nationalist factions inside China to take control of foreign investments in China with government support.
4. Loss of a Market:  While there is sufficient evidence that China wants the domestic consumer market to be served mostly by domestic companies, there will always be opportunities for US companies to benefit from a rising China.  A declining China would remove the opportunity for either domestic or foreign technology companies.

So we want China to continue to succeed in raising itself up in the world economy.  We absolutely want to stay ahead by making ourselves more competitive.  James Chanos has some good arguments about why China may be in trouble.  Let's hope he is wrong this time.